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Are Securities Laws Effective Against Climate Change? A Proposal For Targeted Climate Related Disclosure And Ghg Reduction, Nate Chumley

Fordham Journal of Corporate & Financial Law

The New York Attorney General filed a lawsuit against Exxon Mobil on October 24, 2018, claiming the company committed securities fraud in order to prop up the value of the company by publicly disclosing a higher proxy cost—or projected future cost—of climate change regulation than the internal cost used. Following this lawsuit, a federal class action was filed utilizing the same legal theory on the same facts. These lawsuits should be viewed as part of the larger history of lawsuits against large fossil fuel companies for climate change-related harms. Public nuisance theory largely captured a set of lawsuits against these …

Dictation And Delegation In Securities Regulation, Usha Rodrigues

Scholarly Works

When Congress undertakes major financial reform, either it dictates the precise contours of the law itself or it delegates the bulk of the rulemaking to an administrative agency. This choice has critical consequences. Making the law self-executing in federal legislation is swift, not subject to administrative tinkering, and less vulnerable than rulemaking to judicial second-guessing. Agency action is, in contrast, deliberate, subject to ongoing bureaucratic fiddling and more vulnerable than statutes to judicial challenge.

This Article offers the first empirical analysis of the extent of congressional delegation in securities law from 1970 to the present day, examining nine pieces of …

Unfinished Business: Dodd-Frank's Whistleblower Anti-Retaliation Protections Fall Short For Private Companies And Their Employees, Chelsea Hunt Overhuls

The Journal of Business, Entrepreneurship & the Law

The Sarbanes-Oxley Act of 2002 (“SOX”) revolutionized the world of securities law whistleblowing. It encouraged employees to reveal corporate fraud by providing federal anti-retaliation protection to incentivize such reports. Securities law whistleblowing was transformed a second time in 2010 when Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Under Dodd-Frank, employees that report information to the Securities and Exchange Commission (“SEC”) are not only provided federal anti-retaliation protections but also are eligible for a hefty bounty. Two major differences separate these statutes: (1) SOX is limited to employees of companies who are subject to the reporting …

Inequities In Corporate And Securities Law: Disabling The Exploitative Chinese Corporation And Charting A Path To International Commercial Accountability, Jonathan P. Schmidt

San Diego International Law Journal

This article seeks to illuminate these issues and provide a roadmap for the U.S. federal and state legislatures to come together to protect the U.S. investor from the type of accounting fraud and stock misinformation that was the impetus behind enacting the Sarbanes-Oxley Act of 2002. First, this article will discuss the legal backdrop and legislative policy behind U.S. laws such as SOX and its enforcement mechanisms, and the ability for shareholders to bring securities class action derivative actions for financial fraud. This article will also discuss trade secrets laws, criminal extradition treaties, international enforcement of judgments, and elucidate the …

Transnational Securities Fraud And The Extraterritorial Application Of U.S. Securities Laws: Challenges And Opportunities, Genevieve Beyea

Global Business Law Review

With globalization, securities markets have become increasingly interconnected, and securities fraud has frequently crossed borders, creating problems for national regulators seeking to deter and punish fraud. The United States’ well-developed private enforcement mechanism for securities fraud is very attractive to investors around the world who are harmed by transnational securities fraud, particularly those from countries where private enforcement mechanisms do not exist or fraud is under-regulated. The application of U.S. securities law to foreign investors, however, presents a number of challenges, creating the potential for both under and overregulation as well as possible conflict with the regulatory systems of other …

Securities Laws In Soap Operas And Telenovelas: Are All My Children Engaged In Securities Fraud?, Elena Marty-Nelson

Faculty Scholarship

Securities law images are broadcast to millions worldwide through soap operas and telenovelas. Doctors, and professionals in other fields, have recognized the power of dramatic serials. They have generated a rich body of scholarship demonstrating how these mediums of popular culture impart health messages or effect social change. This author describes some of those empirical studies and suggests that legal scholars conduct similar empirical or ethnographic studies, particularly on the impact of portrayals of complex legal issues such as securities fraud in serials. The author explains differences and similarities between telenovelas and soap operas and compares portrayals of legal issues …

Mapping The American Shareholder Litigation Experience, Randall Thomas, James D. Cox

Vanderbilt Law School Faculty Publications

In this paper, we provide an overview of the most significant empirical research that has been conducted in recent years on the public and private enforcement of the federal securities laws. The existing studies of the U.S. enforcement system provide a rich tapestry for assessing the value of enforcement, both private and public, as well as market penalties for fraudulent financial reporting practices. The relevance of the U.S. experience is made broader by the introduction through the PSLRA in late 1995 of new procedures for the conduct of private suits and the numerous efforts to evaluate the effects of those …

The Competing Paradigms Of Securities Regulation, James J. Park

Duke Law Journal

Although the securities industry is primarily regulated by specific rules, it is also governed by general principles. When conduct violates a rule, the regulatory response is obvious-enforce the rule. The issue is more difficult when conduct does not violate a rule but violates a principle. A regulator can excuse the conduct on the ground that the law is unclear and prohibit the conduct going forward through rulemaking. Or, the regulator can punish the conduct through what I call a "principles-based" enforcement action. Since 2002, there has been a surge of principles-based enforcement actions, provoking criticism that regulators are engaging in …

Laws Against Bubbles: An Experimental-Asset-Market Approach To Analyzing Financial Regulation, Erik F. Gerding

Publications

This article analyzes the effectiveness of proposed and actual securities, financial, and tax laws designed to prevent, or dampen the severity of asset price bubbles, including laws designed to mitigate excessive speculation. The article employs experimental asset market research to measure the effectiveness of these anti-bubble laws in correcting mispricings. Experimental asset markets represent complex simulations of stock markets in which subjects trade securities over a computer network. These markets allow scholars to test causal links between legal policies and market effects in ways that empirical research alone cannot. With these virtual markets, researchers can identify asset price bubbles - …

The Next Epidemic: Bubbles And The Growth And Decay Of Securities Regulation, Erik F. Gerding

Publications

This article explores how speculative bubbles undermine the effectiveness of securities regulations and spawn epidemics of securities fraud. A brief historical survey demonstrates that stock market bubbles almost invariably coincide with epidemics of securities fraud, and provides a compelling argument that the outbreak of fraud in the Enron era did not stem merely from factors unique to the 1990s, but from the dynamics of an asset price bubble as well.

Drawing on perspectives from securities law practice and economic theory, the article argues that bubbles dilute the deterrent effect of antifraud rules and promote deregulation. Both effects alter the calculus …

Protecting The Perception Of The Public Markets: At What Costs - The Effects Of Noisy Withdrawal On The Long Standing Attoney-Corporate Client Relationship, Todd J. Canni

St. Thomas Law Review

"Sarbanes-Oxley," this phrase has echoed in the minds of corporate attorneys for almost two years now. Over this period of time, most corporate attorneys have come to recognize the general breadth of this Act. Aside from having a basic understanding, however, do corporate attorneys know the true effects this Act and the corresponding proposal will have on the legal profession and the companies they represent? The scope of this article is concerned with just that. Specifically, this examination concerns the U.S. Securities and Exchange Commission's proposed "noisy withdrawal" provision. Briefly, noisy withdrawal refers to the final measures an attorney would …

Whistling In The Dark? Corporate Fraud, Whistleblowers, And The Implications Of The Sarbanes-Oxley Act For Employment Law, Miriam A. Cherry

Faculty Publications

Passed in 2002 in the wake of the accounting scandals that resulted in billions of dollars of lost value to shareholders, the Sarbanes-Oxley Act has as its major goal the prevention of corporate corruption. This Article analyzes the impact of section 806, the portion of the Sarbanes-Oxlcy Act that provides protections for employees who report securities fraud, and describes the effect that Sarbanes-Oxley has on existing employment law. In addition, this Article contributes to the debate over the general effectiveness of the .Sarbanes-Oxley Act, a topic of contention among both academics and press commentators. This Article argues that the Act …

Sec Enforcement Heuristics: An Empirical Inquiry, James D. Cox, Randall S. Thomas, Dana Kiku

Duke Law Journal

This Article examines the overlap between SEC securities enforcement actions and private securities fraud class actions. We begin with an overview of data concerning all SEC enforcement actions from 1997 to 2002. We find that the volume of SEC enforcement proceedings is relatively modest. We next examine the scope of the recently enacted "Fair Fund" provision that authorizes the SEC to designate civil penalties it recovers from defendants to benefit defrauded private investors. We conclude that this provision offers only limited potential relief for private investors. We complete this Part of the Article with an analysis of the serious resource …

Whither Securities Regulation? Some Behavioral Observations Regarding Proposals For Its Future, Robert Prentice

Duke Law Journal

Respected commentators have floated several proposals for startling reforms of America's seventy-year-old securities regulation scheme. Many involve substantial deregulation with a view toward allowing issuers and investors to contract privately for desired levels of disclosure and fraud protection. The behavioral literature explored in this Article cautions that in a deregulated securities world it is exceedingly optimistic to expect issuers voluntarily to disclose optimal levels of information, securities intermediaries such as stock exchanges and stockbrokers to appropriately consider the interests of investors, or investors to be able to bargain efficiently for fraud protection.

Deconstructing Section 11: Public Offering Liability In A Continuous Disclosure Environment, Donald C. Langevoort

Law and Contemporary Problems

There can be no successful reform of the system of capital-raising regulation in the US without rethinking the liability regime. Reform is long overdue and can readily be accomplished in a way that does not unnecessarily compromise investor protection.

Cross-Border Investment, Conflict Of Laws, And The Privatization Of Securities Law, Robert W. Hillman

Law and Contemporary Problems

The rapid acceleration of transnational investing is occurring in an environment in which emerging markets, and foreign interest in these markets, are exploding. The issues involved with cross-border investment, conflict of laws and the privatization of securities law are examined.