Law Commons^™

To Spac Or Not To Spac: Liberalizing The Regulation Of Capital Markets, Allison N. Swecker

Vanderbilt Journal of Transnational Law

The merger and acquisition world has experienced an uptick in deal flow since 2016, reaching unprecedented levels in 2020 due to enhanced private equity funding and market volatility. While the market volatility spurred by COVID-19 halted traditional initial public offerings (IPOs), the special purpose acquisition company (SPAC) market exploded. The flurry of SPAC activity in the United States triggered the development of SPAC markets worldwide. Unfortunately, SPACs’ great rise to fame in the past few years has come at a cost-—fraud. As such, the US Securities and Exchange Commission (SEC) is left grappling with how to best regulate the market …

Addressing The Auditor Independence Puzzle: Regulatory Models And Proposal For Reform, Martin Gelter, Aurelio Gurrea-Martinez

Vanderbilt Journal of Transnational Law

Auditors play a major role in corporate governance and capital markets. Ex ante, auditors facilitate firms' access to finance by fostering trust among public investors. Ex post, auditors can prevent misbehavior and prevent financial fraud by corporate insiders. In order to fulfill these goals, however, in addition to having the adequate knowledge and expertise, auditors must perform their functions in an independent manner. Unfortunately, auditors are often subject to conflicts of interest, for example, resulting from the provision of nonaudit services but also because of the mere fact of being hired and paid by the audited company. Therefore, even if …

International Multiple Derivative Actions, King F. Tsang

Vanderbilt Journal of Transnational Law

This Article explores two choice of law issues in international multiple derivative actions: (1) the choice of substantive law that should govern multiple derivative actions and (2) the characterization of different aspects of the multiple derivative actions between substantive and procedural laws. After a comparison of choice of law approaches among various common law jurisdictions, the author advocates that the first choice of law issue--the substantive law to be applied to the action--should be governed by the law with the closest connections to the multiple derivative actions. This is the only practical choice given the complex nature of international multiple …

Benchmarking The World: A Proposal For Regulatory Oversight Of Stock Market Index Providers, Jenna L. Mccarthy

Vanderbilt Journal of Transnational Law

Wall Street has recently seen a shift from active management, which involves investors or portfolio managers buying and selling stocks, towards passive management, where investors invest in funds that seek to match the returns of an underlying index. As the popularity of index funds has grown, questions have arisen regarding the role of the index providers that produce the underlying indices. Unlike the funds themselves, these providers are largely unregulated, and have considerable discretion to determine the makeup of indices. This wide discretion allows index providers to exercise control over the global investment community since they have the ability to …

Toward A Public Enforcement Model For Directors' Duty Of Oversight, Renee M. Jones, Michelle Welsh

Vanderbilt Journal of Transnational Law

This Article proposes a public enforcement model for the fiduciary duties of corporate directors. Under the dominant model of corporate governance, the principal function of the board of directors is to oversee the conduct of senior corporate officials. When directors fail to provide proper oversight, the consequences can be severe for shareholders, creditors, employees, and society at large. Despite general agreement on the importance of director oversight, courts have yet to develop a coherent doctrine governing director liability for the breach of oversight duties. In Delaware, the dominant state for U.S. corporate law, the courts tout the importance of board …

Life After Morrison: Extraterritoriality And Rico, R. D. Mello

Vanderbilt Journal of Transnational Law

For years, the federal courts of appeals have borrowed heavily from securities law jurisprudence in developing a framework for analyzing claims under the Racketeer Influenced and Corrupt Organizations Act (RICO). Last year, in the case of Morrison v. National Australia Bank, the Supreme Court issued a ground-breaking opinion that rejected decades of lower court precedent related to the extraterritorial application of U.S. securities laws and reemphasized the vitality of the presumption against extraterritoriality. Because of the parallel development of securities law and RICO jurisprudence, Morrison will have significant consequences for the application of RICO in cases involving foreign defendants and …

Greater Mutual Fund Transparency In India, Stephen P. Smith

Vanderbilt Journal of Transnational Law

India has been one of the darlings among emerging market economies over the past decade. It has experienced dizzying economic growth that has lifted great numbers of Indians out of poverty and changed the economic outlook of much of its populace. For the first time, many Indians have excess funds to save or invest, and the Indian mutual fund industry has enjoyed an explosion in popularity as a result of this economic boom, particularly among first time mutual fund investors.

One of the most important mechanisms for investor protection in any capital market is the provision of information to investors …

The Use Of Mortgage-Backed Securities In International Comparative Perspective: Lessons And Insights, Csaba Rusznak

Vanderbilt Journal of Transnational Law

The secondary mortgage market in the United States has helped millions of people purchase homes over the past half century. Following the burst of the real estate bubble and the credit crisis, it is important for American policymakers not to lose sight of the importance that the secondary mortgage market has played in increasing home ownership. The financial engineering in the form of securitization that led to the success of the secondary mortgage market needs to be preserved, although it should also be reworked so that the externalization of unappreciated risk is reduced and the possibility of a large-scale financial …

Beyond Economics: The U.S. Recognition Of International Financial Reporting Standards As An International Subdelegation Of The Sec's Rulemaking Authority, Jacob L. Barney

Vanderbilt Journal of Transnational Law

A final rule promulgated by the Securities and Exchange Commission (SEC) in 2008 allowing foreign private securities issuers to prepare SEC-required financial disclosures under international financial reporting standards (IFRS) as promulgated by the International Accounting Standards Board (LASB) is a highly significant event for U.S. and global capital markets. However, surprisingly few questions have been asked regarding the SEC's legal authority to take such an unprecedented step.

This Note assesses the recent SEC action with regard to IASB from two perspectives--traditional administrative law, with particular emphasis on delegations by government entities to private parties, and international law, with particular emphasis …

Assessing The Deterrent Effect Of The Sarbanes-Oxley Act's Certification Provisions, Kathleen A. Lacey, Barbara C. George, Clyde Stoltenberg

Vanderbilt Journal of Transnational Law

In the 1970s, Congress reacted to the financial wrongdoing of Lockheed Corp. and others by enacting § 102 of the Foreign Corrupt Practices Act (FCPA), which (1) requires corporations to keep records that accurately reflect financial transactions and (2) mandates a system of internal accounting controls. Going a step further in 2002, Congress responded to the Enron scandal by imposing personal accountability on chief executive officers in the Sarbanes-Oxley Act (SOA). After recounting responses prior to the existence of the Securities and Exchange Commission (SEC) to corporate abuses and the historical background of the SEC's requirements for corporate financial reporting …

Recent Cases, Law Review Editor

Vanderbilt Journal of Transnational Law

Remedies--Fair Labor Standards Act--Private Damage Suit Unavailable to Redress Violations of Child Labor Provisions of the Fair Labor Standards Act

Securities Regulation--Commercial Paper--Promissory Notes with Maturity Not Exceeding Nine Months but Offered to Public as Investment Are "Securities" Within Section 3(a)(10) of the 1934 Act.

Securities Regulation--Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5--A Reorganization in the Form of a Tripartite Merger in Which There Is No Change in the Total Assets Represented by a Share of Stock Does Not Involve a "Purchase or Sale" Within the Meaning of Section 10(b) of The Securities Exchange Act …

Europe And Overseas Commodity Traders V. Banque Paribas London: Zero Steps Forward And Two Steps Back, Paige K. Willison

Vanderbilt Journal of Transnational Law

While international securities transactions have become the norm in today's globalized economy, such transactions necessarily implicate the laws of more than one nation, thereby creating both conflict and confusion. Due to the depth and breadth of U.S. securities laws, plaintiffs often prefer to sue in the United States under U.S. law. Yet inappropriately applying U.S. law to transnational transactions may offend notions of comity. This Note discusses the different tools used to decide the following jurisdictional issues. First, under what circumstances do U.S. anti-fraud rules apply to securities transactions? Second, under what circumstances do U.S. registration laws apply? Over the …

Realizing The Re-Emergence Of The Chinese Stock Market: Fact Or Fiction?, Ann P. Vandevelde

Vanderbilt Journal of Transnational Law

The stock market which currently exists in the People's Republic of China (PRC) is a product of the "open door policy" introduced by Deng Xiaoping in 1978, following the death of Mao Zedong, to promote economic development over class struggle. Following limited experimentation with stock issuance at the local level, the Shanghai and Shenzhen stock exchanges opened in 1990 and 1991 respectively. Since its recent inception, China's stock market--which comprises the trading of domestically owned A-Shares and foreign-owned B-Shares--has experienced impressive growth together with periods of volatility as well as lackluster performance. Recent performance of A-Share trading has been strong, …

The Estonian Securities Market Act: A Lesson For Former Republics Of The Soviet Union, John J.A. Burke

Vanderbilt Journal of Transnational Law

This Article describes and analyzes the Estonian Securities Market Act; the only securities statute presently in effect in Estonia. Before examining the requirements of that law, the Article provides an overview of the development of a securities market in Estonia, including a description of the securities, exchanges, and professionals that comprise the contemporary market. After providing this context, the Article analyzes the Estonian Securities Market Act. The author concludes that Estonia should not adopt complex securities legislation, but rather should "sample" the laws of other states. This process will allow Estonia to tailor a comprehensive regulatory system to the particular …

French & Sec Securities Regulation: The Search For Transparency And Openness In Decisionmaking, Keith D. Nunes, Louis Vogel, Chris X. Linn, Peter C. Kostant

Vanderbilt Journal of Transnational Law

In this Article, the authors retrace the history and development of France's securities markets. The authors find that the French markets have become dynamic and diverse in the wake of their modernization. In contrast to the passivity of the United States regulatory regime, the authors demonstrate that the role of French regulators is more aggressive and intrusive. The authors also note that, through directives seeking to coordinate the policies of member states, the European Economic Community serves as the world's leading securities regulator. The authors conclude that French securities laws have been successful in improving disclosure and market efficiency. But …

Loss Compensation In The Japanese Securities Market: Causes, Significance, And Search For A Remedy, Mitsuru Misawa

Vanderbilt Journal of Transnational Law

Recently, the Japanese securities market has been plagued by scandals in which brokerages have compensated large customers for their losses from trading. Following a brief historical review of loss compensation, Dr. Misawa describes the mechanics of a loss compensation scheme. The author then details how rising interest rates caused the losses to clients that brokerages were compensating.

Loss compensation is illegal in Japan. The law prohibiting it, however, is ambiguous as to whether it applies to voluntary compensation. The author suggests the law should be clarified also to prohibit voluntary compensation. Dr. Misawa further recommends that brokerage commissions be liberalized …

The European Community's Ucits Directive, Patrick J. Paul

Vanderbilt Journal of Transnational Law

As the twenty-first century approaches, the world is undergoing massive change. Social, political, and economic barriers are being torn down; new alliances are forming, as are new barriers. Economic stability and supremacy have replaced military supremacy in the hierarchy of a nation's policy objectives. The European Community's move toward a single market exemplifies this policy shift.

This Note focuses on one element of these global changes--internationalization of the securities market. The Note begins with an overview of the international securities market and the reasons for its increased globalization. The Investment Company Act of 1940 (the 1940 Act) that, in part, …

Books Received, Law Review Staff

Vanderbilt Journal of Transnational Law

Books Received

GOOD FAITH IN ENGLISH LAW

By J.F. O'Connor

Brookfield, Vermont: Dartmouth Publishing Company, 1990. Pp. 148.

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LAW AND ISLAM IN THE MIDDLE EAST

Edited by Daisy Hilse Dwyer

New York, New York: Bergin & Garvey, 1990. Pp. 168.

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INTERNATIONAL SECURITIES REGULATION

By Norman S. Poser

Boston, Massachusetts: Little, Brown and Company, 1991. Pp. 799.

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COMPARATIVE CONSTITUTIONAL FEDERALISM

Edited by MarkTushnet

Westport, Connecticut: Greenwood Press, 1990. Pp. 157.

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ECONOMIC SANCTIONS AND U.S. TRADE

By Michael P. Melloy

Boston, Massachusetts: Little, Brown and Company, 1990. Pp. 752.

Case Digest, Law Review Staff

Vanderbilt Journal of Transnational Law

MEDICAL MALPRACTICE ABROAD BY UNITED STATES PHYSICIAN IN CONNECTION WITH DEPARTMENT OF STATE REGULATIONS GOVERNING TORT CLAIMS PROVIDED FOR AN INVESTIGATIVE PROCEDURE FOLLOWED BY AGENCY DECISION--AGENCY FOR INTERNATIONAL DEVELOPMENT HOLDS NO CONSTITUTIONAL OBLIGATIONS TO EVALUATE MEDICAL MALPRACTICE CLAIM ON THE MERITS AND IN ACCORD WITH MINIMAL DUE PROCESS. Tarpeh-Doe v. United States, 904 F.2d719 (D.C. Cir. 1990).

THE FOREIGN CORRUPT PRACTICES ACT DOES NOT CREATE AN IMPLIED PRIVATE RIGHT OF ACTION THAT KENTUCKY TOBACCO GROWERS COULD USE TO RECOVER DAMAGES FROM COMPANIES THAT ALLEGEDLY ENGAGED IN CORRUPT PRACTICES TO THE DETRIMENT OF GROWERS. THE ACT OF STATE DOCTRINE, HOWEVER, DOES …

Icarus And His Waxen Wings: Congress Attempts To Address The Challenges Of Insider Trading In A Globalized Securities Market, John T. Thomas

Vanderbilt Journal of Transnational Law

This Note addresses the globalization of the world financial securities markets and the potential for fraud in these expanded markets. The author considers actual cases of insider trading that have crossed national borders and the enforcement problems such cases raise. The author analyzes the first significant response by the United States Congress to these problems and concludes that the response is inadequate. Congress recognizes the incredible pace of evolution of the world financial markets, but is slow to address this process. The SEC offered serious proposals to Congress--proposals that apparently have bipartisan support--and Congress failed to act on these proposals …

Swiss Bank Secrecy And United States Efforts To Obtain Information From Swiss Banks, Elliot A. Stultz

Vanderbilt Journal of Transnational Law

The United States has utilized numerous techniques to penetrate bank secrecy, with varying degrees of success. The United States and Switzerland have signed several agreements relating to bank secrecy and its role in United States criminal investigations. These efforts have allowed United States authorities to obtain normally privileged information in numerous investigations over the past ten years, although some confusion as to what information is available still exists today.

Two recent events have expanded the scope of information available to United States investigators and alleviated some of the confusion. In November 1987 the United States and Switzerland exchanged a Memorandum …

Foreign Securities Offerings In The United States: The Impact Of Sec Clearance Of Denationalized French Stock Issues, John T. Vogel

Vanderbilt Journal of Transnational Law

In response to the growing internationalization of financial markets and the internal deregulation of foreign national securities structures, the United States Government, through the Securities and Exchange Commission (SEC or Commission), has entertained suggestions and has implemented measures to facilitate the flow of capital across United States borders. The world financial community has generally applauded these actions, but has nonetheless continued the call for more reform and liberalization of capital markets. The ideas behind the voices of reform have appeal: less federal regulation means more corporate access to international capital, more opportunities for investors, and a more efficient allocation of …

A Study Of Mexico's Capital Markets And Securities Regulation, Samuel Wolff

Vanderbilt Journal of Transnational Law

This Article will analyze Mexico's capital markets and regulations, primarily from an empirical point of view. The discussion will begin with an overview of the Mexican financial and legal systems to provide a context for the analysis of the market and the law. The essay will then discuss the Mexican securities market, including history, participants and characteristics. Finally, Mexico's Ley del Mercado de Valores ("Securities Market Law") will be analyzed." The objective of the study is to increase understanding of the Mexican market by Mexicans and foreigners alike. The study should be useful to policymakers in Mexico and other developing …

Secrecy And Blocking Laws: A Growing Problem As The Internationalization Of Securities Markets Continues, Rochelle G. Kauffman

Vanderbilt Journal of Transnational Law

This Note examines the problems recently faced by the SEC in policing securities transactions effected by foreign financial institutions in jurisdictions with secrecy and blocking laws, and it proposes both a short-term solution and a long-term solution to the SEC's enforcement problems. Part II of the Note outlines the problems confronting the SEC, specifically addressing the growing internationalization of securities markets and the effects on United States markets. This section also examines the problems confronting the SEC as a result of secrecy and blocking laws, and it suggests that unless new enforcement procedures are developed, these problems will increase when …

Special Project -- Legal Issues Arising From The Mexican Economic Crisis, Robert L. Morgan -- Special Projects Editor, J. Robert Paulson, Jr., Fred A. Frost, Terrence L. Dugan, Cynthia L. Wells, G. Wilson Horde, Iii, Judith B. Anderson

Vanderbilt Journal of Transnational Law

The economic crisis in Mexico, which profoundly altered the financial and political course of that nation, has also had a significant impact on persons and corporations having business ties to Mexico. Foreign investors and businesses now are required to follow new Mexican rules that often differ dramatically from those previously in effect. The impact of the crisis has not been confined to changes in Mexican law. A substantial number of issues have arisen that will have significant bearing on United States and international law.

The Special Project discusses the changes in the legal environment following the crisis, with its focus …

Case Digest, Law Review Staff

Vanderbilt Journal of Transnational Law

THE UNITED STATES MAY EXERCISE JURISDICTION OVER PERSONSON A "STATELESS" VESSEL WITHOUT SHOWING A NEXUS BETWEEN THE VESSEL AND THE UNITED STATES--United States v. Pinto-Mejia, 720 F.2d 248 (2d Cir. 1983).

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ALIEN RETAINS RIGHT TO DEPORTATION PROCEEDING AFTER RETURNING FROM AUTHORIZED DEPARTURE NOTWITHSTANDING THAT IMMIGRATION AND NATURALIZATION SERVICE PERMISSION TO DEPART WAS STYLED AS AN "ADVANCE PAROLE"--Joshi v. District Director, Immigration and Naturalization Serv., 720 F.2d 799 (1983).

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NO VIOLATION OF INTERNATIONAL LAW WHEN EQUIPMENT LOCATED IN UNITED STATES RECORDS TRANSNATIONAL TELECOMMUNICATIONS--United States v. Romano, 706 F.2d 370 (2d Cir. 1983).

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UNITED STATES MANUFACTURERS HAVE A CAUSE …

Recent Decisions, Thomas L. Raleigh, Iii, Jay W. Mccann

Vanderbilt Journal of Transnational Law

Jurisdiction--Application of Doctrine of Forum Non Conveniens Justified when Defendant Consents to Jurisdiction of a Non-United States Forum

Thomas L. Raleigh, III

Securities Regulation--Extraterritorial Application of Antifraud Provisions--Allegation of Deception of Foreign Fundholders by Foreign Directors Insufficient to Invoke Jurisdiction of the Securities Laws

Jay W. McCann

The Foreign Corrupt Practices Act Of 1977: A Private Right Of Action?, Mary F. Lyle

Vanderbilt Journal of Transnational Law

The Foreign Corrupt Practices Act of 1977 (the Act) was passed as a consequence of revelations of foreign and domestic bribes, kickbacks, political payoffs and other questionable financial practices by corporations throughout the past several years. The Act requires issuers of securities subject to the registration and reporting provisions of the Securities Exchange Act of 1934 to comply with specific accounting standards. In addition, the Act provides for civil and criminal liability when an issuer or any domestic concern not an issuer uses the mails or any instrumentality of interstate commerce in furtherance of certain payments to foreign officials...

The …

Recent Decisions, Anne Markey, James F. Maddox, Thomas C. Eklund, Thomas F. Taylor, Ralph Vinciguerra, Clark Mervis

Vanderbilt Journal of Transnational Law

Admiralty--Damages in a Maritime Collision or Stranding Caused by Mutual Fault Must be Apportioned According to the Comparative Negligence of the Parties

Anne Markey

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Admiralty--Wrongful Death--General Maritime Law Provides Remedy for Pain and Suffering of Decedent Incurred in Wrongful Death on High Seas but not for Funeral Expenses

James F. Maddox

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Arbitration--Securities Regulation--In International Sale of Securities, Arbitration Agreement is Binding not Withstanding Non-Waiverability of Judicial Remedy of Securities Exchange Act of 1934

Thomas C. Eklund

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IMMIGRATION--ALIEN COMMUTERS, BOTH DAILY AND SEASONAL, WHO HAVE ONCE OBTAINED THE STATUS OF IMMIGRANTS ARE PROPERLY CLASSIFIED AS SPECIAL IMMIGRANTS LAWFULLY …

Editor's Foreword, Charles G. Burr Editor-In-Chief

Vanderbilt Journal of Transnational Law

The Vanderbilt Journal of Transnational Law is a new undertaking at Vanderbilt Law School. The Journal is an outgrowth of the predecessor publication, The Vanderbilt International, which was established in 1967 as a bulletin of the Vanderbilt International Law Society. A number of factors, including increased student enrollment at the Law School and a growing awareness of global activities and problems, have facilitated the Journal's evolution into its present, expanded format. It is indeed appropriate that the lead article of the new publication should be authored by Judge Philip C. Jessup, who has long been the foremost advocate in the …