Law Commons^™

The Sec's Spac Solution, Karen Woody, Lidia Kurganova

Scholarly Articles

The SPAC craze has ebbed and flowed over the past few years, creating fortunes and ruining others. The SEC stepped into the mix in 2022 and proposed rules governing SPACs. The proposed rules artfully balance the interests of investor protection while retaining some of the featured characteristics of SPACs as innovative ways to take companies public. This Article details the history of SPACs, including their benefits and risks, and analyzes the SEC’s proposed rules, arguing that the SEC is well within its Congressional authority to regulate SPACs, and that the proposed rules are both well-tailored and necessary.

Profiting From Our Pain: Privileged Access To Social Impact Investing, Cary Martin Shelby

Scholarly Articles

Social impacting investing has become the latest trend to permeate the financial markets. With massive anticipated funding gaps for sustainable development goals, and a millennial-driven thirst for doing good while doing well, this trend is likely to continue in the coming decades. This burgeoning industry is poised to experience yet an additional boost, since it provides an alternative mechanism for private actors to “profit from our pain,” particularly in the wake of the COVID-19 pandemic and the Black Lives Matter movement.

As to be expected, the law has not sufficiently adapted to this new wave of innovation. Scholars have thus …

The New Insider Trading, Karen E. Woody

Scholarly Articles

Pursuant to the SEC’s Rule 10b-5, in order to obtain a conviction for insider trading based upon a tipper-tippee theory, the government must prove that the tipper received a personal benefit for the tip, and that the tippee knew about that benefit. The last five years of blockbuster insider trading cases have focused on this seemingly nebulous personal benefit test, and the Supreme Court has been unable to clear the muddy waters. As a result, the parameters of insider trading remain hard to pin down and often shift depending on the facts of the most recent case. Two terms ago, …

Boards In Information Governance, Faith Stevelman, Sarah C. Haan

Scholarly Articles

This Article focuses on the evolving role of boards of directors. It charts the decline of the two leading, twentieth-century conceptual frameworks shaping corporate boards’ roles: agency cost theory, which produced the limited “monitoring board,” and “separate realms” theory, which ceded board responsibility for matters other than profit maximization to government regulation. Hedge fund activism and wild stock market swings have exposed the limits of the board’s role in agency cost theory. The 2020 pandemic, economic crises, investors’ demands for socially responsible stewardship, and corporations’ own political activism have rendered separate realms thinking untenable.

Although much theorizing in corporate law …

How Did We Get Here? Dissecting The Hedge Fund Conundrum Through An Institutional Theory Lens, Cary Martin Shelby

Scholarly Articles

This article dissects both the origins and resulting harms of what the author terms the "hedge fund conundrum," in which institutional investors, such as pension plans and endowments, have consistently increased hedge fund allocations over the past decade despite pervasive evidence of excessive fees and subpar returns. It then utilizes an historical institutionalist lens to examine how lawmakers may have enabled a conundrum of this magnitude. By and large, this phenomenon is a symptom of regulatory loopholes that have permitted the private hedge fund market to increase in "publicness" through its expanding access and subsequent harm to retail investors. Such …

Myth Of The Attorney Whistleblower, Carliss N. Chatman

Scholarly Articles

Notwithstanding the political grandstanding and legal regimes put in place to prevent the next Enron, this article explores whether attorney whistleblower provisions provided in the Standards of Professional Conduct for Attorneys Appearing and Practicing Before the Commission in the Representation of an Issuer and in the Model Rules of Professional Conduct are effective. When faced with attorney involvement in Enron, Congress passed § 307 of the Sarbanes Oxley Act (Sarbanes), which required the Securities and Exchange Commission (SEC) to amend its standards governing the conduct of attorneys practicing before the SEC. In response, the SEC and the American Bar Association …

Justice Stevens And Securities Law, Lyman P.Q. Johnson, Jason A. Cantone

Scholarly Articles

In this Article, we tell the overlooked story of Justice Stevens's important role in Supreme Court securities law decisions. In Part I, where we briefly highlight Stevens's career before his 1975 appointment to the Supreme Court, we observe that we can identify no evident interest in or connection to federal securities law or the securities industry, making his contributions all the more remarkable. The only foreshadowing of his prolific opinion-writing on the subject of securities law was his voluminous writing of opinions, in general, while serving on the Seventh Circuit Court of Appeals. This commitment to authoring opinions stemmed, in …

Feeling Insecure—A State View Of Whether Investors In Municipal General Obligation Bonds Have A Mere Promise To Pay Or A Binding Obligation, Randle B. Pollard

Scholarly Articles

The City of Detroit's filing for municipal bankruptcy in July, 2013, has added to a continuing controversy of whether general obligation bondholders have a secured lien. The City of Detroit claimed its general obligation bondholders did not have a fully secured lien because the law of the state of Michigan did not create a statutory lien. Without the creation of a lien by state law, during the insolvency or bankruptcy of municipalities, general obligation bondholders will potentially have a mere promise to pay versus a binding obligation to pay, and therefore, will not have a secured lien. Treating otherwise secured …

Regulating Angels, Heidi Mandanis Schooner

Scholarly Articles

This article examines the current calls for deregulation of community banks and balances those ideas against the long history of community bank regulation, insolvency, and government support. Part II discusses the benefits offered by community banks and the current status of the industry. Part III outlines the justification for community bank regulation and the availability of the government safety net to support these institutions. Part IV addresses the solvency risk of community banks-their rates of failure and the causes of their failure. Part V addresses the reaction by community banks and their supporters to the passage of the Dodd-Frank Wall …

Brief Of Professors At Law And Business Schools As Amici Curiae In Support Of Respondents: Omnicare, Inc., Et Al. V. Laborers District Council Construction Industry Pension Fund, Et Al., Celia Taylor, Lyman P.Q. Johnson, J. Robert Brown, Joan Macleod Heminway

Scholarly Articles

None available.

Gender And Securities Law In The Supreme Court, Lyman P.Q. Johnson, Michelle Harner, Jason A. Cantone

Scholarly Articles

The 2010 appointment of Elena Kagan to the United States Supreme Court meant that, for the first time, three female justices would serve together on that court. Less clear is whether Justice Kagan’s gender will really matter in how she votes as a justice. This question is an especially visible aspect of a larger issue: do female judges display gendered voting patterns in the cases that come before them?

This article makes a novel contribution to the growing literature on female voting patterns. We investigated whether female justices on the United States Supreme Court voted differently than, or otherwise influenced, …

Corporate Governance Reform In A Time Of Crisis, Christopher M. Bruner

Scholarly Articles

In this article I argue that crisis-driven corporate governance reform efforts in the United States and the United Kingdom that aim to empower shareholders are misguided, and offer an explanation of why policymakers in each country have reacted to the financial crisis as they have. I first discuss the risk incentives of shareholders and managers in financial firms, and examine how excessive leverage and risk-taking in pursuit of short-term returns for shareholders led to the crisis. I then describe the far greater power and centrality that U.K. shareholders have historically possessed relative to their U.S. counterparts, and explore historical and …

Enron And The Dark Side Of Worker Ownership, David K. Millon

Scholarly Articles

None available.

For The Civil Practitioner: Review Of Fourth Circuit Opinions In Civil Cases Decided November 1, 1991 Through December 31, 1992: Xi - Securities Regulation, Lyman P.Q. Johnson

Scholarly Articles

Not available.

Securities Fraud And The Mirage Of Repose, Lyman P. Q. Johnson

Scholarly Articles

After decades of confusion, in 1991 the Supreme Court articulated a uniform federal limitations period for securities fraud claims grounded on Rule 10b-5. The court further held that the new limitations period was not subject to equitable tolling.

This Article argues that the court wrongly conflated into a singular equitable tolling doctrine two historically and normatively distinct bases for tolling a limitations period. Only claims of securities fraud uncomplicated by a later cover-up of the original fraud are free from tolling principles. The limitations period for fraud which is subsequently concealed by an original wrongdoer remains, because of the still …

Generating Precedent In Securities Industry Arbitration, David A. Lipton

Scholarly Articles

The author charts the progress made by the securities industry’s dispute resolution system as it went from judicial litigation to a system that relies almost exclusively on arbitration. Further advances were made by the adoption of the 1989 Rules Amendments, which, by introducing prehearing conferences and setting deadlines for document exchanges, cleared up many procedural issues. However, one serious problem remains: The present system does not provide a means to generate case precedent. The author suggests various ways to cure this defect.

The Case Beyond Time, Lyman P.Q. Johnson, David K. Millon

Scholarly Articles

The Delaware Supreme Court's opinion in Paramount Communications, Inc. v. Time, Inc.' treats several important questions that arise in connection with hostile corporate takeovers. At the same time, it leaves three critical issues unanswered. In this article, we first briefly describe what the Time decision did, comparing Chancellor William Allen's somewhat discursive Chancery Court opinion with the more peremptory ruling of the Supreme Court. Next, we identify three unarticulated but potentially far-reaching implications of both the Supreme Court's and Chancellor Allen's reasoning that threaten to destabilize seemingly settled doctrine governing the conduct of target company management.

Mandatory Securities Industry Arbitration: The Problems And The Solution, David A. Lipton

Scholarly Articles

Many of the perceived problems with the securities arbitration system do not reflect deficiencies in the operation of the current system, but rather are a result of the very qualities that make arbitration attractive. For example, participants in arbitration have a limited right of appeal from arbitration awards precisely because they contractually agreed to forego judicial litigation and instead have their disputes considered in a more expeditious and less expensive forum. It is reasonable to believe that if arbitration awards were appealable for the full range of reasons for which judicial decisions may be appealed, the efficiency of the arbitration …

Significant 1986 Regulatory And Legislative Developments, David A. Lipton

Scholarly Articles

No abstract provided.

A Primer On Broker-Dealer Registration, David A. Lipton

Scholarly Articles

No abstract provided.

Significant 1985 Regulation And Legislative Developments, David A. Lipton

Scholarly Articles

No abstract provided.

Arbitration In The Securities Industry: Too Much Of A Good Thing?, David A. Lipton

Scholarly Articles

The study upon which this article is based was conducted in response to the explosive growth of the use of arbitration in the securities industry as a means of resolving broker/customer disputes. The study was designed to investigate whether the use that is being made of arbitration is efficient and, if inefficiencies were found, what procedures might be employed to screen out inefficient use.

This article was completed prior to the Supreme Court's recent resolution of the Dean Witter Reynolds, Inc. v. Byrd case. In light of that decision, it now appears likely that the concerns raised in the article …

Governance Of Our Securities Markets And The Failure To Allocate Regulatory Responsibility, David A. Lipton

Scholarly Articles

No abstract provided.

The Sec Or The Exchanges: Who Should Do What And When? A Proposal To Allocate Regulatory Responsibilities For Securities Markets, David A. Lipton

Scholarly Articles

This article will investigate what principles should guide the Commission in allocating decision making authority over regulatory matters between itself and the SROs. When should the SEC initiate the resolution of issues? When should it merely oversee the efforts of the SROs in issue resolution? Finally, can specific market regulatory problems be analyzed pursuant to these principles to determine how decision making authority should be allocated? In addition to providing a model for answering these questions, the guidelines 4 developed in this article will also have relevance to the broader question of allocating decision making responsibility between the government and …

Best Execution: The National Market System’S Missing Ingredient, David A. Lipton

Scholarly Articles

In 1975 Congress enacted legislation designed to foster the establishment of a national system for the trading of securities. Many of the goals of a national market cannot be achieved if brokers are not compelled to seek the best price when executing transactions in multiply traded securities. To date, the Securities and Exchange Commission has failed to adopt a rule either requiring or encouraging a best execution practice.

This article examines the importance of a best execution rule to investors, to the national market system and to the economy. It explores the changes that have evolved in the securities industry …

The Special Study Of The Options Market: Its Findings And Recommendations, David A. Lipton

Scholarly Articles

Since its inception in 1972, listed options trading has become a very important source of income for the securities industry. The total volume of transactions has risen dramatically, but so have investor complaints. The author of this article examines the 1979 study of the options markets issued by the SEC staff, notes its principal recommendations, and discusses the need for greater industry self-regulation. The author notes that the SEC is still considering final rule proposals in the options field, and he suggests that the options/securities industry will probably be altered in the following respects: (1) a restructuring of the existing …