Law Commons^™

Preemption Under The Securities Litigation Uniform Standards Act: If It Looks Like A Securities Fraud Claim And Acts Like A Securities Fraud Claim, Is It A Securities Fraud Claim?, Jennifer O'Hare

Working Paper Series

This Article addresses the removal and preemption provisions of the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”). In SLUSA, Congress preempted class actions alleging “an untrue statement or omission of a material fact in connection with the purchase or sale of a covered security.” SLUSA clearly applies to preempt the typical state securities fraud action, forcing plaintiffs into federal court where they will be subject to the rigorous procedural requirements of the Private Securities Litigation Reform Act of 1995. Preemption of false corporate publicity cases was expected and, in fact, intended by SLUSA. However, many courts have also extended …

Gaming Delaware, William Wilson Bratton

Articles

No abstract provided.

Was Arthur Andersen Different? An Empirical Examination Of Major Accounting Firm Audits Of Large Clients, Theodore Eisenberg, Jonathan R. Macey

Cornell Law Faculty Publications

Enron and other corporate financial scandals focused attention on the accounting industry in general and on Arthur Andersen in particular. Part of the policy response to Enron, the criminal prosecution of Andersen eliminated one of the few major audit firms capable of auditing many large public corporations. This article explores whether Andersen’s performance, as measured by frequency of financial restatements, measurably differed from that of other large auditors. Financial restatements trigger significant negative market reactions and their frequency can be viewed as a measure of accounting performance. We analyze the financial restatement activity of approximately 1,000 large public firms from …

Reassessing The Scope Of Conduct Prohibited By Section 10(B) And The Elements Of Rule 10b-5: Reflections On Securities Fraud And Secondary Actors, Andrew S. Gold

Faculty Scholarship

No abstract provided.

Let The Money Do The Governing: The Case For Reuniting Ownership And Control, Usha Rodrigues

Scholarly Works

Part I of the Article outlines the problems with the current method of board selection and functioning. Management or management-sympathetic board members often select the board nominees, who share social ties with other board members. Boards tend to avoid "rocking the boat" by questioning management's recommendations, and because of the way the proxy process is structured, shareholders cannot effectively use their votes to oust unsatisfactory board members.

Part II analyzes the SEC's recent proposals for reform, which center on granting shareholders more opportunities to nominate candidates to the board. These proposals attempt to give shareholders a greater voice in the …

The Securities And Exchange Commission Goes Abroad To Regulate Corporate Governance, Roberta S. Karmel

Faculty Scholarship

No abstract provided.

The Securities And Exchange Commission Goes Abroad To Regulate Corporate Governance, Roberta S. Karmel

Faculty Scholarship

No abstract provided.

Rules, Principles, And The Accounting Crisis In The United States, William Wilson Bratton

Articles

The Sarbanes-Oxley Act and the Securities Exchange Commission move too quickly when they prod the Financial Accounting Standards Board, the standard setter for US GAAP, to move immediately to a principles-based system. Priorities respecting reform of corporate reporting in the US need to be ordered more carefully. Incentive problems impairing audit performance should be solved first through institutional reform insulating the audit from the negative impact of rent-seeking and solving adverse selection problems otherwise affecting audit practice. So long as auditor independence and management incentives respecting accounting treatments remain suspect, the US reporting system holds out no actor plausibly positioned …

Public Company Shareholders Acting As Owners: Three Reforms--Introducing The "Oversight Shareholder" (With E. Fogel & D. Addis), Edward C. Harris

All Faculty Scholarship

No abstract provided.

Is Securities Arbitration Fair To Investors?, Barbara Black

Faculty Articles and Other Publications

Most disputes between customers and their brokerage firms are resolved through arbitration as a result of the Supreme Court's holding in Shearson/American Express, Inc. v. McMahon. McMahon was part of two larger trends of the Supreme Court: the Court's general pro-arbitration trend and its efforts to remove private securities fraud claims from federal court. Many investor advocates viewed McMahon as anti-investor, a view that continues to have support today.

This is an assessment of the current securities arbitration process from the perspective of an investor advocate. In my view, investors may fare better in arbitration than in litigation. Accordingly, the …

Entering The U.S. Securities Markets: Regulation Of Non-U.S. Issuers, Barbara Black

Faculty Articles and Other Publications

The U.S. securities markets offer the greatest opportunities for businesses that wish to raise additional capital or expand their shareholder base. Large non-U.S. corporations regularly tap the U.S. market for infusions of capital, and the securities of many non-U.S. corporations are listed on the New York Stock Exchange or traded on NASDAQ. Smaller non-U.S. entities, however, may be deterred from entering the U.S. markets because of concerns about the burdens of U.S. securities regulation. These concerns are legitimate: a decision to enter the highly-regulated U.S. securities markets should not be made lightly. For non-U.S. private issuers, perhaps the greatest difficulty …

Telling All: The Sarbanes-Oxley Act And The Ideal Of Transparency, David A. Westbrook

Journal Articles

No abstract provided.

Legal And Ethical Duties Of Lawyers After Sarbanes-Oxley, Roger C. Cramton, George M. Cohen, Susan P. Koniak

Cornell Law Faculty Publications

No abstract provided.

Avoiding Regulatory Mismatch In The Workplace: An Informational Approach To Workplace Safety Regulation, Thom Lambert

Faculty Publications

The purpose of this article is to do just that. As it turns out, there is fertile middle ground between the pure libertarian “do nothing” approach and the paternalistic command-and-control approach OSHA tends to favor. Even the middle ground “information-provision” approach a number of theorists have advocated (in imprecise terms) could be implemented several different ways, some of which would be more effective than others. It is therefore possible to make some systematic policy prescriptions that may aid regulators attempting to avoid regulatory mismatch.In the course of exploring the range of regulatory options, this article attempts to make several contributions …

Experiments In Comparative Corporate Law: The Recent Italian Reform And The Dubious Virtues Of A Market For Rules In The Absence Of Effective Regulatory Competition, Marco Ventoruzzo

Journal Articles

The article addresses a sweeping Reform of corporate law which was enacted by the Italian government in 2003 and came into effect on January 1, 2004. The new statutory regulation significantly increases freedom of contract in corporate law, relying on the idea that the development of an efficient market for rules will allow the "natural selection" of the rules that better suit the need of the different stakeholders. Together - and to some extent to compensate for - this greater freedom of contract, new protections for minority shareholders have also been implemented. The reform also imports into the Italian legal …

Squeeze-Outs, Freeze-Outs And Discounts: Why Is Illinois In The Minority In Protecting Shareholder Interests?, Charles W. Murdock

Faculty Publications & Other Works

No abstract provided.

The Selection Of An Arbitrator: A Human Resource Management Perspective, Kenneth Anderson

Articles in Law Reviews & Other Academic Journals

No abstract provided.

Sec Enforcement Of Attorney Up-The-Ladder Reporting Rules: An Analysis Of Institutional Contraints, Norms, And Biases, Michael A. Perino

Faculty Publications

In their paper and in their earlier comments to the SEC on the proposed attorney reporting rules, Professors Cramton, Cohen and Koniak do an excellent job recounting the genesis of the attorney reporting requirements in the Sarbanes-Oxley Act, describing the SEC's proposed and final rules and critiquing the rule's triggering mechanism and now apparently shelved noisy withdrawal requirement. Their case study of the recent Spiegel, Inc. independent examiner's report is a particularly useful vehicle for examining the practical implications of the SEC's policy and drafting choices. Although I was a member of a committee that submitted comments opposed to noisy …

The New Look Of Shareholder Litigation: Acquisition-Oriented Class Actions, Randall Thomas, Robert B. Thompson

Vanderbilt Law School Faculty Publications

Shareholder litigation is the most frequently maligned legal check on managerial misconduct within corporations. Derivative lawsuits and federal securities class actions are portrayed as slackers in debates over how best to control the managerial agency costs created by the separation of ownership and control in the modern corporation. In each instance, early hopes these suits would effectively monitor managerial misconduct have been replaced with concerns about the size of the litigation agency costs of such representative litigation, which can arise when a self-selected plaintiff's attorney and her client that are appointed to pursue the claims of an entire class of …

The Quiet Transformation Of Corporate Law, Mark J. Loewenstein

Publications

No abstract provided.

The Public And Private Faces Of Derivative Lawsuits, Randall S. Thomas, Robert B. Thompson

Vanderbilt Law School Faculty Publications

Derivative suits, long the principal vehicle for discussions about representative litigation in corporate and securities law, now share the stage with younger cousins - securities fraud class actions and state law fiduciary duty class actions. At the same time alternative governance vehicles - independent directors, auditors and other reforms that have followed in the wake of Enron - potentially diminish the relative place of litigation such as derivative suits. This article presents data from all derivative suits filed in Delaware over a two-year period. We find a relatively small number, certainly as compared to fiduciary class action and securities fraud …

The Muddled Duty To Disclose Under Rule 10b-5, Donald C. Langevoort, G. Mitu Gulati

Faculty Scholarship

No abstract provided.

Be Careful What You Wish For: How Accountants And Congress Created The Problem Of Auditor Independence, Sean M. O'Connor

Articles

Although corporate fraud is not held in check by our current audit process, in which auditors lack independence from the clients they inspect, numerous attempts to fix this problem have failed. This Article analyzes the history of auditing, which has been neglected in legal scholarship, to argue that the mandatory audit system created the problem of auditor independence. Accountants advocated for the system in order to gain the status of a learned profession; however, they received more than they bargained for. In particular, auditors incurred an obligation to the "investing public," but this undefined group does not actually control the …

Pslra, Slusa, And Defrauded Retirement Investors: Overlooked Side Effects Of A Potent Legislative Medicine, Michael J. Borden

Law Faculty Articles and Essays

This Article highlights a harmful and far-reaching unintended consequence of two major pieces of securities litigation reform legislation that were passed as part of the Republican party's Contract with America in the mid-1990s. These reforms were justified, in part, on the grounds that they would benefit investors by improving disclosure of financial information by corporations. However, for many aggrieved investors, the effect of the legislation was just the opposite. Because of inadequate and misleading disclosures made by life insurance companies and their registered representatives, consumers were induced to purchase inappropriate investments carrying excessive fees that reduced the value of their …

Law's Signal: A Cueing Theory Of Law In Market Transition, Robert B. Ahdieh

Faculty Scholarship

Securities markets are commonly assumed to spring forth at the intersection of an adequate supply of, and a healthy demand for, investment capital. In recent years, however, seemingly failed market transitions - the failure of new markets to emerge and of existing markets to evolve - have called this assumption into question. From the developed economies of Germany and Japan to the developing countries of central and eastern Europe, securities markets have exhibited some inability to take root. The failure of U.S. securities markets, and particularly the New York Stock Exchange, to make greater use of computerized trading, communications, and …

Over-Preemption Of State Vacatur Law: State Courts And The Faa, Jill I. Gross

Elisabeth Haub School of Law Faculty Publications

This Article will examine the state courts' approach to FAA preemption on a vacatur motion since the most recent Supreme Court FAA preemption decisions. This Article will demonstrate that, with little or no analysis, state courts over-apply the FAA to commercial arbitration awards, particularly the "manifest disregard" prong, causing what I call "over-preemption" and frustrating their own state's interests in the application of its arbitration law. Part II of this Article will briefly review Supreme Court FAA preemption jurisprudence. Part III of this Article will use illustrative state court decisions to demonstrate that the state courts are applying FAA preemption …

Should Issuers Be On The Hook For Laddering? An Empirical Analysis Of The Ipo Market Manipulation Litigation, Adam C. Pritchard, Stephen J. Choi

Articles

On December 6, 2000, the Wall Street Journal ran a front-page story exposing abuses in the market for initial public offerings (IPOs). The story revealed "tie-in" agreements between investment banks and initial investors seeking to participate in "hot" offerings. Under those agreements, initial investors would commit to buy additional shares of the offering company's stock in secondary market trading in return for allocations of shares in the IPO. As the Wall Street Journal related, those "[c]ommitments to buy in the after-market lock in demand for additional stock at levels above the IPO price. As such, they provide the rocket fuel …

Was Arthur Andersen Different? An Empirical Examination Of Major Accounting Firm Audits Of Large Clients, Theodore Eisenberg, Jonathan R. Macey

Cornell Law Faculty Publications

Enron and other corporate financial scandals focused attention on the accounting industry in general and on Arthur Andersen in particular. Part of the policy response to Enron, the criminal prosecution of Andersen eliminated one of the few major audit firms capable of auditing many large public corporations. This article explores whether Andersen's performance, as measured by frequency of financial restatements, measurably differed from that of other large auditors. Financial restatements trigger significant negative market reactions and their frequency can be viewed as a measure of accounting performance. We analyze the financial restatement activity of approximately 1,000 large public firms from …

Sec Debarment Of Officers And Directors After Sarbanes-Oxley, Jayne W. Barnard

Faculty Publications

No abstract provided.

The New Federal Regulation Of Corporate Governance, Jill E. Fisch

All Faculty Scholarship

No abstract provided.