Law Commons^™

Spac Mergers, Ipos, And The Pslra's Safe Harbor: Unpacking Claims Of Regulatory Arbitrage, Amanda M. Rose

William & Mary Law Review

Communications in connection with an initial public offering (IPO) are excluded from the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 (PSLRA). Unsurprisingly, IPO issuers do not share projections publicly—the liability risk is too great. By contrast, communications in connection with a merger are not excluded from the safe harbor, and special purpose acquisition companies (SPACs) routinely share their merger targets’ projections publicly. Does the divergent application of the PSLRA’s safe harbor in traditional IPOs and SPAC mergers create an opportunity for “regulatory arbitrage” and, if so, what should be done about it? …

The Long Rise And Quick Fall Of Appraisal Arbitrage, Randall S. Thomas, Wei Jiang, Tao Li

Vanderbilt Law School Faculty Publications

Appraisal is a legislatively created right for shareholders to seek a judicial determination of the fair value of their stock in certain transactions. For many decades, appraisal was a little-used and frequently maligned corporate law remedy. Beginning at the turn of the twenty-first century, this all changed when a group of financial investors, including some hedge funds, began filing appraisal cases. Appraisal arbitrage, as it became known, grew rapidly in popularity.

Appraisal arbitrage's success soon attracted negative attention. In 2016, the Delaware legislature amended its appraisal statute to eliminate most small shareholders' appraisal rights and to permit companies to prepay …

Risk, Speculation, And Otc Derivatives: An Inaugural Essay For Convivium, Lynn A. Stout

Cornell Law Faculty Publications

Speculative trading, including speculative trading in derivatives, is often claimed to provide social benefits by decreasing risk and improving the accuracy of market prices. This assumption overlooks the possibility that speculation can be driven not just by differences in traders' risk aversion and information investments, but also by differences in traders' subjective expectations. Disagreement-based speculation erodes traders' returns, increases traders' risks, and can distort market prices. There is reason to believe that by 2008, the market for OTC derivatives may have been dominated by disagreement-based speculation that contributed to the Fall 2008 credit crisis.

Securities Price Risks And Financial Derivative Markets, Peter H. Huang

Publications

The financial and popular media report almost daily on the volatility of securities market prices. Yet, many people continue to buy securities to hedge against or speculate on certain risks. People can also buy or sell derivatives to hedge against or speculate on fluctuations in securities prices. This Article discusses three regulatory policy implications of utilizing derivatives markets to reallocate the bearing of securities price risks. First, if there are too few non-redundant derivative markets, a competitive market equilibrium allocation of securities price risks is typically constrained Pareto inefficient. This financial economic result means that for typical economies, a regulator …