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Columbia Law School

2009

Columbia Law Review

Civil Law

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Full-Text Articles in Law

Civil Liability And Mandatory Disclosure, Merritt B. Fox Jan 2009

Civil Liability And Mandatory Disclosure, Merritt B. Fox

Faculty Scholarship

This Article explores the efficient design of civil liability for mandatory securities disclosure violations by established issuers. An issuer not publicly offering securities at the time of a violation should have no liability. Its annual filings should be signed by an external certifier – an investment bank or other well-capitalized entity with financial expertise. If the filing contains a material misstatement and the certifier fails to do due diligence, the certifier should face measured liability. Officers and directors should face similar liability, capped relative to their compensation but with no indemnification or insurance allowed. Damages should be payable to the issuer ...