Law Commons^™

A Look Back At The Future Of Ucc Damages Remedies, Roy Ryden Anderson

SMU Law Review

Article Two of the Uniform Commercial Code stands today as a living testament to Karl Llewellyn and the many other brilliant and dedicated lawyers from well over a half century ago who participated actively in its drafting. Of the Code’s several articles, Article Two is particularly noteworthy because it alone has survived to the present day without significant substantive amendment. That longevity is most remarkable given the ensuing fifty plus years of expanded knowledge, technological advance, and innovative changes in fundamental business practice that have occurred in our ever-evolving economy. At its inception, much of Article Two represented novel departure …

Quarantine And The Federal Role In Epidemics, Michael R. Ulrich, Wendy K. Mariner

SMU Law Review

Every recent presidential administration has faced an infectious disease threat, and this trend is certain to continue. The states have primary responsibility for protecting the public’s health under their police powers, but modern travel makes diseases almost impossible to contain intrastate. How should the federal government respond in the future? The Ebola scare in the U.S. repeated a typical response—demands for quarantine. In January 2017, the Department of Health and Human Services and the Centers for Disease Control and Prevention issued final regulations on its authority to issue Federal Quarantine Orders. These regulations rely heavily on confining persons who may …

Panel Effects In Administrative Law: A Study Of Rules, Standards, And Judicial Whistleblowing, Morgan Hazelton, Kristin E. Hickman, Emerson Tiller

SMU Law Review

In this article, we consider whether “panel effects”—that is, the condition where the presence, or expected voting behavior, of one judge on a judicial panel influences the way another judge, or set of judges, on the same panel votes—varies depending upon the form of the legal doctrine. In particular, we ask whether the hand of an ideological minority appellate judge (that is, a Democrat-appointed judge with two Republican appointees or a Republican-appointed judge with two Democrat appointees) is strengthened by the existence of a legal doctrine packaged in the form of a rule rather than a standard. Specifically, we unbundle …

What’S In A Name?: Proving Actual Damages For Reputational Harm In Texas Defamation Cases Will Only Get Harder, Austin Brakebill

SMU Law Review

No abstract provided.

First Amendment Electronic Speech: Ex Parte Reece, A Missed Opportunity To Narrow Texas’S Unconstitutionally Overbroad Anti-Harassment Statute, Brian Long

SMU Law Review

No abstract provided.

Second Amendment: D.C. Circuit Court Creates Split On The Constitutionality Of Good-Reason Laws, Madeleine Giese

SMU Law Review

No abstract provided.

Cancelled Credit Cards: Substantial Risk Of Future Injury As A Basis For Standing In Data Breach Cases, Jennifer Wilt

SMU Law Review

No abstract provided.

Front Matter

SMU Law Review

No abstract provided.

Equal Access To Information: The Fraud At The Heart Of Texas Gulf Sulphur, Stephen M. Bainbridge

SMU Law Review

The Texas Gulf Sulphur decision was the seminal moment in the creation of the modern federal insider trading prohibition. In the half century since it was decided, however, courts and commentators have overlooked the glaring flaw in the court’s analysis.

In the key part of the opinion, in which the court laid out the equal access standard, the court grossly misrepresented the precedents on which it relied. The court cited two state law opinions that were wholly irrelevant to the problem at hand. It cited two law review articles, but those articles sim- ply do not say what the court …

Seeking An Objective For Regulating Insider Trading Through Texas Gulf Sulphur, James D. Cox

SMU Law Review

Data summarized in the opening of this article document shows that in- side trading is a growth industry. And, as deals get ever bigger, the growth curve becomes steeper as more the data confirms intuition that the more who know about a good thing the more who will seek to harvest its bene- fits. Even though insider trading appears to have thrived during the fifty years after Texas Gulf Sulphur, we gather in this symposium to celebrate the decision. But why? As developed below, the Second Circuit’s landmark decision gave way to the Supreme Court’s erection of a fiduciary frame- …

Texas Gulf Sulphur And Information Disclosure Policy, Onnig H. Dombalagian

SMU Law Review

Texas Gulf Sulphur’s bold ultimatum—"disclose or abstain”— enjoys an enduring place of prominence in discussions of insider trading law be- cause of the intuitive simplicity with which it asserts the expectations of investors in securities markets. As the law of information dissemination has developed into a distinct subset of federal securities law over the past fifty years, however, it is equally important to reflect on how the Texas Gulf Sulphur opinion has shaped the views of courts and regulators in crafting rules and guidelines for information disclosure. Indeed, Texas Gulf Sulphur anticipated—and continues to inform—contemporary debates relating to the dissemination …

Constructive Ambiguity And Judicial Development Of Insider Trading, Jill E. Fisch

SMU Law Review

The Texas Gulf Sulphur decision began what has become a fifty-year project of developing U.S. insider trading regulation through judicial law- making. During the course of that project, the courts developed a complex, fraud-based approach to determining the scope of liability. The approach has led, in many cases, to doctrinal uncertainty, a result that is reflected in the recent decisions in Newman, Salman, and Martoma.

In the face of this uncertainty, many commentators have called for a legislative solution. This article argues, however, that the true challenge of insider trading regulation is a lack of consensus about the appropriate scope …

Insider Trading, Tamar Frankel

SMU Law Review

This article focuses on the nature and position of corporate insiders. The discussion leads to a suggestion that one punishment of insiders who misappropriated what is not theirs—the information—is to disqualify them for a position of corporate power.

Will Fifty Years Of The Sec’S Disgorgement Remedy Be Abolished?, Roberta S. Karmel

SMU Law Review

SEC v. Texas Gulf Sulphur was the first case holding that equitable relief, and specifically disgorgement, can be obtained by the SEC in a federal court action for an injunction against insider trading. Such ancillary equitable relief has been obtained in numerous cases during the fifty years since Texas Gulf was decided. But, the continued availability of the remedy of disgorgement has been thrown into question by the recent Supreme Court case of Kokesh v. SEC, in which the Supreme Court held disgorgement to be a penalty for purposes of the federal statute of limitations. The Court identified, but …

From Texas Gulf Sulphur To Laudato Si’: Mining Equitable Principles From Insider Trading Law, Michael J. Kaufman

SMU Law Review

In SEC v. Texas Gulf Sulphur, the Second Circuit declared that all investors trading on impersonal exchanges should have equal access to material information, and therefore anyone who possesses material inside information must either turn it over to the investing public or not trade. The broad reach of that insider trading prohibition sent shock waves throughout the financial markets and encountered significant judicial resistance from the Supreme Court.

Although the Supreme Court initially rejected the insider trading prohibition announced in Texas Gulf Sulphur, the fundamental equitable trading principles underlying that decision have endured. This article shows that TGS was …

Thinking Fast And Slow About The Concept Of Materiality, Mark J. Loewenstein

SMU Law Review

Determining whether, for securities law purposes, a misrepresentation or omission is material raises interesting questions. The Court of Appeals in SEC v. Texas Gulf Sulphur Co. provided some guidance on materiality, and the U.S. Supreme Court has weighed in several times in the past 50 years. This article first discusses what Texas Gulf Sulphur contributed to the doctrine of materiality, then briefly considers other dimensions of the doctrine, and finally moves to its thesis: The doctrine of materiality should take into account important psychological insights and heuristics that may affect the way that a fact finder decides whether a misrepresentation …

From Texas Gulf Sulphur To Chiarella: A Tale Of Two Duties, Donald C. Langevoort

SMU Law Review

This short essay tells the story of two distinct journeys begun in SEC v. Texas Gulf Sulphur—one dealing with insider trading, the other with corporate liability for false corporate publicity. The first involves the “equal access” principle planted therein and then harshly discarded by the Supreme Court twelve years later in Chiarella v. United States. My claim is that marketplace egalitarianism never had much traction in the period from TGS to Chiarella, and was largely dead by the time the Court officially extinguished it. By that time, it played mainly a boogeyman role. The second journey had a different fate: …

Martoma And Newman: Valid Corporate Purpose And The Personal Benefit Test, Jonathan R. Macey

SMU Law Review

The law of insider trading in the United States is fundamentally grounded on a theory of property rights in information. Those to whom property rights in information have been allocated may trade without violating the prohibitions on trading contained in § 10(b) of the Securities Ex- change Act. Similarly, those who use material, nonpublic information for a valid corporate purpose have not violated the law. On the other hand, those who pilfer for personal gain material inside information belonging to a corporation do so at their legal peril. Those with property rights in inside information may authorize others to trade …

Taming Rule 10b-5-1: The Unfinished Business Of Texas Gulf Sulphur, Daniel J. Morrissey

SMU Law Review

Insider trading has shaped both the evolution of the Securities Exchange Commission (SEC) and the current state of securities law. The injustice of insider trading, especially as felt by everyday shareholders and investors, mandated action by government regulators. Consequently, the SEC enacted Rule 10b-5—a prohibition and prosecution on any corporate officials’ use of material, non-public information for private profit. In SEC v. Texas Gulf Sulphur Co., Rule 10b-5 grew into the sanction on insider trading that it is known as today. As case law whet Rule 10b-5’s reach on in- sider trading, corporate executives became increasingly concerned that necessary business …

Texas Gulf Sulphur And The Genesis Of Corporate Liability Under Rule 10b-5, Adam C. Pritchard, Robert Thompson

SMU Law Review

This Essay explores the seminal role played by SEC v. Texas Gulf Sulphur Co. in establishing Rule 10b-5’s use to create a remedy against corporations for misstatements made by their officers. The question of the corporation’s liability for private damages loomed large for the Second Circuit judges in Texas Gulf Sulphur, even though that question was not directly at issue in an SEC action for injunctive relief. The judges considered both, construing narrowly “in connection with the purchase or sale of any security,” and the requisite state of mind required for violating Rule 10b-5. We explore the choices of the …

The Statutory Authority For Court-Ordered Disgorgement In Sec Enforcement Actions, Donna M. Nagy

SMU Law Review

What empowers the U.S. Securities and Exchange Commission to seek, and federal district courts to order, the disgorgement of ill-gotten gains from securities law violators? The short answer, which stood virtually un- challenged for nearly forty-six years, is that federal courts may award disgorgement, at the request of the SEC, pursuant to the broad equitable powers that Congress conferred in the jurisdictional provisions of the federal securities laws. During the 2017 oral argument in Kokesh v. SEC, however, five Justices of the U.S. Supreme Court interjected statements ex- pressing varying degrees of skepticism. The tenor of the questions during …

A Birthday Toast To Texas Gulf Sulphur, Manning G. Warren Iii

SMU Law Review

This article commemorates the fiftieth anniversary of the Second Circuit’s Texas Gulf Sulphur decision by examining the impact of the case on insider trading law in the United States. The author begins by discussing the SEC’s opinion, In the Matter of Cady, Roberts & Co., which laid the foundation for the Texas Gulf Sulphur decision by creating a federal duty to disclose material nonpublic information or abstain from trading securities. The author then posits that the SEC, in its Cady, Roberts decision, rejected judicially developed common law fiduciary duty to disclose based on trust and confidence, and, by administrative fiat, …

Disgorgement In Insider Trading Cases: Fy2005-Fy2015, Verity Winship

SMU Law Review

For about 50 years—at least since Texas Gulf Sulphur—the SEC has ordered defendants to disgorge their profits from transactions that violated the securities laws. Despite disgorgement’s long history, in its 2017 opinion in Kokesh v. SEC, the U.S. Supreme Court put two aspects of the remedy on the table. It applied a five-year statute of limitations to disgorgement. It also reopened old questions about agencies’ power to seek remedies not specified in statute. This article provides data to inform these debates over the agency’s use of disgorgement and the effects of Kokesh. It reports the results of an empirical study …

Front Matter

SMU Science and Technology Law Review

No abstract provided.

Gaming The Law: Adolescents And The Harmful Digital Communication Act—Employing An Educational Approach, Nachshon Goltz, Giulia Dondoli

SMU Science and Technology Law Review

In 2015, the Parliament of New Zealand enacted the Harmful Digital Communication Act (HDCA) with the aim of eliminating harm caused by digital communications. After a year of HDCA’s partial enforcement, a relatively large number of cases under Section 22, which concerns harm caused by posting digital communication, have been filed. Under this section, anyone over the age of fourteen can potentially face sanctions, and the first person to be convicted under the Act was an eighteen-year-old. This article highlights the legal rights and obligations that adolescents need be aware of. It also presents an online game, “Privacy Games” at …

Predatory Innovation: The Definite Need For Legal Recognition, Thibault Schrepel

SMU Science and Technology Law Review

No abstract provided.

Scraping The Bottom Of The Barrel: Why It Is No Surprise That Data Scrapers Can Have Access To Public Profiles On Linkedin, Marissa Boulanger

SMU Science and Technology Law Review

No abstract provided.

Germline Editing: Two Steps Forward, One Step Back?, Kristina Smith

SMU Science and Technology Law Review

No abstract provided.

(Im)Perfect Regulation: Virtual Currency And Other Digital Assets As Collateral, Kristin Johnson, Sarah E. Hsu Wilbur, Stanley Sater

SMU Science and Technology Law Review

No abstract provided.

Lessons From Case Study Of Secured Transactions With Bitcoin, Xuan-Thao Nguyen

SMU Science and Technology Law Review

No abstract provided.