Law Commons^™

Regulating Dynamic Risk In Changing Market Conditions, Susan Navarro Smelcer, Anne Tucker, Yusen Xia

William & Mary Business Law Review

How successful are the SEC's attempts to regulate dynamic risk in financial markets? Using mutual fund disclosure data from two financial shocks--the Puerto Rican debt crisis and COVID-19--this Article finds evidence that SEC open-ended regulations, like the obligation to disclose changing market conditions, are largely successful in capturing dynamic, future risk. Funds engage in widespread and, often, detailed disclosures for new risks--although these disclosures vary widely in specificity. But not all funds disclose new risks. This creates perverse incentives for funds to opt out of disclosure or downplay threats with boilerplate language when new risks are emerging. This Article recommends …

Why Comparability Is A Greater Problem Than Greenwashing In Esg Etfs, Ryan Clements

William & Mary Business Law Review

This Article argues that comparability in environmental, social, and governance (ESG) exchange traded funds (ETFs) is a much greater problem than greenwashing. Rising demand for sustainable investment products in recent years has been met with an explosion in ESG ETF varieties, and numerous ESG-themed funds have captured massive capital inflows. There is little evidence, however, that deceptive “greenwashing” is widespread in ETFs. ETF issuers face significant reputational costs from such behavior, and there are effectively no consumer switching costs for hyperliquid, easily accessible ETFs. While nondeceptive practices of asset managers are observable in the zero-sum, highly competitive, asset management game …

What Exactly Is Market Integrity? An Analysis Of One Of The Core Objectives Of Securities Regulation, Janet Austin

William & Mary Business Law Review

One of the main objectives of securities regulation around the world is to protect the integrity or fairness of the markets. This, together with protecting investors, improving the efficiency of markets, and protecting the markets from systemic risk, form the four fundamental goals of securities regulation.

However, what exactly is envisaged by this concept of market integrity or fairness? Are these simply norms of behaviour incapable of further definition? Despite their importance, relatively little attention has been given to these concepts in the literature. Do they, for example, require securities regulators to just work towards eliminating dishonest trading practices such …

Why Now Is The Time To Statutorily Ban Insider Trading Under The Equality Of Access Theory, Bruce W. Klaw

William & Mary Business Law Review

This Article makes the case for a new U.S. statutory provision that defines and prohibits insider trading under an “equality of access” theory. It supports this claim, and contributes to the important public dialogue concerning this prevalent practice, by highlighting the moral and legal gaps in existing U.S. law that result from understanding the harms of trading on the basis of material nonpublic information solely with reference to fiduciary breach or misappropriation, as evidenced by the recent cases of United States v. Newman and United States v. Salman. It weaves legal analysis together with current literature in business ethics, moral …

Better Go It Alone: An Extension Of Fiduciary Duties For Investment Fund Managers In Securities Class Action Opt-Outs, Brian J. Shea

William & Mary Business Law Review

Securities class actions provide a vehicle for plaintiffs to recover billions of dollars in settlement awards. Given the prevalence of institutional investors in the market for publicly traded securities, it is no surprise that large investment funds are often implicated as lead plaintiffs in securities class actions. Despite having recoverable claims in many of these settlements, these investment funds often fail to participate in the action on behalf of their beneficiaries (their investors). Some scholars argue that fund managers have a fiduciary obligation to participate in claim filing and monitoring processes in an effort to recover settlement awards and to …

Superior Supererogation: Why Credit Default Swaps Are Securities Under The Investment Advisers Act Of 1940, J. Tyler Kirk

William & Mary Business Law Review

No abstract provided.

Taking Stock: Insider And Outsider Trading By Congress, Jeanne L. Schroeder

William & Mary Business Law Review

Spring 2012 saw the enactment of the “Stop Trading on Congressional Knowledge Act of 2012” or “STOCK Act.” It supposedly repealed an exemption from the federal securities laws that made insider trading by members of Congress “totally legal.” As every securities lawyer knows, however, there never was such an exemption. Representatives and Senators have always been subject to the same rules as the rest of us. It is just that insider-trading law is so incoherent that legal scholars sharply disagreed as to when, or even if, trading by government officials on the basis of material nonpublic information gleaned from their …

The Howey Test Turns 64: Are The Courts Grading This Test On A Curve?, Miriam R. Albert

William & Mary Business Law Review

Sixty-four years ago, the Supreme Court decided SEC v. W.J. Howey, crafting a definition for one form of security, known as an investment contract. The Supreme Court’s definition of investment contract in Howey is flexible, consistent with the Congressional approach to defining the broader concept of what constitutes a security. This choice of adopting a flexible definition for investment contract is not without cost, and raises the specter of inconsistent interpretation and/or application by the lower courts that threatens to undermine the utility of the Howey test itself as a trigger for investor protection. The intentional breadth and adaptability of …

Removal Of Covered Class Actions Under Slusa: The Failure Of Plain Meaning And Legislative Intent As Interpretative Devices, And The Supreme Court's Decisive Solution, J. Tyler Butts

William & Mary Business Law Review

No abstract provided.