Law Commons^™

A Curious Parental Right, Margaret Ryznar

SMU Law Review

The United States Supreme Court has not articulated the appropriate level of scrutiny for judicial review of interferences with the parents’ care, custody, and control of their children, despite determining it to be constitutionally fundamental. While some observers have called for the selection of a level of scrutiny to prevent inconsistencies among the lower courts, the complexity of the parental right has made it difficult for courts to use one level of scrutiny in such cases. To accommodate this complexity, this Article begins to build a new framework for conceptualizing the parental right in a way that explains and justifies …

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 …

Front Matter

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.

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 …

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.

Personal Benefit Has No Place In Misappropriation Tipping Cases, Merritt B. Fox, George N. Tepe

SMU Law Review

The Supreme Court’s decision in Salman v. United States left unanswered an important issue concerning the reach of Rule 10b-5’s prohibitions with respect to trades based on a tip of material inside information: in cases based on the misappropriation theory, is it necessary to show that the tipper enjoyed a personal benefit of which the trader was aware? The personal benefit test was originally developed in the context of tipping cases based on the classical theory of insider trading. The Supreme Court in Salman explicitly said that it was not reaching the matter of whether the test should be extended …

Front Matter

SMU Law Review

No abstract provided.

From Equality To Duty: On Altering The Reach, Impact, And Meaning Of The Texas Gulf Legacy, Lisa M. Fairfax

SMU Law Review

As the first federal court decision to hold that insider trading represented a violation of the federal securities laws, the historical importance of SEC v. Texas Gulf Sulphur Co. is clear. However, its current relevance may not be so clear. This is because while there are some aspects of Texas Gulf that have endured and remain a fixture of federal insider trading jurisprudence, the Supreme Court has firmly repudiated the normative rationale for in- sider trading articulated by Texas Gulf. This essay contends that this repudiation has important descriptive and normative implications. Perhaps most importantly, this essay contends that Texas …

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 …

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 …

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: …

Texas Gulf Sulphur: A Case Study On Responding To Market Rumors, Wendy G. Couture

SMU Law Review

This essay uses Texas Gulf Sulphur as a case study on an issue that companies continue to face today: whether, and how, to respond to market rumors. This essay analyzes the countervailing incentives that influence whether companies respond to market rumors, applies those pressures to the facts of Texas Gulf Sulphur, and concludes that counsel today would likely advise similarly situated companies to remain silent rather than respond to market rumors. Drawing therefrom, this essay argues that silence is not the socially optimal response and that the dueling pressures on companies should be adjusted to incentivize companies to respond to …

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 Law Review

No abstract provided.

Rico Run Amok, John K. Cornwell

SMU Law Review

In 1970, Congress enacted RICO to eradicate organized crime in America. To enlist the help of private citizens in this effort, the statute included civil provisions providing treble damages for plaintiffs who proved that they were injured by a pattern of racketeering activity. As the decades passed, civil RICO dramatically expanded its reach, addressing misconduct in a diverse array of contexts, including high-profile suits against the Clinton Foundation and Trump University. This Article examines this evolution, focusing on three factors that have figured prominently in civil RICO’s runaway growth: the broad interpretation of what constitutes a RICO “enterprise”; the flexibility …

Richard Posner: A Class Of One, Robert C. Farrell

SMU Law Review

Judge Richard Posner, best known for his contributions to the field of law and economics, has also made an outsized contribution to another area of the law—the equal protection class-of-one claim. By some combination of happenstance and design, Posner was able to shape the class-of-one doctrine even where his views were inconsistent with Supreme Court precedent. The Supreme Court’s initial exposition of the doctrine had identified an equal protection violation when there was intentionally different treatment of similarly situated persons without a rational basis for the difference in treatment. Posner insisted that this language included within it a requirement that …

Avoiding The Alien Tort Statute: A Call For Uniformity In State Court Human Rights Litigation, Alicia Pitts

SMU Law Review

For decades, the Alien Tort Statute (ATS) has played a valuable role in human rights litigation in U.S. courts. However, in recent years, the U.S. Supreme Court has limited the ATS’s effectiveness in a number of respects. In response to these decisions, many scholars have predicted that litigants will begin to evade the restrictive ATS jurisprudence by bringing traditional ATS cases in state courts. This comment reveals that this tactic has not become as prevalent as scholars predicted and evaluates the only two state court cases uncovered by the author’s research. This comment then explains why litigating would-be ATS cases …

The Icarus Syndrome: How Credit Rating Agencies Lost Their Quasi Immunity, Norbert Gaillard, Michael Waibel

SMU Law Review

Subsequent to the 2007–2008 subprime crisis, the SEC and the US Senate discovered that it was common practice for major credit rating agencies (CRAs) to produce inflated and inaccurate structured finance ratings. A host of explanations were posited on how this was able to happen from the “issuer pays” model of CRAs and conflicts of interest to underscoring the CRA’s regulatory license and their ensuing insulation from legal liability. Historically, credit ratings were akin to opinions. However, when courts started to consider structured finance ratings as commercial speech in the 2000s, CRAs became more vulnerable to litigation. This article studies …

Saving Grace: The Role Of Religious Organizations In Disaster Recovery And The Constitutionality Of Federal Funding To Rebuild Them, Cheslea Till

SMU Law Review

Natural disasters are on the rise and religious organizations, the same organizations that came to victims’ rescue in the wake of the last natural disaster, are often left in the path of destruction. Under President Trump’s administration, FEMA recently amended its disaster assistance program to provide funding for religious organizations. Opponents argue this amendment is a violation of the Establishment Clause, while proponents argue the amended plan finally gives religious organizations the fair treatment they deserve. This new aid program needs to be modified and restricted. Though there is clear precedent to support providing some Public Assistance funding to religious …

The Legacy Of Professor Joseph Webb Mcknight, Justice Nathan L. Hecht

SMU Law Review

No abstract provided.

A Library’S Legacy, Natalie Nanasi

SMU Law Review

No abstract provided.

The Changing Tides Of Adoption: Why Marriage, Race, And Family Identity Still Matter, Jessica Dixon Weaver

SMU Law Review

This essay expounds on the shifting motivation for adoption in the United States using a critical race feminist theory lens to explore how adoption remains wedded to marriage, the control of wealth, and family identity. These three elements have been historically and legally tied to race in that the law was intentionally written to exclude certain persons of color from being able to access marriage or wealth, thereby diminishing their ability to establish family identity.

This essay proceeds in three parts. Part II sets forth an overview of the evolution of adoption by exploring the breakdown of formal adoption and …

Shades Of Theology In Suits Affecting The Parent-Child Relationship: A Tribute Honoring The Memory Of Professor Joseph W. Mcknight, Dr. Beverly Caro Dureus

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.

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 …

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 …

Foreword: Tribute To Professor Joseph Webb Mcknight, Jennifer M. Collins

SMU Law Review

No abstract provided.