Law Commons^™

The Fragile Armistice: The Legal, Economic, And Policy Implications Of Trading In A Competitor's Stock, Karl T. Muth

Karl T Muth

This paper examines the legal and other implications when a corporation elects to use corporate treasury resources to trade in a competitor's stock, with a primary focus on short-selling of a direct competitor's stock and the reaction of markets, media, and stakeholders to this activity, as well as a discussion of the practice's relative rarity. Included are brief discussions of the history of securities law around short-selling, the legal landscape internationally, and the timeliness of this particular issue in the context of the market conditions of Q3/Q4-2008.

Failure's Futures: Controlling The Market For Information In Corporate Reorganization, Jonathan C. Lipson

Jonathan C. Lipson

This Article identifies and explores an important gap in bankruptcy theory and policy, with significant implications for the coming wave of major business failures: How to manage information about financially distressed businesses?

The paper makes three claims. First, Chapter 11 of the United States Bankruptcy Code plays a unique informational role, as it creates mechanisms to explain a debtor’s failure and to promote reinvestment. Second, the information functions performed by this system face internal and external threats. Internally, bankruptcy reorganization increasingly resembles an unregulated securities market, dominated by sophisticated, wealthy investors whose motives and strategies are often highly opaque. Their …