Law Commons^™

More Muscle Behind Regulation Sho? Short Selling And The Regulation Of Stock Borrowing Programs, Douglas M. Branson

douglas m branson

Since at least 2004, with the adoption of Regulation SHO, the SEC has waged a campaign against naked short selling and the stock price manipulation that often accompanies it. They have also proposed sales price restrictions (uptick rules), or circuit breakers to dampen down the market volatility associated with the unprecedented levels of short selling we have seen in the past year. This article outlines some of those regulatory efforts and their effects, concluding with a recommendation of one additional regulation designed to hold short sellers to adherence with Regulation SHO.

Treasury Inc. : How The Bailout Redefines Corporate Theory & Practice, J.W. Verret

John W Verret

Corporate law theory and practice considers shareholder relations with companies and the implications of ownership separated from control. Yet through the TARP bailout and the government's resultant shareholding, ownership and control at many companies has merged, leaving corporate theory and practice for the financial and automotive sectors in chaos. The government's $700 billion bailout is a unique historical event; not merely because of its size, but because of a resulting ripple through corporate scholarship and practice. This article builds on the author's four testimonies before Congress during the financial crisis and implementation of the TARP bailout and his consultation for …

Protecting Foreign Investors From International Securities Fraud, Derek N. White

Derek N White

This article discusses the subject matter jurisdiction of national courts in a little-known type of international securities cause of action that has vexed courts of the developed world. The cause of action is labeled the “foreign-cubed class action”, which is brought when a dispute arises regarding purported improprieties in an international securities transaction that contains foreign investors who purchase securities of foreign issuers on foreign stock exchanges. Notice the three “foreign” elements of the transaction ("foreign" meaning foreign to the court presiding over the action).

The number of foreign-cubed class actions brought in U.S. courts has risen sharply over the …

Rough Waters For The Ratings Companies: Should The Securities Ratings Companies Be Held Liable For Investor Reliance In The Wake Of The Real Estate Meltdown Of 2007-2008?, Kristofor W. Nelson

University of Miami Law Review

No abstract provided.

The Ratings Game: Explaining Rating Agency Failures In The Build Up To The Financial Crisis, Kia Dennis

University of Miami Law Review

No abstract provided.

The Milgram Universe Of Credit Derivatives: A Regulatory Proposal, Grace Chong

Grace Chong

Much work in social psychology suggests that in compressed and interactively complex systems, subjects surrender responsibility for their actions in full faith of the system. The leading experiment on obedience, the Milgram experiment, was originally devised by Stanley Milgram to test the willingness of subjects to comply with acts against their conscience under the instruction of authority. However, his later findings, and further research by other academics have expanded the scope of his previous conception of ‘authority’ to hospital studies , aviation , and business contexts. No research has yet been conducted as to the relation between Milgram’s theory and …

Nibbling At The Edges - Regulation Of Short Selling: Stock Borrowing And Restoration Of An Uptick Rule, Douglas M. Branson

douglas m branson

No abstract provided.

Federally-Insured Money Market Funds And Narrow Banks: The Path Of Least Insurance, Mercer E. Bullard

Mercer E Bullard

In September 2008, the Treasury created a temporary insurance program for money market funds (“MMFs”), which had never previously been covered by government insurance. This essay argues that this program should be made permanent. To the extent that deposit insurance is intended to protect cash accounts that provide a stable foundation for our payments system, similar insurance should be made available to MMFs, which serve this function while presenting less risk than bank deposits. The argument that only bank accounts should be insured because the liquidity they create for long-term ventures otherwise would dry up might once have made sense, …

Star Creation: The Manipulation Of Mutual Fund Performance Through Incubation, Ahmed E. Taha, Alan R. Palmiter

Ahmed E Taha

This article reveals how mutual fund companies mislead investors by marketing new funds with artificially high returns. Fund companies create a number of small, new funds (“incubator funds”) that initially operate out of public view. After a period of incubation, the strong performers are actively marketed to the public while the weak performers are quietly terminated. By highlighting the successful incubator funds and hiding the unsuccessful ones, funds companies create the illusion that that the successful funds’ returns were the result of skill rather than luck. In addition, fund companies often subsidize their incubator funds to further artificially boost their …

Choice Of Forum In Securities Litigation: Confronting The Aftermath Of Congressional Reform Of The Securities Act Of 1933, Matthew O'Brien

Matthew O'Brien

The article addresses the wave of federal legislative reform since the mid-1990s aimed at reducing forum shopping by plaintiffs in securities class actions. In particular, the article examines the direct conflict between section 22(a) of the Securities Act of 1933 (“1933 Act”), which prohibits defendants from removing 1933 Act cases from state court to federal court, and the Class Action Fairness Act of 2005 (“CAFA”), which permits removal of high-dollar class actions involving diverse parties.

The article shows how this statutory conflict has produced a recent split between the Seventh and Ninth Circuit Courts of Appeals. In July 2008, the …

Securities And Commerical Law Research, Adeen Postar

Way2Search! Topical Instruction Series

No abstract provided.

Warming Up To Climate Change Risk Disclosure, Jeffrey M. Mcfarland

Jeffrey M McFarland

No abstract provided.

L3cs: The Next Big Wave In Socially Responsible Investing Or Just Simply Too Good To Be True?, David J. Schwister

David J Schwister

This article pertains to the growing popularity of Low-Profit, Limited Liability Companies (L3Cs). It includes a discussion of the potential pitfalls involved in the adoption of this organizational structure. Part I of this Article introduces a timely example that illustrates how L3Cs are gaining steam across the U.S. Part II of this Article provides a history of the L3C movement. In addition, Part II offers a look at the current legal landscape of L3Cs on a federal and state level. Part III offers a glimpse into possible problems that L3Cs may run into including registration as well as disclosure requirements …

Stoneridge Investment Partners, Llc V. Scientific-Atlanta, Inc.: Substitution Of Congressional Intent With Caveat Emptor, Albert J. Matricciani Jr.

Journal of Business & Technology Law

No abstract provided.

Meet Two-Face: The Dualististic Rule 10b-5 And The Quandry Of Offsetting Losses By Gains, Samuel Francis

Fordham Law Review

The challenge of calculating damages in securities litigation is often compounded by the phenomenon of investors that have accrued both gains and losses as a result of the defendant company’s same fraudulent misrepresentations. This Note traces the opposing damages approaches and accounting methods courts have adopted in these instances to the dual origins and objectives of the Rule 10b-5 private right of action. Underscoring the shortcomings in these damages calculations founded predominantly upon either deterrent or compensatory grounds, this Note instead strives for a measure that not only balances both imperative ends but also yields a more sensible and equitable …

Securities Class Actions, Cafa And A Countrywide Crisis: A Call For Clarity And Consistency, Denise Mazzeo

Fordham Law Review

The unfolding of the credit crisis raises novel issues in securities litigation. This Note explores the conflict between the nonremoval provision of the Securities Act of 1933 (’33 Act) and the removal provisions of the Class Action Fairness Act of 2005 (CAFA), and their interplay in the context of class actions involving mortgage-backed securities. Circuits are currently split over whether or not such class actions are removable under CAFA. The Seventh Circuit and the Southern District of New York have held that class actions asserting only ’33 Act claims are removable under CAFA unless they fall within one of CAFA’s …

Proving Preemption By Proving Exemption: The Quandary Of The National Securities Market Improvement Act, Jeffrey D. Chadwick

University of Richmond Law Review

No abstract provided.

Stoneridge Investment Partners, Llc V. Scientific-Atlanta, Inc.: Views From The Academy, The Bar, And The Bench. Introduction

Journal of Business & Technology Law

No abstract provided.

The Future Of Securities Litigation, Richard A. Booth

Journal of Business & Technology Law

No abstract provided.

The Diminishing Role Of The Private Attorney General In Antitrust And Securities Class Action Cases Aided By The Supreme Court, Carl W. Hittinger, Jarod M. Bona

Journal of Business & Technology Law

No abstract provided.

Storetrax.Com, Inc. V. Gurland: An Unnecessarily Broad Rule That Could Adversely Affect A Corporation's Shareholders, Julie M. Dietrick

Journal of Business & Technology Law

No abstract provided.

Do Differences In Pleadings Standards Cause Forum Shopping In Securities Class Actions?: Doctrinal And Empirical Analyses, James D. Cox, Randall S. Thomas, Lin (Lynn) Bai

Faculty Articles and Other Publications

Federal appellate courts have promulgated divergent legal standards for pleading fraud in securities fraud class actions after the Private Securities Litigation Reform Act (PSLRA). Recently, the Supreme Court of the United States issued a decision in Tellabs, Inc. v. Makor Issues & Rights, Ltd. that could have resolved these differences, but did not do so. This Paper provides two significant contributions. We first show that Tellabs avoids deciding the hard issues that confront courts and litigants daily in the wake of the PSLRA's heightened pleading standard. As a consequence, the opinion keeps very much alive the circuits' disparate interpretations of …

Reinventing The Sec By Staring Into Its Past, James D. Cox

Faculty Scholarship

No abstract provided.

Those Who Forget The Regulatory Successes Of The Past Are Condemned To Failure, William K. Black

Faculty Works

This paper shows that the reregulation of the savings & loan (S&L) industry was successful because the regulators correctly identified the primary cause of the second phase of the debacle as an epidemic of “accounting control fraud” and took effective measures to contain such frauds. Control frauds occur when the persons controlling a seemingly legitimate organization use it as a “weapon” to defraud. In the financial sector, accounting control fraud is the “weapon of choice.” The regulators’ primary insights were (1) that lenders optimize accounting fraud by engaging in a distinctive operational pattern that would be irrational for any honest …

Do Differences In Pleading Standards Cause Forum Shopping In Securities Class Actions?: Doctrinal And Empirical Analyses, Randall Thomas, James D. Cox, Lynn Bai

Vanderbilt Law School Faculty Publications

Federal appellate courts have promulgated divergent legal standards for pleading fraud in securities fraud class actions after the Private Securities Litigation Reform Act (PSLRA). Recently, the U.S. Supreme Court issued a decision in Tellabs v. Makor Issues & Rights that could have resolved these differences, but did not do so. This article provides two significant contributions. We first show that Tellabs avoids deciding the hard issues that confront courts and litigants daily in the wake of the PSLRA's heightened pleading standard. As a consequence, the opinion keeps very much alive the circuits' disparate interpretations of the PSLRA's fraud pleading standard. …

Teamsters Local 445 Freight Division Pension Fund V. Dynex Capital Inc., Erica E. Bonnett

NYLS Law Review

No abstract provided.

Hall Street Blues: The Uncertain Future Of Manifest Disregard, Jill I. Gross

Elisabeth Haub School of Law Faculty Publications

In 2008, in Hall Street Assocs. v. Mattel, Inc., the Supreme Court resolved a then-existing split in the federal circuits and held that parties cannot contractually expand the grounds for judicial review of an arbitration award when invoking the Federal Arbitration Act's vacatur provisions, elevating the finality of arbitration over the parties’ freedom of contract. The Hall Street decision necessarily impacted subsequent jurisprudence regarding parties’ motions to vacate arbitration awards. While the opinion clearly and explicitly barred further contractual expansion of grounds for review, it also avoided and thus left unresolved the issue of whether it would endorse or reject …

Securities Law And Antitrust Law: Two Legal Titans Clash Before The United States Supreme Court In Credit Suisse Securities V. Billing, Stacey Sheely Chubbuck

Oklahoma Law Review

No abstract provided.

Burying The Constitution Under A Tarp, Gary S. Lawson

Faculty Scholarship

The Emergency Economic Stabilization Act of 2008, a.k.a. 'the bank bailout bill,' engendered a fair degree of political controversy during and after its enactment but relatively little constitutional controversy. That is unfortunate, and at least a bit puzzling, because, as a matter of original meaning, the statute raises important constitutional questions along at least four dimensions: it is questionable whether Congress had theenumerated power to authorize the Treasury Department to purchase securities, the specific authorizations were sufficiently vague to raise serious questions under the nondelegation doctrine, the expansion of thepowers of the Secretary of the Treasury under the statute make …

Female Investors And Securities Fraud: Is The Reasonable Investor A Woman?, Joan Macleod Heminway

Scholarly Works

This paper extends existing scholarship that questions the existing materiality standard used under Rule 10b-5 (and elsewhere in U.S. securities regulation) and its touchstone notion of the reasonable investor. Specifically, the paper asks and answers a seemingly straightforward, yet provocative, question: Is the reasonable investor a woman? The paper then preliminarily explores the potential significance of its key findings - that women and men exhibit different investment behaviors and achieve different investment outcomes, and that the resulting female investor profile is closer to existing conceptions of the reasonable investor than the resulting male investor profile.

As women become larger players …