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Full-Text Articles in Law
Third-Party Institutional Proxy Advisors: Conflicts Of Interest And Roads To Reform, Matthew Fagan
Third-Party Institutional Proxy Advisors: Conflicts Of Interest And Roads To Reform, Matthew Fagan
University of Michigan Journal of Law Reform
With the rise of institutional activist investors in recent decades—including a purported 495 activist campaigns against U.S. corporations in 2016 alone—the role that third-party institutional proxy advisors play in corporate governance has greatly increased. The United States Office of Government Accountability estimates that clients of the top five proxy advisory firms account for about $41.5 trillion in equity throughout the world. For several years, discussions have developed regarding conflicts of interest faced by proxy advisors. For example, Institutional Shareholder Services, the top proxy advisory firm in the world, frequently provides advice to institutional investors on how to vote proxies while …
Reconciling Tax Law And Securities Regulation, Omri Marian
Reconciling Tax Law And Securities Regulation, Omri Marian
University of Michigan Journal of Law Reform
Issuers in registered securities offerings must disclose the expected tax consequences to investors investing in the offered securities (“nonfinancial tax disclosure”). This Article advances three arguments regarding nonfinancial tax disclosures. First, nonfinancial tax disclosure practice, as the Securities and Exchange Commission (the SEC) has sanctioned it, does not fulfill its intended regulatory purposes. Currently, nonfinancial tax disclosures provide irrelevant information, sometimes fail to provide material information, create unnecessary transaction costs, and divert valuable administrative resources to the enforcement of largely-meaningless requirements. Second, the practical reason for this failure is the SEC and tax practitioners’ unsuccessful attempt to address investors’ heterogeneous …
The Future Of Securities Class Actions Against Foreign Companies: China And Comity Concerns, Dana M. Muir, Junhai Liu, Haiyan Xu
The Future Of Securities Class Actions Against Foreign Companies: China And Comity Concerns, Dana M. Muir, Junhai Liu, Haiyan Xu
University of Michigan Journal of Law Reform
In Morrison v. National Australia Bank Ltd., the U.S. Supreme Court limited the application of U.S. securities fraud law in transnational situations. The Supreme Court noted that its decision was influenced by international comity considerations. In this Article, we evaluate the availability of class actions in China in cases involving alleged securities fraud. Because we find that the availability of those actions is too limited to fully protect U.S. shareholders, we argue that U.S. investors should be permitted to bring securities fraud class actions against non-U.S. companies whose securities are traded on a U.S. exchange regardless of where those investors …
Give Smaller Companies A Choice: Solving Sarbanes-Oxley Section 404 Inefficiency, Paul P. Arnold
Give Smaller Companies A Choice: Solving Sarbanes-Oxley Section 404 Inefficiency, Paul P. Arnold
University of Michigan Journal of Law Reform
This Note argues that smaller public companies should have the option to opt out of Section 404 of the Sarbanes-Oxley Act of 2002. Optional compliance is economically preferable to the current approach of mandatory compliance. Companies that choose to comply with Section 404 will send a signal to the financial markets that their internal controls meet the high standards Section 404 demands, and investors will reward such companies if they actually value the benefit of that company's additional controls. Similarly, companies that benefit less from additional internal accounting will be able to avoid Section 404's high costs. To clarify the …
Fear And Loathing: Combating Speculation In Local Communities, Ngai Pindell
Fear And Loathing: Combating Speculation In Local Communities, Ngai Pindell
University of Michigan Journal of Law Reform
Local governments commonly respond to economic and social pressures on property by using their legal power to regulate land uses. These local entities enact regulations that limit property development and use to maintain attractive communities and orderly growth. This Article argues that government entities should employ their expansive land use powers to limit investor speculation in local markets by restricting the resale of residential housing for three years. Investor speculation, and the upward pressure it places on housing prices, threatens the availability of affordable housing as well as the development of stable neighborhoods. Government regulation of investor speculation mirrors existing, …
Moving Toward A Clearer Definition Of Insider Trading: Why Adoption Of The Possession Standard Protects Investors, Lacey S. Calhoun
Moving Toward A Clearer Definition Of Insider Trading: Why Adoption Of The Possession Standard Protects Investors, Lacey S. Calhoun
University of Michigan Journal of Law Reform
In recent years, insider trading has become a publicized focus of securities law enforcement. The definition of insider trading has emerged slowly through case law, and the term has been clarified by new theories of liability. The use and possession tests are two standards of liability used to judge the treatment of inside information. The use standard offers a defense to insider trading liability while the possession standard premises liability on mere possession of inside information. This Note argues that courts should adopt the possession standard because this standard better protects investors, a primary goal of the Securities Exchange Act …
Financial Statement Insurance: A New Approach To Ivestor Protection, Stephen Z. Surridge
Financial Statement Insurance: A New Approach To Ivestor Protection, Stephen Z. Surridge
University of Michigan Journal of Law Reform
The accounting profession rapidly is moving toward a crisis in liability. Members of the investing public are suing accountants with mounting frequency and success. This article will analyze briefly the origin and present dimensions of the crisis, and then propose a plan for replacing court-imposed liability with insured liability through the offering of financial statement insurance. The essentials of the plan can be simply stated. Insurance would be offered by accountants to investors on a voluntary basis in conjunction with purchases and sales of corporate stock and securities. Individual investors would be able to purchase from the auditors of a …