Securities Law Commons^™

Abolish Ice . . . And Then What?, Peter L. Markowitz

Articles

In recent years, activists and then politicians began calling for the abolition of the United States’s interior immigration-enforcement agency: U.S. Immigration and Customs Enforcement (ICE). Many people have misinterpreted the call to “Abolish ICE” as merely a spontaneous rhetorical device used to express outrage at the current Administration’s brutal immigration policies. In fact, abolishing ICE is the natural extension of years of thoughtful organizing by a loose coalition of grassroots immigrant-rights groups. These organizations are serious, not only about their literal goal to eliminate the agency, but also about not replacing it with another dedicated agency of immigration police. Accordingly, …

The Eu’S Struggles With Collective Action For Securities Fraud: An American Perspective, Dan Morrissey

Texas A&M Law Review

Notwithstanding the apparent exit of the United Kingdom, the European Union (“EU”) has grown in membership and power since its modest beginnings after World War II, now rivaling the U.S. in economic strength. With the goal of promoting the security and prosperity of all the citizens of the countries that belong to it, the EU is pressing ahead to adopt laws that will promote their political and financial integration. Along those lines, it has also recently acknowledged a deficiency in the legal systems of its member states when it comes to allowing collective actions for victims of various types of …

Central Clearing Of Financial Contracts: Theory And Regulatory Implications, Steven L. Schwarcz

Faculty Scholarship

To protect economic stability, post-crisis regulation requires financial institutions to clear and settle most of their derivatives contracts through central counterparties, such as clearinghouses associated with securities exchanges. This Article asks whether regulators should expand the central clearing requirement to non-derivative financial contracts, such as loan agreements. The Article begins by theorizing how and why central clearing can reduce systemic risk. It then examines the theory’s regulatory and economic efficiency implications, first for current requirements to centrally clear derivatives contracts and thereafter for deciding whether to extend those requirements to non-derivative contracts. The inquiry has real practical importance because the …

Revolving Elites: The Unexplored Risk Of Capturing The Sec, James D. Cox, Randall S. Thomas

Faculty Scholarship

Fears have abounded for years that the sweet spot for capture of regulatory agencies is the "revolving door" whereby civil servants migrate from their roles as regulators to private industry. Recent scholarship on this topic has examined whether America's watchdog for securities markets, the Securities and Exchange Commission (SEC), is hobbled by the long-standing practices of its enforcement staff exiting their jobs at the Commission and migrating to lucrative private sector employment where they represent those they once regulated. The research to date has been inconclusive on whether staff revolving door practices have weakened the SEC' s verve. In this …

Accusers As Adjudicators In Agency Enforcement Proceedings, Andrew N. Vollmer

University of Michigan Journal of Law Reform

Largely because of the Supreme Court’s 1975 decision in Withrow v. Larkin, the accepted view for decades has been that a federal administrative agency does not violate the Due Process Clause by combining the functions of investigating, charging, and then resolving allegations that a person violated the law. Many federal agencies have this structure, such as the Securities and Exchange Commission (SEC) and the Federal Trade Commission.

In 2016, the Supreme Court decided Williams v. Pennsylvania, a judicial disqualification case that, without addressing administrative agencies, nonetheless raises a substantial question about one aspect of the combination of functions at agencies. …

Sec Disgorgement Actions: Equitable Remedy Or Penalty?, Armando Lopez

Journal of the National Association of Administrative Law Judiciary

No abstract provided.

Sg’S Brief In Lucia Could Portend The End Of The Alj Program As We Have Known It, Jeffrey S. Lubbers

Journal of the National Association of Administrative Law Judiciary

No abstract provided.

Lucia Et Al. V. Securities And Exchange Commission: Opinion Of The Court, Elena Kagan

Journal of the National Association of Administrative Law Judiciary

No abstract provided.

Lucia Et Al. V. Securities And Exchange Commission: Brief Amicus Curiae Of Administrative Law Scholars In Support Of Neither Party, Richard J. Pierce Jr.

Journal of the National Association of Administrative Law Judiciary

No abstract provided.

Lucia Et Al. V. Securities And Exchange Commission: Brief Of Amicus Curiae The Forum Of United States Administrative Law Judges In Support Of Neither Party, Gerald Marvin Bober

Journal of the National Association of Administrative Law Judiciary

No abstract provided.

Lucia Et Al. V. Securities And Exchange Commission: Brief Amicus Curiae Of Federal Administrative Law Judges Conference In Support Of Neither Party, John M. Vittone

Journal of the National Association of Administrative Law Judiciary

No abstract provided.

Introduction To Lucia Et Al. V. Securities And Exchange Commission, Selina Malherbe

Journal of the National Association of Administrative Law Judiciary

No abstract provided.

'Deriving' An Understanding Of The Extraterritorial Applicability Of The Commodity Exchange Act, Gabrielle Schwartz

St. John's Law Review

(Excerpt)

This Note argues that courts should return to using a holistic approach, similar to the traditional “conducts” and “effects” test previously used by courts to analyze extraterritorial securities and commodities claims, to assess claims brought under the CEA. Furthermore, this Note argues that both the Commodity Futures Trading Commission and private individuals including foreign plaintiffs, should be permitted to bring these claims to uphold Congress’s intent in establishing a regulatory regime and maintaining the integrity of the international derivatives market. Part I discusses the history of derivative regulation and how both court decisions and statutory changes have created the …

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 …

The Shadow Of Free Enterprise: The Unconstitutionality Of The Securities & Exchange Commission’S Administrative Law Judges, Linda D. Jellum, Moses M. Tincher

Journal of the National Association of Administrative Law Judiciary

Six years ago, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), for the first time giving the Securities and Exchange Commission (SEC) the power to seek monetary penalties through its in-house adjudication. The SEC already had the power to seek such penalties in federal court. With the Dodd-Frank Act, the SEC’s enforcement division could now choose between an adjudication before an SEC Administrative Law Judge (ALJ) or a civil action before an Article III judge. With this new choice, the SEC realized a significant home-court advantage. For example, in 2014, the SEC’s enforcement division prevailed …

High‐Frequency Trading And The New Stock Market: Sense And Nonsense, Merritt B. Fox, Lawrence R. Glosten, Gabriel V. Rauterberg

Articles

The stock market has been transformed during the last 25 years. Human suppliers of liquidity like the NASDAQ dealers and NYSE specialists have been replaced by algorithmic market making; stocks that once traded on a single venue now trade across twelve exchanges and a multitude of alternative trading systems. New venues like dark pools, and new participants like high‐frequency traders, have emerged to take on prominent roles. This new market has had more than its share of controversy and regulatory scrutiny, particularly in the wake of Michael Lewis’s bestseller Flash Boys. In this article, the authors analyze five of the …

The Regulation Of Trading Markets: A Survey And Evaluation, Paul G. Mahoney, Gabriel V. Rauterberg

Book Chapters

This chapter was prepared for a conference exploring the desirability and structure of a new special study of the securities markets. Our objective is not to resolve all of the questions that commentators have raised about the new equity markets, but to lay the groundwork for a new special study by surveying the state of market regulation, identifying issues, and offering preliminary evaluations.

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 …

Sg's Brief In Lucia Could Portend The End Of The Alj Program As We Have Known It, Jeffrey Lubbers

Scholarly Articles in Law Reviews & Journals

No abstract provided.

Protecting Whistleblowing (And Not Just Whistleblowers), Evan J. Ballan

Michigan Law Review

When the government contracts with private parties, the risk of fraud runs high. Fraud against the government hurts everyone: taxpayer money is wasted on inferior or nonexistent products and services, and the public bears the burdens attendant to those inadequate goods. To combat fraud, Congress has developed several statutory frameworks to encourage whistleblowers to come forward and report wrongdoing in exchange for a monetary reward. The federal False Claims Act allows whistleblowers to file an action in federal court on behalf of the United States, and to share in any recovery. Under the Dodd- Frank Act, the SEC Office of …

Stock Market Futurism, Merritt Fox, Gabriel Rauterberg

Articles

The U.S. stock market is undergoing extraordinary upheaval. The approval of the application of the Investors Exchange (IEX) to become the nation's newest stock exchange, including its famous "speed bump," was one of the SEC's most controversial decisions in decades. Other exchanges have proposed a raft of new innovations in its wake. This evolving equity market is a critical piece of national infrastructure, but the regulatory scheme for its institutions is increasingly frayed. In particular, current regulation draws sharp distinctions among different kinds of markets for trading stocks, treating stock exchanges as self-regulatory organizations immune from private civil litigation, while …

Sec In-House Tribunals: A Call For Reform, Drew Thornley, Justin Blount

Villanova Law Review (1956 - )

No abstract provided.

Dictation And Delegation In Securities Regulation, Usha Rodrigues

Indiana Law Journal

When Congress undertakes major financial reform, either it dictates the precise con-tours of the law itself or it delegates the bulk of the rule making to an administrative agency. This choice has critical consequences. Making the law self-executing in federal legislation is swift, not subject to administrative tinkering, and less vulnerable than rule making to judicial second-guessing. Agency action is, in contrast, deliberate, subject to ongoing bureaucratic fiddling, and more vulnerable than statutes to judicial challenge.

This Article offers the first empirical analysis of the extent of congressional delegation in securities law from 1970 to the present day, examining nine …

Reforming Sec Alj Proceedings, Joanna Howard

University of Michigan Journal of Law Reform

This Note considers the current constitutional challenges to SEC administrative proceedings and suggests process reforms to enhance fairness for respondents. Challenges have developed since the Dodd-Frank Act expanded the SEC’s ability to use administrative proceedings. Arguments that there is a pre-existing flaw in the method of appointing administrative law judges provide the most potential for success. The Tenth Circuit’s December 2016 decision against the SEC in Bandimere has created a split, diverging from the D.C. Circuit’s analysis of that question in Lucia. Resolution by the Supreme Court may be inevitable. Even if the challengers do ultimately succeed, this will …

Cfius In The Age Of Chinese Investment, Patrick Griffin

Fordham Law Review

As China’s economy has developed, its companies, both state-owned and privately held, have moved to expand their operations in the United States to the point where many now seek to invest in—and on occasion, acquire—U.S. counterparts. This trend has set off alarm bells over fears that China’s unique political and economic system, which gives the state extensive influence over all corporations regardless of their ownership structure, renders such transactions national security threats. Recent hostility toward Chinese-led inbound investment is not a new trend; Congress has attempted to assert itself into the screening process undertaken by the Committee on Foreign Investment …

The Constitutionality Of Sec Administrative Proceedings: The Sec Should Cure Its Alj Appointment Scheme, Kaela Dahan

Cardozo Law Review

The note examines the constitutional challenges surrounding the Securities and Exchange Commission's (SEC) use of administrative law judges (ALJs), particularly under Section 929P of the Dodd-Frank Act. It argues that the SEC's ALJ appointment process violates the Appointments Clause, as current ALJs have not been properly appointed by SEC Commissioners. The note also highlights due process and Seventh Amendment concerns, as defendants in SEC administrative proceedings lack rights such as trial by jury and immediate appellate review. To maintain the integrity of its administrative processes, the SEC must adopt measures to ensure its ALJ appointments comply with constitutional requirements.

The Shadow Of Free Enterprise: The Unconstitutionality Of The Securities & Exchange Commission's Administrative Law Judges, Linda Jellum

Articles

Six years ago, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), for the first time giving the Securities and Exchange Commission (SEC) the power to seek monetary penalties through its in-house adjudication. The SEC already had the power to seek such penalties in federal court. With the Dodd-Frank Act, the SEC's enforcement division could now choose between an adjudication before an SEC Administrative Law Judge (ALJ) or a civil action before an Article III judge. With this new choice, the SEC realized a significant home-court advantage. For example, in 2014, the SEC's enforcement division prevailed …

The Sec's Shift To Administrative Proceedings: An Empirical Assessment, Stephen J. Choi, Adam C. Prichard

Articles

Congress has repeatedly expanded the authority of the SEC to pursue violations of securities laws in proceedings adjudicated by the SEC's own administrative law judges, most recently through the Dodd-Frank Act. We report the results from an empirical study of SEC enforcement actions against non-financial public companies to assess the impact of the Dodd-Frank Act on the balance between civil court and administrative enforcement actions. We show a general decline in the number of court actions and an increase in the number of administrative proceedings post-Dodd-Frank. At the same time, we show an increase in average civil penalties post-Dodd-Frank for …

The Shadow Of Free Enterprise: The Unconstitutionality Of The Securities & Exchange Commission's Administrative Law Judges, Linda D. Jellum, Moses M. Tincher

SMU Law Review

Six years ago, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), for the first time giving the Securities and Exchange Commission (SEC) the power to seek monetary penalties through its in-house adjudication. The SEC already had the power to seek such penalties in federal court. With the Dodd-Frank Act, the SEC’s enforcement division could now choose between an adjudication before an SEC Administrative Law Judge (ALJ) or a civil action before an Article III judge. With this new choice, litigants contended that the SEC realized a significant home-court advantage. For example, the Wall Street Journal …

From Systemic Risk To Financial Scandals: The Shortcomings Of U.S. Hedge Fund Regulation, Marco Bodellini

Brooklyn Journal of Corporate, Financial & Commercial Law

In the recent past, hedge funds have demonstrated that they can pose and spread systemic risk across the financial markets, and that their managers can use them to commit fraud and misappropriation of fund assets. Even if the first issue now seems to be considered a serious one by the U.S. legislature, which in 2010, as a legislative response to the global financial crisis of 2007-2008, enacted the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (Dodd-Frank), the current regulation still appears inconsistent and inappropriate to prevent and face it. By contrast, the second issue is not always considered …