Securities Law Commons^™

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 …

Rustic Justice: Community And Coercion Under The Federal Arbitration Act, Katherine V.W. Stone

Cornell Law Faculty Publications

Arbitration clauses are appearing in a wide variety of consumer transactions, including routine product purchase forms, residential leases, housing association charters, medical consent forms, banking and credit card applications, and employment handbooks. In the past fifteen years, the Supreme Court has reinterpreted the Federal Arbitration Act (FAA) so as to grant tremendous deference to private arbitral tribunals. By doing so, it has altered the landscape of civil litigation, taking many consumer claims out of the legal system and relegating them to private tribunals. In this Article, Professor Stone assesses the recent trend toward the privatization of civil justice in light …

The Limited Public Offer In German And U.S. Securities Law: A Comparative Analysis Of Prospectus Act Section 2(2) And Rule 505 Of Regulation D, David B. Guenther

Michigan Journal of International Law

This Note examines the "limited circle of persons" exception in section 2(2) of the Prospectus Act in comparison to similar provisions of U.S. federal securities law, particularly Section 3(b) of the Securities Act of 1933 (the "Securities Act") and Rule 505 of Regulation D ("Rule 505"). Comparison of the Prospectus Act to U.S. securities law seems both warranted and useful. Certain aspects of German securities law are broadly modeled on U.S. precedents. U.S. securities laws reflect more than sixty-five years of experience defining (and re-defining) public and limited public offers and private placements. U.S. securities regulators have also displayed in …

Impact Of The Capital Markets On Real Estate Law And Practice, 32 J. Marshall L. Rev. 269 (1999), Michael H. Schill

UIC Law Review

No abstract provided.

Markets As Monitors: A Proposal To Replace Class Actions With Exchanges As Securities Fraud Enforcers, Adam C. Pritchard

Articles

Fraud in the securities markets has been a focus of legislative reform in recent years. Corporations-especially those in the high-technology industry-have complained that they are being unfairly targeted by plaintiffs' lawyers in class action securities fraud lawsuits. The corporations' complaints led to the Private Securities Litigation Reform Act of 1995 ("Reform Act"). The Reform Act attempted to reduce meritless litigation against corporate issuers by erecting a series of procedural barriers to the filing of securities class actions. Plaintiffs' attorneys warned that the Reform Act and the resulting decrease in securities class actions would leave corporate fraud unchecked and deprive defrauded …

Creating Law At The Securities And Exchange Commission: The Lawyer As Prosecutor, Roberta S. Karmel

Faculty Scholarship

No abstract provided.

The Securities Litigation Uniform Standards Act Of 1998: The Sun Sets On California's Blue Sky Laws, David M. Lavine, Adam C. Pritchard

Articles

It is often said that California sets the pace for changes in America's tastes. Trends established in California often find their way into the heartland, having a profound effect on our nation's cultural scene. Nouvelle cuisine, the dialect of the Valley Girl and rollerblading all have their genesis on the West Coast. The most recent trend to emerge from California, instead of catching on in the rest of the country, has been stopped dead in its tracks by a legislative rebuke from Washington, D.C. California's latest, albeit short-lived, contribution to the nation was a migration of securities fraud class actions …

Hostile Tender Offers For Companies Holding Licenses Issued By The Federal Communications Commission, Stephen F. Sewell

Federal Communications Law Journal

When a tender offer to acquire a company is made, those making the tender offer will have to overcome a number of regulatory hurdles. The number of hurdles multiply, however, when the offer is hostile and the target company holds licenses issued by the FCC. The article sketches the FCC's response to hostile tender offers for companies holding FCC licenses, specifically discussing the Commission's adoption of procedures in 1985 to address hostile tender offers. While these provisions provided needed clarification, the authority of the FCC to implement these provisions and the effectiveness of them as a matter of policy have …

Securitization Of State Ownership: Chinese Securities Law, Minkang Gu, Robert C. Art

Michigan Journal of International Law

Part I of this article establishes the scope of analysis and defines the Chinese use of the term "security," which is more limited than under American law. Parts II and III briefly examine the history of Chinese securities laws and the understanding of securities by the Chinese people. Part IV focuses on the government's motivations in establishing the securities markets. Part V discusses the distinctively Chinese approach of classifying shares according to the characteristics and nationality of permitted shareholders. Part VI addresses the future development of Chinese securities markets. The conclusion reflects on the significance of western forms of securities …

The Applicability Of Section 2462'S Statute Of Limitations To Sec Enforcement Suits In Light Of The Remedies Act Of 1990, Catherine E. Maxson

Michigan Law Review

This Note argues that section 2462's limitations period reaches all SEC civil suits for monetary fines but not those SEC actions seeking equitable relief. Part I interprets section 2462 and, in the process, demonstrates that the statute controls SEC enforcement suits for civil penalties. Part II argues that SEC actions requesting injunctions or disgorgement of profits, unlike those seeking monetary fines, are not subject to the time bar. Finally, Part III asserts that SEC administrative enforcement proceedings should not be immune from the statute of limitations found in section 2462 of title 28 because exempting administrative proceedings would be tantamount …

Decreasing The Costs Of Jurisdictional Gridlock: Merger Of The Securities And Exchange Commission And The Commodity Futures Trading Commission, Mark Frederick Hoffman

University of Michigan Journal of Law Reform

Jurisdictional conflict exists between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), primarily due to the language of the 1974 CFTC Act. This Act grants the CFTC exclusive jurisdiction to regulate certain financial instruments which, given the increasing complexity and "hybrid" nature of such instruments, might simultaneously be subject to SEC regulation. This Note first explores the history of the two agencies and the statutory language giving rise to the jurisdictional conflict. This Note then examines several instances of jurisdictional conflict that resulted in extensive costs for the respective agencies and the United States' financial …

The Obsolescence Of Wall Street: A Contextual Approach To The Evolving Structure Of Federal Securities Regulation, Joel Seligman

Michigan Law Review

As a matter of analytical style, this article illustrates a contextualist approach. For a considerable period of time, the dominant analytical style in corporate and securities .law has been a variant of economic, or law and economics, analysis. The virtue of this type of analysis is that it focuses on what its authors deem to be crucial variables and reaches conclusions derived from the core of a specific legal problem. The defect of this type of analysis is that so much is assumed or often assumed away.

Insider Trading Deterrence Versus Managerial Incentives: A Unified Theory Of Section 16(B), Merritt B. Fox

Michigan Law Review

Part I of this article assesses the social costs of a crude rule of thumb. Because section 16(b) applies to a given class of paired transactions, it deters both transactions based on inside information and transactions not so based. Each time section 16(b) is stretched to include a class of paired transactions, it deters some additional innocent transactions. This side effect will take the form of officers' and directors' purchasing fewer shares in their own companies and refusing to accept as large a portion of their compensation in a form based on share price. There are strong theoretical and empirical …

The Integration Of Securities Offerings: A Proposed Formula That Fosters The Policies Of Securities Regulation, Cheryl L. Wade

Faculty Publications

(Excerpt)

The Securities Act of 1933 ("1933 Act" or "the Act") generally requires the filing of a registration statement with the Securities and Exchange Commission (the "SEC") prior to the offer or sale of any security and prohibits the sale of any security prior to the effective date of the registration statement. For the prospective issuer of securities, the preparation and filing of this registration statement can be costly and time-consuming. To prevent the hampering of commerce that results from unnecessary registration, the 1933 Act provides a variety of exemptions from registration that relieve issuers of the cost and delay …

Symposium On Securities Law Enforcement Priorities, Roberta S. Karmel

Faculty Scholarship

No abstract provided.

Augmenting Erisa With Market Discipline: Transforming Pension Plan Interests Into Securities, Keir N. Dougall

University of Michigan Journal of Law Reform

Part I of this Note provides general background information about pension plans and details the problems that ERISA creates because of its dependence on trust law. Part II canvasses recent problems in pension plan governance that courts and pension plan members have faced in takeover defense and social investment contexts, demonstrating that ERISA's use of trust law cannot respond adequately to these problems. Parts I and II draw on an analysis of ERISA presented by Professors Fischel and Langbein but argue that their proposals for changing ERISA inadequately address the problems they identify. Part III argues that the economic realities …

Validity Challenges To Sec Rule 14e-3, 23 J. Marshall L. Rev. 305 (1990), Michael T. Raymond

UIC Law Review

No abstract provided.

A New Era Of Financial Futures Trading In Germany: Sweeping Changes In The Legal And Business Environment, Friedrich E.F. Hey

Northwestern Journal of International Law & Business

Trading in futures has increased dramatically in recent years. This is especially true for financial futures. The two main reasons for this phenomenon are: (1) there is a greater need for hedging against price fluctuations; and (2) financial futures trading provides speculators with the opportunity to transform favorable price developments into quick and large profits. This Article examines the recently enacted legislation governing futures trading in the Federal Republic of Germany, distinguishes the new law from the old, and analyzes the impact the new legislation will have on the functioning of the new German futures exchange.

The Regulation Of Insider Trading In The United States, United Kingdom, And Japan, Barbara Ann Banoff

Michigan Journal of International Law

Part I of this article will briefly discuss the American laws regulating insider trading; Part II will discuss the law of the United Kingdom; and Part III will discuss the regulation-or, more accurately, the non-regulation-of insider trading in Japan.

Insider Trading Liability Of Tippees And Quasi-Insiders: Crime Shouldn't Pay, 22 J. Marshall L. Rev. 295 (1988), Robert J. Kuker

UIC Law Review

No abstract provided.

Survey Of National Legislation Regulating Insider Trading, Mary J. Houle

Michigan Journal of International Law

In recent years much attention has been focused on the phenomenon of "insider trading." The United States Securities and Exchange Commission (SEC) now appears to have wide-spread public support for its hard-line approach toward insider trading practices. Previously hostile to a broad prohibition of insider trading, even the Supreme Court has lent a sympathetic ear to the pleas of the SEC in the recent Carpenter case, which hinted at support for the misappropriation theory of insider trading. The prevailing attitude is that confidence in the fair operation of the securities markets must not be undermined by insiders who deprive those …

Survey Of Registration And Disclosure Requirements In International Securities Markets, Scott D. Cohen

Michigan Journal of International Law

This survey of the domestic registration and disclosure requirements in the United Kingdom, the Federal Republic of Germany, France, Australia, Switzerland, the Netherlands, Canada, and Japan provides a topical overview of the institutions, requirements, and procedures involved in securities trading in foreign markets. While the goal of a unified international securities regulation system may represent the best long-term course for an efficient world-wide system of capital markets, the necessity to conform to domestic securities regulations will remain important in the coming years.

The Independent Corporate Board: A Means To What End?, Roberta S. Karmel

Faculty Scholarship

No abstract provided.

The Scope Of Liability Under Section 12 Of The Federal Securities Act Of 1933: 'Participation' And The Pertinent Legislative Materials, Douglas E. Abrams

Faculty Publications

Section 12 of the Securities Act of 1933 creates two private rights of action, each providing in relevant part that ‘ a ny person who offers or sells a security . . . shall be liable to the person purchasing such security from him . . ..’ Because suit may be maintained only by the person who purchases the security from defendant, an offeror may incur section 12 liability only if the offeror also ‘sells' the security to the plaintiff. Section 12(1) imposes liability on any seller whose offer or sale violates the Act's registration or prospectus requirements found in …

On A Just Measure Of The Efficiency Of Law And Governmental Policies, John L. Hanks

Cardozo Law Review

No abstract provided.

Of Lollipops And Law -- A Proposal For A National Policy Concerning Tender Offer Defenses, Ted J. Fiflis

Publications

Early last year, Mesa Petroleum Company made a tender offer for shares of Unocal Corporation in an effort to take over Unocal. Unocal responded by using the "lollipop" defense, which is a discriminatory issuer self-tender offer. Unocal's use of this defense resulted in huge economic losses to many of Unocal's small shareholders who were not knowledgeable about the ramifications of their participation or non-participation in the tender offer. The Delaware Supreme Court upheld Unocal's use of this defense as an appropriate exercise of business judgment. A federal district court in California refused to strike down the lollipop under federal law …

Penalizing Insider Trading: A Critical Assessment Of The Insider Trading Sanctions Act Of 1984, Carole Silver

Articles by Maurer Faculty

No abstract provided.

Federal Security Laws And Their Applicability To The Sale Of A Business: An Appeal For Regulatory Action, 17 J. Marshall L. Rev. 393 (1984), John W. Blenke Jr.

UIC Law Review

No abstract provided.

Limiting The Use Of The Rico Act As A Defense To Hostile Corporate Takeovers, Mary Ann Lesniak

University of Michigan Journal of Law Reform

This Note argues that RICO could be a legitimate defense to a hostile corporate takeover pursuant to a cash tender off er if shareholders who retain stock will be harmed by the takeover. Part I of this Note examines the general background of the RICO Act. Part II applies the Act to a hostile cash tender offer and examines each element of a civil RICO action. Part III advocates the use of RICO's injury requirement to limit this application of the Act and analyzes the potential injuries to shareholders and management during a hostile cash tender offer. This limitation upon …

A Banker's Adventures In Brokerland: Looking Through Glass-Steagall At Discount Brokerage Services, Michigan Law Review

Michigan Law Review

Several banks have recently entered or announced their intention to enter the discount brokerage business, and the Federal Reserve Board is considering a rule listing discount brokerage as an acceptable bank holding company activity. The securities industry has contested this entry, asserting that the Glass-Steagall Act requires separation between investment and commercial banking. Though the Act does mandate some division between the two lines of business, this Note argues that bank discount brokerage services do not violate the Act. Part I examines the competing "accommodation" and "agency" interpretations of the relevant statutory sections, concluding that the agency interpretation, which permits …