Securities Law Commons^™

Leveraging The Mining Industry’S Energy Demand To Improve Host Countries’ Power Infrastructure, Perrine Toledano

Columbia Center on Sustainable Investment Staff Publications

The initial phase of the Leveraging Mining-Related Infrastructure Investments for Development project consisted of a worldwide survey of regulatory, commercial and operating case studies of shared use of mining-related infrastructure. This Policy Paper delivers the findings for power infrastructure.

Background Paper For Second Workshop On Contract Negotiation Support For Developing Host Countries, Vale Columbia Center On Sustainable International Investment, Humboldt-Viadrina School Of Governance

Columbia Center on Sustainable Investment Staff Publications

The Columbia Center on Sustainable Investment (CCSI) and the Humboldt-Viadrina School of Governance (HSVG) have initiated a process to discuss the desirability and feasibility of mechanisms to provide negotiation support for developing host countries in their negotiations with major investors.

At a first workshop held in October 2011, participants agreed on the need for an expansion of support for developing countries in their contract negotiations.

A second workshop was held at Columbia University in July 2012 that undertook a gap analysis between the existing sources of support for developing countries in relation to complex contracts and the countries’ needs for …

Paper On The Business Case For Transparency, Perrine Toledano

Columbia Center on Sustainable Investment Staff Publications

CCSI strongly supports the transparency of contracts and tax flows. CCSI shares the belief of many stakeholders that transparency is essential to leverage extractive industries for sustainable development and is in the mutual interest of all stakeholders. However, some industry players continue to voice the concern that increased transparency would be harmful for their business. Therefore, CCSI is working to also establish the business case for transparency.

In one such case, some industry players have been lobbying against the regulations developed by the Security and Exchange Commission to implement the mandatory disclosure provisions of the Dodd Frank Wall Street Reform …

Openness In Extraction, Lisa E. Sachs, Shefa Siegel

Columbia Center on Sustainable Investment Staff Publications

More than a decade before becoming President of the United States, Herbert Hoover, a mining engineer, observed that, among the branches of property law, the distribution of mining rights most elegantly reflects the vicissitudes of social and political relations. According to Hoover, mining rights were a "never-ending contention," as old as economic and civil conflict, among four principle classes – overlord, state, landowner, and miner. "Somebody," he concluded, "has to keep peace and settle disputes."

Today, with the prices of major natural-resource commodities – including oil, coal, copper, gold, and iron ore – doubling, tripling, or rising even faster, the …

Leveraging Extractive Industry Infrastructure Investments For Broad Economic Development: Regulatory, Commercial And Operational Models For Railways And Ports, Perrine Toledano

Columbia Center on Sustainable Investment Staff Publications

The initial phase of the Leveraging Mining-Related Infrastructure Investments for Development project consisted of a worldwide survey of regulatory, commercial and operating case studies of shared use of mining-related infrastructure. This Policy Paper delivers the findings for mineral railways and ports.

Addressing Climate Change Mitigation And Adaptation Through Insurance For Overseas Investments: The Example Of The U.S. Overseas Private Investment Corporation, Lise Johnson

Columbia Center on Sustainable Investment Staff Publications

In 2008, the United Nations Framework Convention on Climate Change (UNFCCC) estimated that investments of between US$540–570 billion in physical assets and other financial flows will be needed to adequately reduce global greenhouse gas (GHG) emissions to combat climate change; additionally, tens and possibly hundreds of billions of dollars may be necessary to enable countries to adapt to the phenomenon’s challenges. Through climate negotiations under the UNFCCC in Copenhagen and Cancun, developed country governments committed to provide developing countries roughly US$30 billion between 2010 and 2012 and to mobilize approximately US$100 billion per year by 2020 for climate change activities. …

The Political Economy Of Dodd-Frank: Why Financial Reform Tends To Be Frustrated And Systemic Risk Perpetuated, John C. Coffee Jr.

Faculty Scholarship

A good crisis should never go to waste. In the world of financial regulation, experience has shown – since at least the time of the South Sea Bubble three hundred years ago – that only after a catastrophic market collapse can legislators and regulators overcome the resistance of the financial community and adopt comprehensive "re-form" legislation. U.S. financial history both confirms and conforms to this generalization. The Securities Act of 1933 and the Securities Exchange Act of 1934 were the product of the 1929 stock-market crash and the Great Depression, with their enactment following the inauguration of President Franklin Roosevelt …

The Law And Economics Of Blockholder Disclosure, Lucian A. Bebchuk, Robert J. Jackson Jr.

Faculty Scholarship

The Securities and Exchange Commission is currently considering a rulemaking petition that advocates tightening the rules under the Williams Act, which regulates the disclosure of large blocks of stock in public companies. In this Article, we explain why the Commission should not view the proposed tightening as a merely "technical" change needed to meet the objectives of the Williams Act, provide market transparency, or modernize its regulations. The drafters of the Williams Act made a conscious choice not to impose an inflexible 5% cap on pre-disclosure accumulations of shares to avoid deterring investors from accumulating large blocks of shares. We …

Securities Class Actions Against Foreign Issuers, Merritt B. Fox

Faculty Scholarship

This Article addresses the fundamental question of whether, as a matter of good policy, it is ever appropriate that a foreign issuer be subject to the U.S. fraud-on-the-market private damages class action liability regime, and, if so, by what kinds of claimants and under what circumstances. The bulk of payouts under the U.S. securities laws arise out of fraud-on-the-market class actions – actions against issuers on behalf of secondary market purchasers of their shares for trading losses suffered as a result of issuer misstatements in violation of Rule 10b-5. In the first decade of this century, foreign issuers became frequent …

Federalizing Fiduciary Duty: The Altered Scope Of Officer Fiduciary Duty Following Orderly Liquidation Under Dodd-Frank, Dorothy S. Lund

Faculty Scholarship

The financial crisis of 2008 ushered in a new era of regulatory reform in the United States. The failure of several large banks prompted Congressional scrutiny ofthe U.S. bank regulatory system. Many critics highlighted the government's failure to intervene to prevent Lehman Brothers' insolvency, which resulted in economic turmoil not yet resolved. Against this backdrop, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") in July 2010.

Dodd-Frank mandates institutional changes to minimize economic instability and establishes regulatory processes to guide the government's response to future bank failures. At the heart of the regulation is the Orderly …

Delaware Court Of Chancery: Change, Continuity – And Competition, John C. Coffee Jr.

Faculty Scholarship

For Delaware, it is the best of times and the worst of times. The institutional prestige of the Delaware Court of Chancery has never been higher. Under the leadership of Chancellors Allen, Chandler and Strine, the court has converted many (and possibly most) of the academics, who once tended to be skeptical of Delaware. Academics and practitioners alike have been impressed by both the depth and thoughtfulness of the court of chancery's decisions and the hardworking style of its vice chancellors (who regularly seem able to turn out lengthy decisions in days that would take many federal circuit courts months …

Memo To The Sec On The Proposed Rule On Disclosure Of Payments By Resource Extraction Issuers, Perrine Toledano

Columbia Center on Sustainable Investment Staff Publications

CCSI strongly supports the transparency of contracts and tax flows. CCSI shares the belief of many stakeholders that transparency is essential to leverage extractive industries for sustainable development and is in the mutual interest of all stakeholders. However, some industry players continue to voice the concern that increased transparency would be harmful for their business. Therefore, CCSI is working to also establish the business case for transparency.

In one such case, some industry players have been lobbying against the regulations developed by the Security and Exchange Commission to implement the mandatory disclosure provisions of the Dodd Frank Wall Street Reform …

Wider Role For Our Miners In Africa, Lisa E. Sachs, Joel Negin, Glenn Denning

Columbia Center on Sustainable Investment Staff Publications

The Australian government is rapidly increasing aid to Africa. But the real story about the country's engagement in Africa is the massive investment by Australian companies in extractive industries.

More than 150 Australian resource companies are active in more than 40 African countries with a total investment greater than $20 billion, including in coal in Mozambique, copper and uranium in Zambia, gold in Eritrea and uranium in Malawi.

Zambezi Valley Development Study, Lisa E. Sachs, Perrine Toledano

Columbia Center on Sustainable Investment Staff Publications

In June 2011, CCSI released a consultative draft report on Resource-Based Sustainable Development in the Lower Zambezi Basin, the result of a year-long inquiry into how the vast resource deposits in Tete province, combined with other major investments along the Nacala and Beira corridors, can be the basis for sustainable, equitable and inclusive growth in the Lower Zambezi Basin.

The report recommends a framework of actions by Mozambique and its public and private partners to ensure that Mozambique reaps a major boost to economic development from its vast resource endowments, while also respecting the profitability of private-sector investments in …

Investment Promotion Agencies And Sustainable Fdi: Moving Toward The Fourth Generation Of Investment Promotion, Columbia Center On Sustainable Investment, World Association Of Investment Promotion Agencies

Columbia Center on Sustainable Investment Staff Publications

In April and May 2010, CCSI supported WAIPA to conduct its annual survey. This report, Investment Promotion Agencies and Sustainable FDI: Moving toward the Fourth Generation of Investment Promotion, benchmarks the responses of IPAs regarding sustainable FDI and its four dimensions (economic development, environmental sustainability, social development, governance) and finds, among other things, that these are unevenly addressed by investment promotion strategies and investment incentives. The report also draws attention to the desirability of attracting sustainable FDI, rather than focusing on volume of investment alone.

In 2017, CCSI also helped the World Association of Investment Promotion Agencies (WAIPA) to conduct …

Promoting Innovation: The Law Of Publicly Traded Corporations, Merritt B. Fox

Faculty Scholarship

Improving economic welfare requires that society’s scarce savings be allocated among proposed real investment projects in a way that appreciates the prospects of promising new innovations. Corporate and securities law help structure important elements of this process of allocation. This article sketches out an approach based upon a seemingly paradoxical analogy of a market economy’s overall finance process to the way a hierarchical organization gathers and processes relevant bits of information dispersed among many individuals in order to make decisions. It thereby takes advantage of important thinking in communications and organizational theory about how to make organizations sensitive to the …

Handbook For Promoting Foreign Direct Investment In Medium-Size, Low-Budget Cities In Emerging Markets, Vale Columbia Center On Sustainable International Investment, Millennium Cities Initiative

Columbia Center on Sustainable Investment Books

In November 2009, the Vale Columbia Center on Sustainable International Investment and the Millennium Cities Initiative (MCI) released the Handbook for Promoting Foreign Direct Investment in Medium-size, Low-Budget Cities in Emerging Markets. With foreign direct investment (FDI) flows declining worldwide by an estimated 40-50% this year (following a decline of over 10% in 2008), investment promotion has become more important than ever: in a highly competitive world FDI market, promotion can make all the difference.

Investment promotion is particularly important for cities other than capital cities, as investors in manufacturing and services often locate primarily in a country’s capital …

Bilateral Investment Treaties And Fdi Flows, Lisa E. Sachs

Columbia Center on Sustainable Investment Staff Publications

Given that one of the principal purposes of bilateral investment treaties (BITs) is to help countries attract investment flows (by protecting investments), it is only natural that the question has been raised whether they do, in fact, lead to higher investment flows. The main studies on this topic from the past decade are collected in The Effect of Treaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows (Oxford University Press, 2009), a volume I edited with Karl P. Sauvant.

Redesigning The Sec: Does The Treasury Have A Better Idea?, John C. Coffee Jr., Hillary A. Sale

Faculty Scholarship

Symposiums supply a snapshot in time. By observing the common assumptions and shared frameworks of a collection of scholars writing contemporaneously, one gains both insight into the intellectual world of a past era and the ability to measure its distance from our own. Twenty-five years ago the Virginia Law Review organized a noted symposium (the "1984 Symposium") to celebrate the 50th anniversary of the SEC. A number of prominent scholars participated, and its articles have been much cited.

Enhancing Investor Protection And The Regulation Of Securities Markets, John C. Coffee Jr.

Faculty Scholarship

This is the congressional testimony of Professor John C. Coffee, Jr., before the United States Senate Committee on Banking, Housing and Urban Affairs, March 10, 2009.

Short Selling And The News: A Preliminary Report On Empirical Study, Merritt B. Fox, Lawrence R. Glosten, Paul C. Tetlock

Faculty Scholarship

No subject in securities regulation has generated more heat and less light than short selling. A short sale is the sale of a share that is borrowed from a third party rather than owned by the seller. At a later time, the short seller extinguishes her obligation to this third party by “covering” – purchasing an identical share in the market and then returning it to the third party. If the share price drops, the cost of covering will be less than the proceeds received earlier from the sale and the short seller will make money. Politicians and CEOs rail …

Reputational Sanctions In China's Securities Market, Benjamin L. Liebman, Curtis J. Milhaupt

Faculty Scholarship

Literature suggests two distinct paths to stock market development: an approach based on legal protections for investors, and an approach based on self-regulation of listed companies by stock exchanges. This Essay traces China's attempts to pursue both approaches, while focusing primarily on the role of the stock exchanges as regulators. Specifically, the Essay examines a fascinating but unstudied aspect of Chinese securities regulation – public criticism of listed companies by the Shanghai and Shenzhen exchanges. Based on both event study methodology and extensive interviews of market actors, we find that the public criticisms have significant effects on listed companies and …

Accountability And Competition In Securities Class Actions: Why "Exit" Works Better Than "Voice", John C. Coffee Jr.

Faculty Scholarship

A sizable literature on class actions has long suggested that the plaintiff’s attorney is an independent entrepreneur over whom the class members have only limited control. But the analysis cannot stop here. Why does this state of affairs exist? This essay will give two connected answers to this question as a prelude to evaluating what reforms are likely to work:

(1) The rules of "litigation governance" differ diametrically from those of corporate governance. An entrepreneur seeking capital for a business venture must convince investors to "opt in" and buy the securities of the entrepreneur's start-up corporation. In contrast, a plaintiffs …

Sovereign Wealth Funds And Corporate Governance: A Minimalist Response To The New Mercantilism, Ronald J. Gilson, Curtis J. Milhaupt

Faculty Scholarship

Keynes taught years ago that international cash flows are always political. Western response to the enormous increase in the number and the assets of sovereign wealth funds (SWFs), and other government-directed investment vehicles that often get lumped together under the SWF label, proves Keynes right. To their most severe critics, SWFs are a threat to the sovereignty of the nations in whose corporations they invest. The heat of the metaphors matches the volume of the complaints. The nations whose corporations are targets of investments are said to be threatened with becoming "sharecropper" states if ownership of industry moves to foreign-government …

Law And The Market: The Impact Of Enforcement, John C. Coffee Jr.

Faculty Scholarship

Are the U.S. capital markets losing their competitiveness? A fascinating question, but what does it mean and how can it be intelligently assessed? This Article will explore the newly popular thesis that draconian enforcement and overregulation are injuring the United States and will offer a sharply contrasting interpretation: higher enforcement intensity gives the U.S. economy a lower cost of capital and higher securities valuations. This higher intensity attracts some foreign listings, but deters others.

This Article will proceed by first mapping the marked variation in the intensity of enforcement efforts by securities regulators in selected nations and then relating these …

The Rise Of Independent Directors In The United States, 1950-2005: Of Shareholder Value And Stock Market Prices, Jeffrey N. Gordon

Faculty Scholarship

Between 1950 and 2005, the composition of large public company boards dramatically shifted towards independent directors, from approximately 20% independents to 75% independents. The standards for independence also became increasingly rigorous over the period. The available empirical evidence provides no convincing explanation for this change. This Article explains the trend in terms of two interrelated developments in U.S. political economy: first, the shift to shareholder value as the primary corporate objective; second, the greater informativeness of stock market prices. The overriding effect is to commit the firm to a shareholder wealth maximizing strategy as best measured by stock price performance. …

Remapping The Charitable Deduction, David Pozen

Faculty Scholarship

If charity begins at home, scholarship on the charitable deduction has stayed at home. In the vast legal literature, few authors have engaged the distinction between charitable contributions that are meant to be used within the United States and charitable contributions that are meant to be used abroad. Yet these two types of contributions are treated very differently in the Code and raise very different policy issues. As Americans' giving patterns and the U.S. nonprofit sector grow increasingly international, the distinction will only become more salient.

This Article offers the first exploration of how theories of the charitable deduction apply …

The Essential Role Of Securities Regulation, Zohar Goshen, Gideon Parchomovsky

Faculty Scholarship

This Article posits that the essential role of securities regulation is to create a competitive market for sophisticated professional investors and analysts (information traders). The Article advances two related theses – one descriptive and the other normative. Descriptively, the Article demonstrates that securities regulation is specifically designed to facilitate and protect the work of information traders. Securities regulation may be divided into three broad categories: (i) disclosure duties; (ii) restrictions on fraud and manipulation; and (iii) restrictions on insider trading – each of which contributes to the creation of a vibrant market for information traders. Disclosure duties reduce information traders’ …

After Dura: Causation In Fraud-On-The-Market Actions, Merritt B. Fox

Faculty Scholarship

On April 19, 2005, the Supreme Court announced its unanimous opinion in Dura Pharmaceuticals, Inc. v. Broudo, concerning what a plaintiff must show to establish causation in a Rule lob-5 fraud-on-the-market suit for damages. The opinion had been awaited with considerable anticipation, being described at the time of oral argument in the Financial Times, for example, as the "most important securities case in a decade." After the opinion was handed down, a representative of the plaintiffs' bar lauded it as a "unanimous ruling protecting investors' ability to sue." A representative of the defendants' bar equally enthusiastically hailed it as "a …

Cataclysmic Liability Risk Among Big Four Auditors, Eric L. Talley

Faculty Scholarship

Since Arthur Andersen's implosion in 2002, policymakers have been encouraged with ever increasing urgency to insulate the auditing industry from legal liability. Advocates of such insulation cite many arguments, but the gravamen of their case is that the profession faces such significant risk of cataclysmic liability that its long term viability is imperiled. In this Essay, I explore the nature of these claims as a legal, theoretical, and empirical matter. Legally, it is clear that authority exists (within both state and federal law) to impose liability on auditing firms for financial fraud, and courts have been doing so sporadically for …