Securities Law Commons^™

Sec Enforcement Of Attorney Up-The-Ladder Reporting Rules: An Analysis Of Institutional Contraints, Norms, And Biases, Michael A. Perino

Faculty Publications

In their paper and in their earlier comments to the SEC on the proposed attorney reporting rules, Professors Cramton, Cohen and Koniak do an excellent job recounting the genesis of the attorney reporting requirements in the Sarbanes-Oxley Act, describing the SEC's proposed and final rules and critiquing the rule's triggering mechanism and now apparently shelved noisy withdrawal requirement. Their case study of the recent Spiegel, Inc. independent examiner's report is a particularly useful vehicle for examining the practical implications of the SEC's policy and drafting choices. Although I was a member of a committee that submitted comments opposed to noisy …

Did The Private Securities Litigation Reform Act Work?, Michael A. Perino

Faculty Publications

In 1995 Congress passed the Private Securities Litigation Reform Act (the PSLRA or the Act) to address abuses in securities fraud class actions. In the wake of Enron, WorldCom, Adelphia, and other high profile securities frauds, critics suggest that the law made it too easy to escape liability for securities fraud and thus created a climate in which frauds are more likely to occur. Others claim that the Act has largely failed because it did little to deter plaintiffs' lawyers from filing nonmeritorious cases. This article employs a database of the 1449 class actions filed from 1996 through 2001 to …

Enron's Legislative Aftermath: Some Reflections On The Deterrence Aspects Of The Sarbanes-Oxley Act Of 2002, Michael A. Perino

Faculty Publications

Since Enron's implosion, an astounding string of accounting scandals have stunned the securities markets. Global Crossing, WorldCom, Adelphia, and a host of other companies have seen plummeting share prices and SEC and criminal investigations. Congress's reaction has been equally stunning and surprisingly swift. It passed with near unanimity the Sarbanes-Oxley Act of 2002 (the "SOA" or the "Act"), and President Bush quickly signed it into law. The President billed the Act as one of the "the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt." While the SOA is certainly lengthy, with eleven titles and …

Reviewing Article 8’S Revised Collusion Standard; Outside Counsel, Francis J. Facciolo

Faculty Publications

(Excerpt)

The first published case to deal with the new collusion standard in revised Article 8 has been decided by Judge Bransten in Supreme Court, New York County. As New York City is the center of the securities industry, it is not surprising that the first published case to deal with collusion was decided here. The result reached by Judge Bransten, however, is surprising in the liberality with which collusion was construed.

Securites Law For The Next Millennium: A Forward-Looking Statement, Michael A. Perino

Faculty Publications

This article serves as the introduction to a symposium on the future of the securities markets and securities regulation which was held as part of St. John's University School of Law's year-long 75th anniversary celebration. The introduction serves to place the symposium in an historical context to set the stage for a discussion of the future.

Fraud And Federalism: Preempting Private State Securities Fraud Causes Of Action, Michael A. Perino

Faculty Publications

The passage of the Private Securities Litigation Reform Act of 1995 has engendered a significant forum shift in class action securities fraud litigation, from federal to state court. This unintended by-product of the Act has reignited debate over our dual federal-state system of securities regulation and in turn has inspired a discussion as to whether Congress should now preempt state securities fraud causes of action. This article argues that preemption is an appropriate, but not the only, solution to these concerns. To support this argument, this article first traces the history of dual state-federal securities regulation within the context of …

Legislature Mulls Change Of Article 8; Corporate Law, Francis J. Facciolo

Faculty Publications

(Excerpt)

A major revision of Article 8 of the Uniform Commercial Code was passed by the New York Assembly on July 2, 1996, but did not receive Senate consideration prior to adjustment. In light of the strong support given Proposed Article 8 by the banking and securities industries, the New York State Legislature will probably give serious consideration to passage when the next legislative session begins.

Although the supporters of Proposed Article 8 have stoutly maintained that it is primarily a clarification of the existing Article 8 and that the proposed changes are insignificant, the proposal actually includes major changes …

The Pentium Papers: A Case Study Of Collective Institutional Investor Activism In Litigation, Joseph A. Grundfest, Michael A. Perino

Faculty Publications

This article suggests that institutional investors have rational incentives to become more active in the litigation arena, but that the current debate is falsely constrained because it rests on the assumption that institutional investors must participate either by (1) assuming the formal role of lead plaintiff, class representative, or intervenor or, (2) not participating at all. This is a false dichotomy because, as this article demonstrates, institutions have available to them a rich array of flexible, informal, and relatively inexpensive mechanisms by which they can make their views known to litigants and courts alike.

Our hypothesis that institutional investor activism …

Order Flow Cases: Jurisdiction, Preemption And Securities Laws; Outside Counsel, Richard L. Stone, Jay Facciolo

Faculty Publications

(Excerpt)

Primary jurisdiction and preemption issues arise in securities class action litigation when alleged violations of state law arise from conduct that is either explicitly or implicitly regulated by the federal securities laws.

These are two distinct theories: one is a matter of administrative law and judicial economy (primary jurisdiction); the other is a matter of constitutional law involving the Supremacy Clause (preemption). To date, there has not been extensive case law involving preemption and the federal securities laws (other than in the blue sky and tender offer areas) and there has been almost no case law on primary jurisdiction …

Not Just A Private Club: Self Regulatory Organizations As State Actors When Enforcing Federal Law, Richard L. Stone, Michael A. Perino

Faculty Publications

In the Securities Exchange Act of 1934, Congress enacted a comprehensive scheme for regulating the national securities markets. Pursuant to that scheme, the Securities and Exchange Commission was given ultimate authority to enforce the newly enacted securities laws against market participants. The Exchange Act also created a prominent enforcement role for national securities exchanges, like the New York Stock Exchange. Congress required these self-regulatory organizations as a condition for their continued operation to enforce, among other things, compliance by their members with the provisions of the Exchange Act and the rules and regulations promulgated thereunder. The SROs were also given …

Double Jeopardy Issues In The Financial Sector; Outside Counsel, Richard L. Stone, Jay Facciolo

Faculty Publications

(Excerpt)

Double jeopardy issues arise regularly in the financial, banking and commodities industries where both civil and criminal statutes and penalties are used in successive prosecutions by federal and state governments to sanction the same conduct.

Recent Supreme Court and federal court decisions have established new standards for determining when civil fines and other civil penalties constitute “punishment” for purposes of the double jeopardy clause of the Fifth Amendment.

These decisions indicate that where a civil penalty imposed by a federal or state actor bears no “rational relation” to any actual damages caused, the penalty will be characterized as punishment …

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 …