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Articles 121 - 150 of 698
Full-Text Articles in Securities Law
The Two Faces Of Janus: The Jurisprudential Past And New Beginning Of Rule 10b-5, John Patrick Clayton
The Two Faces Of Janus: The Jurisprudential Past And New Beginning Of Rule 10b-5, John Patrick Clayton
University of Michigan Journal of Law Reform
Section 10(b) of the Securities Exchange Act and its implementing Rule 10b-5 are the primary antifraud provisions for both private and public enforcement of the federal securities laws. Neither the statute nor the rule expressly provides for a private right of action, but federal courts have long recognized such an implied right, and the Securities and Exchange Commission has supported the implied private right of action as a “necessary supplement” to its own efforts. However, after a decade of applying an expansive interpretation to Section 10(b), in the early 1970s the U.S. Supreme Court began to narrowly interpret this implied …
Halliburton Co. V. Erica P. John Fund, Inc.: Brief Of Law Professors As Amici Curiae In Support Of Petitioners, Adam C. Pritchard
Halliburton Co. V. Erica P. John Fund, Inc.: Brief Of Law Professors As Amici Curiae In Support Of Petitioners, Adam C. Pritchard
Appellate Briefs
Amici are law professors whose scholarship and teaching focuses on corporate law and federal securities law. Amici have an interest in ensuring that the securities laws are interpreted to accurately reflect both current financial economic scholarship and the law's historical underpinnings. Amici filed amicus briefs in Erica P. John Fund, Inc. v. Halliburton Co., 131 S. Ct. 2179 (2011), and in Amgen Inc. v. Connecticut Retirement Plans & Trust Funds, 133 S. Ct. 1184 (2012), both addressing the consideration of market impact and the fraud on the market theory at the class certification stage of Rule 10b-5 securities …
From Revolutionary To Palace Guard: The Role And Requirements Of Intermediaries Under Proposed Regulation Crowdfunding, Andrew D. Stephenson, Brian R. Knight, Matthew Bahleda
From Revolutionary To Palace Guard: The Role And Requirements Of Intermediaries Under Proposed Regulation Crowdfunding, Andrew D. Stephenson, Brian R. Knight, Matthew Bahleda
Michigan Business & Entrepreneurial Law Review
Intermediaries in securities crowdfunding face significant requirements as a result of the statutory mandates of Title III of the JOBS Act. The SEC, in its proposed rules, provided structure to these requirements. The proposed rules would create strict requirements for intermediaries regarding their relationships with investors and how they undertake crowdfunding transactions under Section 4(a)(6) of the Securities Act. The proposed rules would also create and establish the guidelines for funding portals, a new type of limited purpose securities broker. While some commentators decry the SEC for placing undue burdens and legal liabilities on intermediaries in securities crowdfunding, the SEC …
The Jobs Act Trojan Horse: A Gift To Startups With Something Else Inside?, Erik Gordon
The Jobs Act Trojan Horse: A Gift To Startups With Something Else Inside?, Erik Gordon
Michigan Business & Entrepreneurial Law Review
This Comment will analyze which provisions of the Act are consistent with the purpose that sponsors would have the public believe, that emphasized by the name “JOBS Act,” and distinguish them from those provisions that serve as menacing soldiers hidden under the cover of a name that diverts attention from the Act’s true purpose.
Enhancing The Legal And Regulatory Environment For Investment In Social Enterprise, Dilpreet K. Minhas
Enhancing The Legal And Regulatory Environment For Investment In Social Enterprise, Dilpreet K. Minhas
Michigan Business & Entrepreneurial Law Review
The objectives of this Note are: 1) to provide readers interested in social enterprise and entrepreneurship an introduction to these endeavors and the growing trend toward using them; 2) to present the challenges stemming from the legal and financial frameworks surrounding social investment activity, which can inhibit the survival and growth of social enterprises; and 3) to propose suggestions for addressing such challenges and limitations in order to better support the survival of social enterprise. Part II and Part III provide a broad perspective of the types of investment in and nurturing of social entrepreneurship in the U.S. Part IV …
Insider Trading And Other Securities Frauds In The United States: Lessons For Chile, Dante Figueroa
Insider Trading And Other Securities Frauds In The United States: Lessons For Chile, Dante Figueroa
Michigan Business & Entrepreneurial Law Review
This Article is a comparative analysis of insider trading law in the United States and Chile. The study summarily reviews the historical, political, and legal foundations of insider trading regulation in both jurisdictions, identifying areas of convergence, as well as areas in which the Chilean securities market could benefit vis- ` a-vis the more advanced experience of the considerably larger American securities market. The Article also highlights the axiological closeness between both jurisdictions concerning the protection of inside corporate information and the fiduciary role of those who intervene in securities markets in their various capacities (as investors, shareholders, corporate officers, …
Legally "Strong" Shareholders Of Japan, Gen Goto
Legally "Strong" Shareholders Of Japan, Gen Goto
Michigan Business & Entrepreneurial Law Review
Foreign investors often criticize Japanese corporations for not paying enough attention to the interests of their shareholders. It might surprise these critics, then, to learn that shareholders’ legal rights under the Japanese Companies Act are actually quite strong. Indeed, many of the rights that shareholders’ rights advocates often support, including shareholders’ power to alter a corporate charter without board consent, shareholders’ power to control dividend payments, majority voting for board elections, shareholders’ power to replace the board of directors, and shareholder access to a corporate ballot—all of which are strongly debated elsewhere— are already effective in Japan. Moreover, derivative suits …
'Quack Corporate Governance' As Traditional Chinese Medicine – The Securities Regulation Cannibalization Of China's Corporate Law And A State Regulator's Battle Against Party State Political Economic Power, Nicholas C. Howson
Articles
From the start of the People’s Republic of China’s (PRC) “corporatization ” project in the late 1980s, a Chinese corporate governance regime subject to increasingly enabling legal norms has been determined by mandatory regulations imposed by the PRC securities regulator, the China Securities Regulatory Commission (CSRC). Indeed, the Chinese corporate law system has been cannibalized by all - encompassing securities regulation directed at corporate governance, at least for companies with listed stock. This Article traces the path of that sustained intervention and makes a case — wholly contrary to the “quack corporate governance” critique much aired in the United States …
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 …
Securities Class Actions And Bankrupt Companies, James J. Park
Securities Class Actions And Bankrupt Companies, James J. Park
Michigan Law Review
Securities class actions are often criticized as wasteful strike suits that target temporary fluctuations in the stock prices of otherwise healthy companies. The securities class actions brought by investors of Enron and WorldCom, companies that fell into bankruptcy in the wake of fraud, resulted in the recovery of billions of dollars in permanent shareholder losses and provide a powerful counterexample to this critique. An issuer's bankruptcy may affect how judges and parties perceive securities class actions and their merits, yet little is known about the subset of cases where the company is bankrupt. This is the first extensive empirical study …
Scandal Enforcement At The Sec: The Arc Of The Option Backdating Investigations, Stephen Choi, Adam C. Pritchard, Anat C. Wiechman
Scandal Enforcement At The Sec: The Arc Of The Option Backdating Investigations, Stephen Choi, Adam C. Pritchard, Anat C. Wiechman
Law & Economics Working Papers
We study the SEC’s allocation of enforcement resources in the wake of a salient public scandal. We focus on the SEC’s investigations of option backdating in the wake of numerous media articles on the practice of backdating. We find that the SEC shifted its mix of investigations significantly toward backdating investigations and away from investigations involving other accounting issues. We test the hypothesis that SEC pursued more marginal investigations into backdating at the expense of pursuing more egregious accounting issues. Our event study of stock market reactions to the initial disclosure of backdating investigations shows that those reactions declined over …
Channel Checking And Insider Trading Liability, Michael Byun
Channel Checking And Insider Trading Liability, Michael Byun
Michigan Business & Entrepreneurial Law Review
This note addresses the potential legality or illegality of channel checking in the context of a private equity buyout. In Part II, this note uses a hypothetical to demonstrate a situation in which a private equity acquirer might engage in a channel check. In Part III, this note analyzes federal judicial and SEC cases that have developed various categories of insider trading liability, and provides a framework for insider trading liability. In Part IV, this note applies the analysis from Part III to the hypothetical described in Part II. Part IV attempts to reach a conclusion about whether the private …
'Quack Corporate Governance' As Traditional Chinese Medicine – The Securities Regulation Cannibalization Of China's Corporate Law And A State Regulator's Battle Against State Political Economic Power, Nicholas C. Howson
Law & Economics Working Papers
From the start of the PRC’s “corporatization” project in the late 1980s, a Chinese corporate governance regime subject to increasingly enabling legal norms has been determined by mandatory regulations imposed by the PRC securities regulator, the CSRC. Indeed, the Chinese corporate law system has been cannibalized by allencompassing securities regulation directed at corporate governance, at least for companies with listed stock. This article traces the path of that sustained intervention, and makes a case – wholly contrary to the “quack corporate governance” critique much aired in the U.S. – that for the PRC this phenomenon is necessary and appropriate, and …
Private Regulation Of Insider Trading In The Shadow Of Lax Public Enforcement: Evidence From Canadian Firms, Laura Nyantung Beny, Anita Anand
Private Regulation Of Insider Trading In The Shadow Of Lax Public Enforcement: Evidence From Canadian Firms, Laura Nyantung Beny, Anita Anand
Articles
Like firms in the United States, many Canadian firms voluntarily restrict trading by corporate insiders beyond the requirements of insider trading laws (i.e., super-compliance). Thus, we aim to understand the determinants of firms’ private insider trading policies (ITPs), which are quasi-contractual devices. Based on the assumption that firms that face greater costs from insider trading (or greater benefits from restricting insider trading) ought to be more inclined than other firms to adopt more stringent ITPs, we develop several testable hypotheses. We test our hypotheses using data from a sample of firms included in the Toronto Stock Exchange/Standard and Poor’s (TSX/S&P) …
Revisiting 'Truth In Securities Revisited': Abolishing Ipos And Harnessing Private Markets In The Public Good, Adam C. Pritchard
Revisiting 'Truth In Securities Revisited': Abolishing Ipos And Harnessing Private Markets In The Public Good, Adam C. Pritchard
Articles
My thesis is that the transition between private- and public-company status could be less bumpy if we unify the public-private dividing line under the Securities Act and Exchange Act. The insight builds on Cohen's thought experiment where Congress first enacted the Exchange Act. My proposed public-private standard would take the company-registration model to its logical conclusion. The customary path to public-company status is through an IPO, typically with simultaneous listing of the shares on an exchange. There is nothing about public offerings, however, that makes them inherently antecedent to public-company status. What if companies became public, with required periodic disclosures …
Sec Investigations And Securities Class Actions: An Empirical Comparison, Stephen Choi, Adam Pritchard
Sec Investigations And Securities Class Actions: An Empirical Comparison, Stephen Choi, Adam Pritchard
Law & Economics Working Papers
We compare investigations by the SEC with securities fraud class action filings involving public companies. Using actions with both an SEC investigation and a class action as our baseline, we compare SEC-only investigations with class action-only lawsuits. We find evidence that the stock market reacts more negatively to the class actions relative to SEC investigations. We also find that institutional ownership and stock turnover decline more for class actions compared with SEC investigations. Lastly, the incidence and magnitude of settlements, as well as the incidence of top officer resignation, are greater for class actions relative to SEC investigations. This evidence …
Facebook, The Jobs Act, And Abolishing Ipos, Adam C. Pritchard
Facebook, The Jobs Act, And Abolishing Ipos, Adam C. Pritchard
Law & Economics Working Papers
The market for initial public offerings (IPOs) — the first sale of private firms’ stock to the public — is notorious for its swings from peaks to valleys. This paper argues that these swings reflect serious flaws in the IPO scheme, and that U.S. capital markets should move toward a more stable alternative. Specifically, this paper argues for a two-tier market system in which new stock issuers initially participate in a less-regulated private capital market of accredited investors and then, if they choose, they can move to a more regulated, broader public market. Likewise, firms currently participating in the public …
The Volcker Rule's Hedging Exemption, Spencer A. Winters
The Volcker Rule's Hedging Exemption, Spencer A. Winters
Michigan Law Review First Impressions
The comment period for the proposed regulations to be promulgated under the Volcker Rule expired on February 13, 2012. The rulemakers received over 16,000 comments during that period, in what one commentator described as a "fecal storm." Though that description is hopefully an exaggeration, it is safe to say that the Rule's implementation has been contentious. The Volcker Rule, named for former chairman of the Federal Reserve Paul Volcker, is a component of the Dodd-Frank Act, which Congress passed in response to the recent financial crisis. The Rule's statutory provision charges the nation's financial regulators with issuing a body of …
Amgen Inc. V. Connecticut Retirement Plans And Trust Funds: Brief Of Law Professors As Amici Curiae In Support Of Petitioners, Adam C. Pritchard
Amgen Inc. V. Connecticut Retirement Plans And Trust Funds: Brief Of Law Professors As Amici Curiae In Support Of Petitioners, Adam C. Pritchard
Appellate Briefs
Amici are law professors whose scholarship and teaching focuses on corporate law and the federal securities laws. Law professors have an interest in ensuring that the securities laws are interpreted to accurately reflect both current financial economic scholarship and the historical underpinnings of the securities laws. Amici filed a brief amici curiae in Erica P. John Fund, Inc. v. Halliburton Co., 131 S. Ct. 2179 (2011) (No. 09-1403), addressing the consideration of market impact and the fraud on the market theory at the class certification stage of Rule 10b-5 securities fraud suits.
Federal Discovery Stays, Gideon Mark
Federal Discovery Stays, Gideon Mark
University of Michigan Journal of Law Reform
In federal civil litigation, unless a discretionary stay is granted, discovery often proceeds while motions to dismiss are pending. Plaintiffs with non-meritorious cases can compel defendants to spend massively on electronic discovery before courts ever rule on such motions. Defendants who are unable or unwilling to incur the huge up-front expense of electronic discovery may be forced to settle non-meritorious claims. To address multiple electronic discovery issues, Congress amended the Federal Rules of Civil Procedure in 2006 and the Federal Rules of Evidence in 2008. However, the amendments failed to significantly reduce costs and failed to address the critical issue …
The Facebook Ipo's Face-Off With Dual Class Stock Structure, Anna S. Han
The Facebook Ipo's Face-Off With Dual Class Stock Structure, Anna S. Han
University of Michigan Journal of Law Reform Caveat
The Facebook initial public offering (“Facebook IPO”) is premised on a dual class stock structure, which the media criticizes as a circumvention of regulations designed to protect shareholders. I argue that Facebook’s use of dual class stock not only is likely to benefit its shareholders, but also follows in the footsteps of seasoned, influential companies like Google.
Private Equity Firms: Beyond Sec Registration As An Investment Adviser How To Build And Administer An Effective Compliance Program, Susan Mosher
Michigan Business & Entrepreneurial Law Review
The Securities and Exchange Commission (the “SEC” or the “Commission”) recently adopted new rules and rule amendments under the Investment Advisers Act of 1940 (the “Advisers Act”) that serve to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).1 The new rules and rule amendments under the Advisers Act relate to provisions of Title IV of the Dodd-Frank Act (the Private Fund Investment Advisers Registration Act of 2010) that, among other things, require certain private fund advisers and private equity firms to register with the Commission.2 This article is intended to assist firms that …
The Meaning Of The Market Myth, Benjamin Means
The Meaning Of The Market Myth, Benjamin Means
Michigan Business & Entrepreneurial Law Review
This Book Review contends that the perfectly rational market may be a myth, not just in the sense of a false or over-simplified account of reality, but also in the deeper, anthropological sense of cultural explanation. Part I describes how rational-market theories were developed by financial economists and applied to Wall Street, sometimes without adequate appreciation for the difference between simplified economic models and real-world behavior. Part II contends that if the rational-market theory has met with acceptance that outstrips its empirical support, the favorable reception may be explained in part by the theory’s congruence with broader normative views about …
A Very Quiet Revolution: A Primer On Securities Crowdfunding And Title Iii Of The Jobs Act, Thaya Brook Knight, Huiwen Leo, Adrian A. Ohmer
A Very Quiet Revolution: A Primer On Securities Crowdfunding And Title Iii Of The Jobs Act, Thaya Brook Knight, Huiwen Leo, Adrian A. Ohmer
Michigan Business & Entrepreneurial Law Review
This essay introduces the complex regulatory regime that governs the public sale of all securities, no matter how small the offeror. It is intended as a rudimentary roadmap for the start-up or its counsel and will, hopefully, help to illuminate the traps for the unwary while providing an overview of the regulatory universe in which securities crowdfunding will operate.
High-Frequency Trading: Should Regulators Do More, Matt Prewitt
High-Frequency Trading: Should Regulators Do More, Matt Prewitt
Michigan Telecommunications & Technology Law Review
High-Frequency Trading ("HFT") is a diverse set of algorithmic trading strategies characterized by fast order execution. Its importance in international markets has increased vastly in recent years. From a regulatory perspective, HFT presents difficult and partially unresolved questions. The difficulties stem partly from the fact that HFT encompasses a wide range of trading strategies, and partly from a dearth of unambiguous empirical findings about HFT's effects on markets. Yet certain important conclusions are broadly accepted. HFT can increase systemic risk by causing or exacerbating events like the "Flash Crash" of May 6, 2010. HFT can also enable market manipulators to …
Enforcement Without Foundation? Insider Trading And China's Administrative Law Crisis, Nicholas C. Howson
Enforcement Without Foundation? Insider Trading And China's Administrative Law Crisis, Nicholas C. Howson
Articles
China's securities regulator enforces insider trading prohibitions pursuant to non-legal and non-regulatory internal "guidance." Reported agency decisions indicate that enforcement against insider trading is often possible only pursuant to this guidance, as the behavior identified is far outside of the scope of insider trading liability provided for in statute or regulation. I argue that the agency guidance is itself unlawful and unenforceable, because: (i) the guidance is not the regulatory norm required by the statutory delegation of power; and (ii) the guidance is ultra vires because (a) it addresses something substantively different from what is authorized under the statutory delegation, …
Facebook, The Jobs Act, And Abolishing Ipos, Adam C. Pritchard
Facebook, The Jobs Act, And Abolishing Ipos, Adam C. Pritchard
Articles
Initial public offerings (IPOs)-the first sale of private firms' stock to the public-are a bellwether of investor sentiment. Investors must be bullish if they are putting their money into untested start-ups. IPOs are frequently cited in the business press as a key barometer of the health of financial markets. Politicians, too, see a steady flow of IPOs as an indicator that capital is fueling the entrepreneurial initiative that sustains the growth of new businesses. Growing businesses create jobs, so Republicans and Democrats can find common ground on the importance of promoting IPOs. That bipartisan consensus was on display this spring …
Toward Transatlantic Convergence In Financial Regulation, Hwa-Jin Kim
Toward Transatlantic Convergence In Financial Regulation, Hwa-Jin Kim
Law & Economics Working Papers
This Article reviews the historical background of the Glass-Steagall Act of 1933 along with the developments in the markets that led to the Gramm-Leach-Bliley Act of 1999. It analyzes the discussions on the Volcker Rule in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 from a comparative perspective. It shows how the reform in the United States may impact financial institutions and markets in other jurisdictions. Germany and Switzerland, where universal banking is the hallmark of the financial services industry, are the primary jurisdictions of interest. After taking a historical and political look at the regulation of …
Why Governance Might Work In Mutual Funds, Michael C. Schouten
Why Governance Might Work In Mutual Funds, Michael C. Schouten
Michigan Law Review First Impressions
The Supreme Court's recent decision in Jones v. Harris Associates L.P. has highlighted the potential for agency conflicts in mutual funds, whose advisors have the de facto power to award themselves high fees. While the surrounding debate has focused on the extent to which market competition replaces the need for fee litigation, there appears to be a growing consensus that fund governance, through the use of voice, is unlikely to be effective. The use of voice is commonly said to be hampered by collective action problems. More recently, scholars have argued that it is further weakened by the easy availability …
The Price Of Pay To Play In Securities Class Actions, Adam C. Pritchard, Stephen J. Choi, Drew T. Johnson-Skinner
The Price Of Pay To Play In Securities Class Actions, Adam C. Pritchard, Stephen J. Choi, Drew T. Johnson-Skinner
Articles
We study the effect of campaign contributions to lead plaintiffs—“pay to play”—on the level of attorney fees in securities class actions. We find that state pension funds generally pay lower attorney fees when they serve as lead plaintiffs in securities class actions than do individual investors serving in that capacity, and larger funds negotiate for lower fees. This differential disappears, however, when we control for campaign contributions made to offcials with infuence over state pension funds. This effect is most pronounced when we focus on state pension funds that receive the largest campaign contributions and that associate repeatedly as lead …