Securities Law Commons^™

Repo Madness: The Characterization Of Repurchase Agreements Under The Bankruptcy Code And The U.C.C., Jeanne L. Schroeder

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The article examines the legal characterization of repurchase agreements (repos) under the Bankruptcy Code and the Uniform Commercial Code (U.C.C.), with a focus on proposed revisions to Articles 8 and 9. It argues that repos should be treated as sales rather than secured loans, primarily due to the repo buyer's unrestricted right to deal with the collateral. This characterization is supported by court rulings in cases such as In re Bevill, Bresler & Schulman and SEC v. Drysdale Securities Corp., which emphasize the transfer of ownership and the buyer's ability to engage with the securities. The article critiques current methods …

Is Article 8 Finally Ready This Time? The Radical Reform Of Secured Lending On Wall Street, Jeanne L. Schroeder

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The article critiques the 1977 proposed amendments to Articles 8 and 9 of the Uniform Commercial Code (UCC), arguing that while they aim to modernize securities law by replacing the outdated physical possession metaphor with the concept of "control," they fail to adequately address the complexities of indirect holdings through intermediaries. The revisions introduce "supernegotiability," prioritizing secured creditors over customers, but raise ethical concerns about rewarding dishonest behavior and potentially undermining consumer protections. The article concludes that while the changes improve market efficiency and clarity, further refinements are needed to balance the interests of all stakeholders.

Postpetition Security Interests Under The Bankruptcy Code, David G. Carlson

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Section 364(c) and (d) of the Bankruptcy Code provides for the creation of security interests in real and personal property under federal law. In this Article, David Gray Carlson discusses the quality and nature of these federal security interests, their remarkable immunity from reversal on appeal, and the ability of postpetition lenders to obtain preferences over other creditors through "cross-collateralization" clauses and the like.

Delaware Fiduciary Duty Law After Qvc And Technicolor: A Unified Standard (And The End Of Revlon Duties?), Lawrence A. Cunningham, Charles M. Yablon

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The Delaware Supreme Court's decisions in QVC and Technicolor have redefined the analysis of directors' fiduciary duties in takeover situations by rejecting the fragmented approach of separate duties under Revlon, Unocal, and MacMillan. Instead, these rulings establish a unified standard that combines the duties of care and loyalty under a single obligation of good faith and fair dealing, requiring directors to make reasonably informed judgments. This approach applies enhanced scrutiny to decisions involving sales of control, defensive tactics, and other extraordinary events, ensuring that directors act in the best interests of shareholders while allowing flexibility in their decision-making processes.

Bankruptcy Theory And The Creditors' Bargain, David G. Carlson

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The article critiques the traditional "simple creditors' bargain" theory in bankruptcy law, arguing that it fails to align with libertarian principles due to its inability to justify bankruptcy discharges and its exclusion of debtors and non-creditors. It then explores an "expanded creditors' bargain," which attempts to address distributive aspects but ultimately falls short by excluding non-consensual creditors and failing to explain why contractual risk allocation is insufficient. The analysis highlights the theory's shortcomings in handling various creditor types and risks, questioning its validity in explaining bankruptcy law.

Competitive Deregulation Of Financial Services Activity In Europe After 1992, Caroline Bradley

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No abstract provided.

Defining The Scope Of Broker And Dealer Duties -- Some Problems In Adjudicating The Responsibilities Of Securities And Commodities Professionals, Gregory A. Hicks

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The purpose of this Article is to stress the need for grounding broker-dealer duties in sound, articulated understandings of the investment markets, as well as defensible statements of the responsibilities and expectations of both customers and market professionals. This important need will be demonstrated through the use of several cases illustrating problematical or failed processes by which broker-dealer duties have been established.

This Article will focus primarily on two recent decisions, In re E.F. Hutton & Co., and Wasnick v. Refco, Inc., both of which have been criticized for inappropriately expanding broker and dealer duties. Each decision is …

Poison Pills And Litigation Uncertainty, Charles M. Yablon

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The article argues that the legal uncertainty surrounding poison pills in corporate takeovers is not accidental but a result of deliberate strategies by judges and corporate lawyers. This uncertainty encourages negotiation between incumbent management and raiders, preventing either side from having absolute control. The analysis explores the implications of this uncertainty, particularly its impact on the balance of power and management's ability to influence takeover outcomes. It also considers whether maintaining this uncertainty is more beneficial than establishing clear legal rules regarding poison pills.

Rationality, Accident, And Priority Under Article 9 Of The Uniform Commercial Code, David G. Carlson

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The article argues that the priority rules under Article 9 of the Uniform Commercial Code (UCC) are not grounded in a coherent, rational principle but are instead the result of historical accidents and the influence of powerful interest groups. These rules create an asymmetrical system that favors expert lenders over amateur lenders, leading to inequities and inefficiencies. The author critiques justifications for these rules, such as efficiency and moral culpability, and advocates for a more ethical and equitable framework that aligns with societal notions of fairness.

The Issuer's Paper: Property Or What? Zero Basis And Other Income Tax Mysteries, Elliott Manning

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No abstract provided.

Closely Held Stocks—Deferral And Financing Of Estate Tax Costs Through Sections 303 And 6166, Douglas A. Kahn

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The enactment of the Economic Recovery Tax Act of 1981 (hereinafter referred to as "the 1981 Act") will reduce both the impact of federal wealth transfer taxes and the number of persons still subject to them. Nevertheless, even after the 1981 Act takes full effect, a category of persons remains for whom wealth transfer taxes will constitute a meaningful burden and whose estates face a liquidity problem in satisfying the estate tax liability. The focus of this article is on two statutory techniques: redemptions of stock pursuant to section 3031 and deferral of estate tax payments under section 6166.2 These …

Corporations, Shareholders' Right To Have A Dividend Declared And Paid Out Of Surplus, Horace Lafayette Wilgus

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In Dodge v. Ford Motor Co. (Mich. 1919), 170, N. W. 668, the questions were not new, and with one exception, the decision was not unusual, but the sums involved were enormos. The Motor Company was incorporated in 1903, under the general manufacturing incorporating act of Michigan (P. A. 232, 1903), for the manufacture and sale of automobiles, motors and devices incident to their construction and operation, with an authorized Capital Stock of $150,000-$100,000 then paid up, $49,000 in cash, $40,000 in letters patent issued and applied for, and $11,000 in machinery and contracts. In 1908 the stock was increased …

Purchase Of Shares Of Corporation By A Director From A Shareholder, Horace Lafayette Wilgus

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It is generally laid down in the encyclopedias and text books, and affirmed in many court opinions that "the doctrine that officers and directors [of corporations] are trustees of the stockholders, applies only in respect to their acts relating to the property or business of the corporation. It does not extend to their private dealings with stockholders or others, though in such dealings they take advantage of knowledge gained through their official position."1 Much of this doctrine is based upon the language of Chief Justice SHAW in Smith v. Hurd2 decided in 1847. He said: "There is no legal privity, …

Right Of Joint Adventurers Holding All The Stock Of A Corporation To A Dissolution And Accounting In Equity, Horace Lafayette Wilgus

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The case of Jackson v. Hooper, in the New Jersey Court of Errors and Appeals, decided February 28, 1910, by Judge DILL, (42 N. Y. Law Journal, March 8, 1910), overruling Vice Chancellor HOWELL, of the Court of Chancery (74 AtL. 130) presents interesting and unusual points in corporation and partnership law, and the jurisdiction of courts of equity over corporate affairs.

Corporation Liens On Stock, Edson R. Sunderland

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At common law a corporation had no lien upon its stock for assessments unpaid or for debts due it from its shareholders.6 There are therefore but four possible methods by which liens could be created in favor of the corporation upon the stock which it issues, (i) by statute, (2) by charter, (3) by by-law, (4) by contract.