Securities Law Commons^™

Pay-To-Play, Gad Weiss

BYU Law Review

Pay-to-play clauses are a surprisingly understudied feature of venture capital financing deals. These provisions are designed to act as enforcement agents, securing investors’ long-term commitment by penalizing those who decline to provide additional funding when their portfolio startups come calling. Through an analysis of a novel dataset of pay-to-play clauses, this paper uncovers surprising patterns in how U.S. startups design and deploy them—most notably, their tendency to discriminate among investors despite legal guidance suggesting otherwise. The paper illustrates how pay-to-play clauses can increase enterprise value by addressing flaws in startups’ governance and capital structures, preventing destructive “chicken” games among investor …

Poor Esg: Regressive Effects Of Climate Stewardship, Zohar Goshen, Assaf Hamdani, Alex Raskolnikov

BYU Law Review

The rise of inequality and global warming are the two ultimate challenges of our time. After decades of congressional failure to address climate change, the private sector has stepped in and adopted a set of environmental, social, and governance (ESG) policies as a market-based solution to a public policy failure. ESG advocates hope that corporate executives would save our planet. Where Congress failed, ESG will succeed.

This Article argues that if ESG-driven climate stewardship ever achieves the scale necessary to have a real impact on global warming, it will hurt the poor. Legislative interventions to combat climate change are nearly …

Regulatory Influence In The Financial Markets Revisited, Jessica E. Lees

BYU Law Review

Historically, the financial markets of the United States and their corresponding regulatory scheme wielded unique influence throughout the globe. But this influence is waning, due largely to the centralization of financial services rulemaking within the European Union and the growth of global emerging markets. It is thus an important time to consider the circumstances under which a jurisdiction may assume and exercise the global regulatory influence traditionally wielded by the U.S. regime.

This Article develops a new framework to specifically address regulatory influence within global financial regulation and financial markets more broadly, looking beyond market size to establish a more …

The Esg Gap, Sharon Hannes, Adi Libson, Gideon Parchomovsky

BYU Law Review

The corporate world is undergoing a transformation: there has been a dramatic influx in demand for companies to promote environmental, social, and governance (ESG) values. Yet these preferences do not necessarily translate into effective corporate actions. In this Article, we underscore the structural problems that prevent such preferences from steering the corporate ship full steam ahead toward ESG goals. We analyze the central actors in the corporate sphere that can potentially bring about such change on the ground: managers, institutional investors, and activist hedge funds. We demonstrate that none of these actors have the two central elements required for promoting …

Valuing Esg, Aneil Kovvali, Yair Listokin

BYU Law Review

Corporate environmental, social, and governance (ESG) commitments promise to make capitalism better. Unfortunately, ESG has become a hotbed of hype and controversy. The core problem is that ESG mixes vague environmental and social goals with a profit maximization goal and does not provide a framework for resolving the conflicts that exist between them. The result is confusion that invites deception and cynicism. This Article proposes a mechanism for resolving conflicts between goals by translating them into the common language of money. Once nonpecuniary environmental or social goals are translated into dollar values, they can provide clear and actionable guidance for …

The Failure Of Market Efficiency, William Magnuson

BYU Law Review

Recent years have witnessed the near total triumph of market efficiency as a regulatory goal. Policymakers regularly proclaim their devotion to ensuring efficient capital markets. Courts use market efficiency as a guiding light for crafting legal doctrine. And scholars have explored in great depth the mechanisms of market efficiency and the role of law in promoting it. There is strong evidence that, at least on some metrics, our capital markets are indeed more efficient than they have ever been. But the pursuit of efficiency has come at a cost. By focusing our attention narrowly on economic efficiency concerns—such as competition, …

Nontraditional Investors, Jennifer S. Fan

BYU Law Review

In recent years, nontraditional investors have become a major player in the startup ecosystem. Under the regulatory regime of U.S. securities law, those in the public realm are heavily regulated, while those in the private realm are largely left alone. This public-private divide, which is a fundamental organizing principle of securities law, has eroded with the rise of nontraditional investors. While legal scholars have addressed the impact of some of these nontraditional investors individually, their collective impact on deal terms, deal timelines, due diligence, and board configuration has not been discussed in a holistic manner; neither has their impact on …

State Securities Enforcement, Andrew K. Jennings

BYU Law Review

Each year, state securities regulators bring over twice the enforcement actions brought by the Securities and Exchange Commission, yet their work is largely missing from the literature. This Article provides an institutional account of state securities enforcement and identifies two key advantages — detection granularity and institutional decentralization — that states enjoy over their federal counterparts in policing localized frauds involving individual, often small-dollar, victims. Although states share enforcement jurisdiction with the SEC and DOJ, their enforcement activity reflects their institutional advantages and constraints and thus largely does not overlap with that of federal authorities. Instead, states serve as the …

Relational Enforcement Of Stock Exchange Rules, Geeyoung Min, Kwon-Yong Jin

BYU Law Review

Stock exchanges, as regulating entities supervised by the Securities and Exchange Commission (SEC), have wielded their rulemaking power on various corporate governance issues, ranging from the independent board committee requirement adopted in 2003 to the board diversity requirement approved in 2021. Simultaneously, as for-profit corporate entities, major stock exchanges have been competing against each other to attract and retain more companies. This dual status of stock exchanges — as regulators and as profit driven entities — brings into question the stock exchanges' incentive to enforce their own rules against listed companies. What happens if a listed company violates stock exchange …

Utility Token Offerings: Can A Security Transform Into A Non-Security?, Scott W. Maughan

BYU Law Review

No abstract provided.

The Importance Of Inferior Voting Rights In Dual-Class Firms, Dov Solomon

BYU Law Review

Over the past several years, corporate law scholarship has carefully analyzed the effects of dual-class capital structures, which allocate superior voting rights to insiders and inferior voting rights to public shareholders. This Article adds to the literature by focusing on a unique and novel type of dual-class structure—one in which the public shares have no voting rights at all. It notes that this structure is fundamentally different because in the absence of even highly diluted voting rights in public hands, the firm does not have to abide by certain types of disclosure rules and corporate governance standards. Nonvoting shareholders are …

Spotify’S Direct Listing And Foreign Private Issuers: Protecting Investors When Foreign Private Issuers List On A U.S. Exchange But Not On Their Home Exchange, Tayler Tanner

BYU Law Review

No abstract provided.

The Stock Exchange As Multi-Sided Platform And The Future Of The National Market System, Steven Mcnamara

BYU Law Review

Since Regulation National Market System (Regulation NMS) came into force a decade ago, computer technology has transformed the stock markets. While Regulation NMS benefited investors by lowering stated transaction costs, it also created today’s complex and fragmented trading system. An increasing amount of trading now occurs off-exchange in dark pools and other “non-lit” venues, and hidden costs proliferate. In addition to the profits taken by high-frequency traders, these include the defensive costs of the technological arms race, the possibility of another “Flash Crash,” public suspicions of “rigged” stock markets, reduced allocative efficiency, and rising proprietary data fees paid by stockbrokers …

What Happens In Delaware Need Not Stay In Delaware: How Trulia Can Strengthen Private Enforcement Of The Federal Securities Laws, Ryan Lewis

BYU Law Review

Class-action lawsuits have been used by private plaintiffs to enforce the federal securities laws since those laws were enacted in the 1930s. With the SEC retaining concurrent authority to enforce federal securities laws, a debate has emerged as to whether the private right of action helps or hinders public enforcement. The primary criticism of private securities litigation is that rent-seeking attorneys abuse the system by bringing frivolous litigation aimed at achieving a settlement and a fee. In the public merger context, the potentially disastrous consequences of failing to close an announced deal on time make corporations eager to settle potentially …

Simmonds V. Credit Suisse Securities: Applying Delaware’S Demand Requirement To Section 16(B), Joseph Orien

BYU Law Review

No abstract provided.

Opening The Rule 10b-5 Floodgates: Ninth Circuit Split In Gilead Sciences Leaves The Loss Causation Pleading Standard In Limbo , Brandon J. Stoker

BYU Law Review

No abstract provided.

In Re Williams Securities Litigation—Wcg Subclass: How Dura Met Daubert, Bryan L. Phipps

BYU Law Review

No abstract provided.

Contemporary Legal Transplants: Legal Families And The Diffusion Of (Corporate) Law, Holger Spamann Spamann

BYU Law Review

No abstract provided.

The Plight Of The Private Securities Litigation Reform Act In The Post-Enron Era: The Ninth Circuit's Interpretation Of Materiality In Employer-Teamster V. America West, Patrick Hall

BYU Law Review

No abstract provided.

Reforming Securities Class Actions From The Bench: Judging Fiduciaries And Fiduciary Judging, Lisa L. Casey

BYU Law Review

No abstract provided.

Determining The Materiality Of Earnings Forecasts Under The Private Securities Litigation Reform Act In Helwig V. Vencor, Hugh Beck

BYU Law Review

No abstract provided.

Liability Of Broker-Dealers For Unsuitable Recommendations To Institutional Investors, Norman S. Poser

BYU Law Review

No abstract provided.

There Should Be No Reliance In The "Blue Sky", David O. Blood

BYU Law Review

No abstract provided.

United States U. O'Hagan: 'L'He Eighth Circuit Throws The Second Strike To The Misappropriation Theory Of Rule 10b-5 Liability, Shawn J. Lindquist

BYU Law Review

No abstract provided.

Central Bank V. First Interstate Bank: Plain Language And The Implied Private Right Of Action Under Section Loch) And Rule 10b-5, T. James Lee Jr.

BYU Law Review

No abstract provided.

The Business Judgment Rule: How Much Board Deliberation Is Enough When A Board Is Under Time Constraints?-Citron V. Fairchild Camera And Instrument Corp., Jeffrey M. Moss

BYU Law Review

No abstract provided.

Company Law In The European Single Market, Richard D. English

BYU Law Review

No abstract provided.

The Eec Merger Regulation And Its Impact On Non-Eec Businesses, Alec Burnside, Carl Meyntjens False

BYU Law Review

No abstract provided.

Corporate Scienter Under The Securities Exchange Act Of 1934, Craig L. Griffin

BYU Law Review

No abstract provided.

Independent Motion Picture Financing: Unregistered Limited Partnership Offerings, James L. Thompson

BYU Law Review

No abstract provided.