Securities Law Commons^™

Hyperbole In The Capital Stack: Are We Misreading Lender Intent? Liability Management Transactions And The Implied Covenant Of Good Faith And Fair Dealing, Daniel R. Janel

Cardozo Law Review

The hasty characterization and overall sentiment surrounding Liability Management Transactions (“LMTs”) as “hostile” strategies that promote “lender-on-lender violence” attempt to misapply the implied covenant of good faith and fair dealing under New York law, which serves as a gap-filler rather than a “contract buster.” Although the covenant’s proper function is to protect parties’ reasonable expectations that they will receive the fruits of their bargain, it does not purport to rewrite or impose on carefully negotiated credit agreements. Sophisticated parties enter into meticulously crafted credit agreements with full awareness of the breadth and scope of their provisions. Only after finding themselves …

Regulating Congressional Insider Trading: The Rotten Egg Approach, Sarah J. Williams

Cardozo Law Review

A 2004 study revealed that the stock portfolios of members of Congress were consistently outperforming those of the investing public. The financial success of federal lawmakers was statistically correlated to the use of nonpublic information obtained while performing legislative responsibilities—reasonably characterizable as insider trading. Cries of dismay over such profiteering by lawmakers have been echoing in the public domain since Samuel Chase, Maryland’s representative in the Continental Congress, directed colleagues to corner the flour market in 1778 after learning that copious quantities of it would be purchased by the government to support the Continental Army. Notwithstanding efforts to apply insider …

Data Privacy By Contract, Ifeoma Ajunwa, Austin Kamer

Cardozo Law Review

Protecting consumer privacy rights presents a particular challenge given the prevalence of data breaches. This Article notes that current law is woefully inadequate in protecting the privacy rights of consumers. Notably, the law fails in the following four areas: (1) classification of consumer data, (2) lack of a comprehensive approach, (3) after-the-fact focus, and (4) limited accountability for third parties. Although it may be impossible to eliminate all data breaches, more regulations can bolster protection without restricting technological advancements. This Article proposes a contractual approach to privacy protection for consumers. It argues that the creation of mandatory implied contractual terms …

Beneficial Conflicts Of Interest, Anita K. Krug

Cardozo Law Review

Conflicts of interest exist in both professional and private settings, and everyone experiences them from time to time. If a person harboring a conflict acts on it—meaning the person acts against interests she ought to uphold—innocent parties may be harmed. Accordingly, the key to addressing a conflict in most settings is to eliminate it, such as by prohibiting conflicted behavior or recusing oneself from a deliberative process. However, conflicts of interest have a special character in the securities realm, both because they are ubiquitous given financial firms’ myriad competing interests and because the goal of the agency charged with addressing …

Landlord Liability For Tenant-On-Tenant Harassment Under The Fair Housing Act, Mary Karapogosian

Cardozo Law Review

No abstract provided.

Section 546(E) Redux—The Proper Framework For The Construction Of The Terms Financial Institution And Financial Participant Contained In The Bankruptcy Code After The U.S. Supreme Court’S Holding In Merit, Peter V. Marchetti

Cardozo Law Review

This Article discusses and analyzes the proper framework for the construction of the terms “financial institution” and “financial participant” as defined in Sections 101(22)(A) and 101(22A) of the Bankruptcy Code (the Code), as they work in tandem with Section 546(e) of the Code. In 2018, the U.S. Supreme Court issued its long awaited decision in Merit, which held that the language regarding transfers “made by or to (or for the benefit of) . . . a financial institution” contained in Section 546(e) does not insulate the ultimate transferee of a constructive fraudulent action (a CFTA) simply because the company being …

Separating Governance Tokens From Securities: How The Utility Token May Fall Short Of The Investment Contract, Kyle Bersani

Cardozo Law Review

No abstract provided.

War & The Constitution: Chemical Agents And The Rights Of Protestors, Yomidalys GüIchardo Morel

Cardozo Law Review

No abstract provided.

Treat Thy Neighbor As Thyself? Equal Protection And The Scope Of Rluipa’S Equal Terms Clause, Noah Kane

Cardozo Law Review

No abstract provided.

Winning, Defined? Text-Mining Arbitration Decisions, Charlotte S. Alexander, Nicole G. Iannarone

Cardozo Law Review

Who wins in consumer arbitration? Historically, this question has been nearly impossible to answer, as most arbitration proceedings are a private black box, and arbitral forums release only limited summary statistics. One exception is the Financial Industry Regulatory Authority (FINRA), which arbitrates virtually all disputes between investors and stockbroker-dealers, and makes all of its nearly 60,000 written arbitration decisions publicly available in an online database. This Article is the first to use computational text analysis tools to study these decisions, and to construct a measure of the claimants’ win, loss, and settlement rates. It is the first installment in an …

Buyer Beware: Variation And Opacity In Esg And Esg Index Funds, Dana Brakman Reiser, Anne Tucker

Cardozo Law Review

Evidence of the tremendous rise in the significance of environmental, social, and governance (ESG) investing is coming from all quarters. Fund flows into ESG investment vehicles are growing at a sustained and sometimes exponential pace. Fund complexes are rushing to design products, creating and rebranding scores of mutual funds and exchange traded funds (ETFs), including lower-cost indexed options. Industry leaders, critics, and commentators are all heralding the sea change as a shift in investing-and corporate governance-to more broadly consider environmental and social factors.

This Article provides vital context for this conversation. Its descriptive account of the ESG investment landscape drawn …

Securing The Best Odds: Why Congress Should Regulate Sports Gambling Based On Securities-Style Mandatory Disclosure, Ryan Grandeau

Cardozo Law Review

No abstract provided.

The Sec's Part 205.3(D)(2) And Wadler V. Bio-Rad Labs. Should Be Revisited: The Sec Exceeded Authority In Creating A Reporting Out Provision For In-House Attorneys, Briana Sheridan

Cardozo Law Review

This Note proceeds in three parts. Part I introduces relevant statutory law. Part I discusses federal law, notably Section 307 of the Sarbanes-Oxley Act and the SEC's Part 205.3(d)(2), as well as the American Bar Association (ABA) Model Rules and conflicting state law. Part II first examines case law involving the preemption of state ethics laws, including Wadler v. Bio-Rad Laboratories, which concluded broadly that Part 205 preempts California law.23 Part II then examines the doctrine of federal preemption, which is followed by a preemption analysis of Part 205.3(d)(2). Part III recommends that Part 205.3(d)(2) should be revisited, as the …

The Equality Principle: How Title Vii Can Save Insider Trading Law, Kenneth R. Davis

Cardozo Law Review

No abstract provided.

No Smoke And No Fire: The Rise Of Internal Controls Absent Antibribery Violations In Fcpa Enforcement, Karen E. Woody

Cardozo Law Review

The Foreign Corrupt Practices Act (FCPA) prohibits bribery of foreign public officials in order to obtain or retain business. It is, for all intents and purposes, an anti-bribery statute. To detect bribery, the FCPA contains accounting provisions related to bookkeeping and internal controls. The books and records provision requires issuers to make and maintain accurate books, records, and accounts; likewise, the internal controls provision requires that issuers devise and maintain reasonable internal accounting controls aimed at preventing and detecting FCPA violations. If one considers the analogy that bribery is the 'fire" in FCPA enforcement actions, and books and records violations …

The Constitutionality Of Sec Administrative Proceedings: The Sec Should Cure Its Alj Appointment Scheme, Kaela Dahan

Cardozo Law Review

The note examines the constitutional challenges surrounding the Securities and Exchange Commission's (SEC) use of administrative law judges (ALJs), particularly under Section 929P of the Dodd-Frank Act. It argues that the SEC's ALJ appointment process violates the Appointments Clause, as current ALJs have not been properly appointed by SEC Commissioners. The note also highlights due process and Seventh Amendment concerns, as defendants in SEC administrative proceedings lack rights such as trial by jury and immediate appellate review. To maintain the integrity of its administrative processes, the SEC must adopt measures to ensure its ALJ appointments comply with constitutional requirements.

A Safe Harbor For Communicating Or Trading On Material Nonpublic Information Obtained Through "Replicable" Methods Or Strategies: Proposed Sec Rule 10b5-Sh, Bernard Tsepelman

Cardozo Law Review

No abstract provided.

Crowdfunding Human Capital Contracts, Max Vogel

Cardozo Law Review

No abstract provided.

Rethinking Regulation Fair Disclosure And Corporate Free Speech, Susan B. Heyman

Cardozo Law Review

In a significant departure from the disclosure regime created by the insider trading rules of the Securities and Exchange Act of 1934 (Exchange Act), Regulation Fair Disclosure (Reg FD) forces publicly traded companies to make simultaneous public disclosure of any information they make available to analysts or institutional investors. The rule gives issuers a choice: make public disclosure or don't disclose to anyone. Reg FD targets the transmission of information, rather than any actual trading based on that information. Unlike the insider trading rules, Reg FD is not an anti-fraud provision and the government can assert a claim without establishing …

Municipal Securities: The Crisis Of State And Local Government Indebtedness, Systemic Costs Of Low Default Rates, And Opportunities For Reform, Christine Sgarlata Chung

Cardozo Law Review

No abstract provided.

The Twilight Of Equity Liquidity, Jeff Schwartz

Cardozo Law Review

This Article argues that U.S. equity markets fail to offer a satisfactory listing venue for emerging firms. I contend that this lacuna is a manifestation of a flawed structure of equity-market regulation and that this void undermines entrepreneurship, jeopardizes the future of U.S. equity markets, and weakens the broader U.S. economy. To close this gap and respond to these concerns, I recommend a new theoretical structure for regulating equity markets. Under the "lifecycle model" I propose, regulations would adapt to firms as they age. The key change would be to establish a market specifically for newly-public young firms, where they …

Citizen Petitions: An Empirical Study, Michael A. Carrier, Daryl Wander

Cardozo Law Review

In recent years, brand-name drug companies have engaged in an array of conduct that has delayed generic competition. While some of the activity - such as settlements between brand and generic firms and "product hopping" from one drug version to another - has received attention, another behavior has, until now, flown under the radar.

This Article examines the activity of "citizen petitions." A citizen petition is a request for the U.S. Food and Drug Administration (FDA) to take an action such as evaluating a drug's safety or effectiveness. When used appropriately, it could raise awareness of legitimate concerns with a …

The Foreign Corrupt Practices Act And New Governance: Incentivizing Ethical Foreign Direct Investment In China And Other Emerging Economies, Michael B. Runnels, Adam M. Burton

Cardozo Law Review

No abstract provided.

Mad Money: Wall Street's Bonus Obsession, Jeanne L. Schroeder

Cardozo Law Review

No abstract provided.

Laughing Out Loud: Art, Culture, And Fantasy, Henrietta L. Moore

Cardozo Law Review

What makes art valuable? Why in times of crisis do people buy contemporary art? This Paper discusses whether or not investment in art can ever be seen as rational, and explores how the contemporary art market is expanding to include not just works of art, but art as a form of cultural practice. Audiences are no longer content simply to visit museums, galleries, and other cultural institutions. They want to participate, but why are art fairs, biennials, and museum events so popular? The contemporary art market has always been segmented, and reputation and display have been important motivators for rich …

Read Between The Lines: Why Recent Ilsa Litigation Is Bad For Business And Contravenes Congressional Intent, Joseph Einav

Cardozo Law Review

No abstract provided.

Stimulating Long-Term Shareholding, Emeka Duruigbo

Cardozo Law Review

This Article answers, in the affirmative, two core research questions: do we need long-term shareholders and can we find them? The economy needs long-term shareholders to provide prudent and profitable patient capital, generate an antidote to corporate short-termism, and spearhead managerial accountability. Finding these shareholders requires a structure that provides the right environment and incentives for such investment. This Article presents a novel application of the trust fund theory - the dominant philosophical paradigm of American corporate finance in the nineteenth century - as a vehicle for stimulating long-term shareholding. The central features of the reformulated trust fund theory include …

Is The Third Time The Charm? Janus And The Proper Balance Between Primary And Secondary Actor Liability Under Section 10(B), Elizabeth Cosenza

Cardozo Law Review

On June 13, 2011, in a 5-4 ruling that has generated much criticism, the Supreme Court decided Janus Capital Group, Inc. v. First Derivative Traders, a landmark case establishing the limits of secondary actor liability under section 10(b) of the Securities Exchange Act of 1934 (Exchange Act). Following Janus, investment managers who deceive and manipulate their shareholders no longer face the prospect of liability under section 10(b) as long as those managers perpetrate their fraud through the mutual fund itself which is, in essence, a business trust. More importantly, the decision holds that liability under section 10(b) may …

A New Breath Of Life For Private Rule 10b-5(B) Litigation After Stoneridge: Sec V. Tambone And Implied Statements By Collateral Actors, David R. Allen

Cardozo Law Review

No abstract provided.

To Disclose Or Not To Disclose? Csx Corp., Total Return Swaps, And Their Implications For Schedule 13d Filing Purposes, Daniel Bertaccini

Cardozo Law Review

No abstract provided.