Securities Law Commons^™

Obligations Of Financial Advisers In Change-Of-Control Transactions: Fiduciary And Other Questions, Andrew F. Tuch

Scholarship@WashULaw

Outside the United States, financial regulators have recently focused their attention on whether a financial adviser to a party in a change-of-control transaction (such as a takeover) is obliged to avoid being in positions of conflict with the interests of that party. Because financial advisers in these transactions are typically investment banks, the integrated structure of which may make conflicts of interest inevitable, such an obligation is likely to pose difficult challenges for the investment banking industry. The question is complicated by two apparently inconsistent standards being applied: the fiduciary obligation to avoid conflicts and the statutory obligation in many …

Contemporary Challenges In Takeovers: Avoiding Conflicts, Preserving Confidences And Taming The Commercial Imperative, Andrew F. Tuch

Scholarship@WashULaw

This article discusses contemporary legal, commercial, ethical and other issues that arise in the context of corporate takeover transactions. Due to their complexity and the numerous parties - including deal advisers - they involve, the loyalties of company directors and advisers are frequently tangled, creating legion opportunities for conflicted interests and breached confidences. At the same time, the high status of advising on takeovers and the financial lure they provide produce powerful incentives that inevitably inform the application of legal principles to these issues. The article adopts a hypothetical case study approach to focus on the challenges confronting these parties …

Investment Banks As Fiduciaries: Implications For Conflicts Of Interest, Andrew F. Tuch

Scholarship@WashULaw

Investment banks play an intermediary role in the financial system that is integral to its efficient operation. A core, and highly visible, part of their work involves providing financial advisory services to institutional clients on transactions that have strategic importance, such as mergers and acquisitions. As these services are but one aspect of the broad and diverse range of financial services that investment banks typically provide, challenges such as conflicts of interest inevitably arise. Somewhat anomalously, the question of whether these firms owe fiduciary duties to their clients when providing financial advisory services has received little regulatory, judicial or scholarly …

The New Uniform Securities Act, Joel Seligman

Scholarship@WashULaw

In early August, the National Conference of Commissioners on Uniform State Laws (“NCCUSL”) adopted the Uniform Securities Act (2002) at its annual meeting. At that time, there were two earlier versions of the Uniform Securities Act in force.

The Uniform Securities Act of 1956 (“1956 Act”) had been adopted at one time or another, in whole or in part, by 37 jurisdictions. The Revised Uniform Securities Act of 1985 (“RUSA”) had been adopted in only a few States. Both Acts have been preempted in part by the National Securities Markets Improvement Act of 1996 (“NSMIA”) and the Securities Litigation Uniform …

The Changing Nature Of Federal Regulation - Dedications, Joel Seligman

Scholarship@WashULaw

In 1911 the failure of state corporation statutes to prevent securities fraud gave rise to the first significant legislative response when Kansas enacted the first well known state securities law. The law was popularly known as a “blue sky” law, because its intention was to check stock swindlers so barefaced that they “would sell building lots in the blue sky.”

After the U.S. Supreme court held that the blue sky law was constitutional in 1917, the blue sky movement swept the country. By 1933 every state except Nevada had a state securities law in effect.

The Nontrial Adversarial Model: Complex Litigation At The Millennium, Joel Seligman

Scholarship@WashULaw

During the past two decades, a non-trial adversarial model has evolved for deciding private securities law claims. Underlying this evolution are three different types of dynamics: (1) a dramatic growth in the size of securities class actions, epitomized by the Washington Public Power Supply System litigation of the 1980s and the Court’s approval of the fraud-on-the-market presumption, rather than a requirement of individual proof of fraud, in Basic, Inc. v Levinson; (2) a significant growth in the cost and litigation leverage of discovery; and (3) a fundamental shift in the political orientation of Congress in securities litigation, illustrated by the …

The Mandatory Disclosure System And Foreign Firms: Securities Regulation In The Apec Countries., Joel Seligman

Scholarship@WashULaw

This Article examines the disclosure requirements for foreign and domestic securities imposed by the Securities and Exchange Commission, paying special attention to the balance between investor protection and the free flow of capital internationally. As the world economy becomes increasingly global, foreign issuers and their governments, who in the past have had to meet more stringent requirements to issue their securities in the United States, are pushing for less restrictive treatment. This Article describes the progress that has been made towards this end.

The Obsolescence Of Wall Street: A Contextual Approach To The Evolving Structure Of Federal Securities Regulation, Joel Seligman

Scholarship@WashULaw

As a matter of analytical style, this article illustrates a contextualist approach. For a considerable period of time, the dominant analytical style in corporate and securities .law has been a variant of economic, or law and economics, analysis. The virtue of this type of analysis is that it focuses on what its authors deem to be crucial variables and reaches conclusions derived from the core of a specific legal problem. The defect of this type of analysis is that so much is assumed or often assumed away.

The Sec's Unfinished Soft Information Revolution, Joel Seligman

Scholarship@WashULaw

The transformation of the Securities and Exchange Commission's mandatory disclosure system represents the single most important development in the agency's greater than sixty years' experience administering disclosure requirements. Since the early 1970s, the SEC has shifted its emphasis from historical or "hard" information to its current emphasis on forward-looking information. This transformation can be termed the "soft information revolution" in the SEC's mandatory disclosure system. In terms of investor protection, the SEC's emphasis on forward-looking information has significantly improved the quality of what is mandatorily disclosed.

The New Corporate Law, Joel Seligman

Scholarship@WashULaw

My thesis is a simple one. In the twentieth century state corporate law norms for the large publicly held corporation have been progressively supplanted by federal standards, particularly those originating in federal securities law. This has occurred both because of the promulgation of new federal standards and because of the atrophy of state corporate law. Certain applications of this thesis are little questioned today. For instance, it is now a conventional idea that the state law applicable to insider trading has largely been ignored and has been generally displaced by such federal securities law staples as Rule 10b-5, section 16 …

The Disinterested Person: An Alternative Approach To Shareholder Derivative Litigation., Joel Seligman

Scholarship@WashULaw

Recently I had the opportunity to apply an unused procedure in a shareholder derivative litigation. In 1989 Michigan amended its Business Corporation Act to allow a court under specified circumstances to appoint a "disinterested person" to perform fact gathering functions similar to those of a German investigative judge. In 1991 I was appointed to be the disinterested person in a derivative litigation involving Rospatch Corporation. The experience persuaded me that compared to litigation and the special litigation committee, the disinterested person approach may often have significant advantages in terms of reduction of litigation costs, procedural fairness, and protection of shareholders.

The Internationalization Of The Securities Markets: Preface To A Symposium., Joel Seligman

Scholarship@WashULaw

This preface begins by tracing certain of the initial steps taken by the SEC in the internationalization of securities trading. Regulations involving issuers of new securities are discussed in two contexts. First, when foreign private issuers offer securities into the United States, and second, when securities are simultaneously offered in the United States and abroad. The preface concludes by introducing each of the articles in this symposium.

The Sec And Accounting: A Historical Perspective, Joel Seligman

Scholarship@WashULaw

Joel Seligman argues that in the absence of regulatory oversight, managerial incentives and notions of efficient markets and competitive positioning have proven to be insufficient in ensuring full disclosure of material financial data. The SEC given express authority to regulate accounting practices, has, during the past fifty years, directly contributed to the standardization of financial statement disclosures. In establishing accounting standards, the SEC has exercised restraint, allowing private organizations such as the FASB to set standards subject to SEC oversight. Although the SEC could be more aggressive in initiating accounting standards (particularly with controversial practices such as pooling versus purchase …

The Securities And Exchange Commission And Corporate Democracy, Joel Seligman

Scholarship@WashULaw

On April 28th of last year, the Securities and Exchange Commission announced it would begin a comprehensive reexamination of the shareholders' role in corporate governance. After receiving close to one hundred and fifty letters of comment, the Commission commenced hearings on September 29th in Washington D.C.

Few issues are so worthy of the Commission's concern. Under state corporation law, shareholders have the power to nominate and elect members of the board of directors. Today this power is virtually meaningless in publicly held corporations. The vast majority of shareholders vote by proxy. But neither state nor federal law guarantees shareholders access …