Securities Law Commons^™

A New Look At Judicial Impact: Attorneys' Fees In Securities Class Actions After Goldberger V. Integrated Resources, Inc., Theodore Eisenberg, Geoffrey P. Miller, Michael A. Perino

Cornell Law Faculty Publications

Judicial impact studies have generally found widespread compliance by lower courts. Often, however, these studies employ relatively insensitive measures of compliance, limit their focus to compliance with Supreme Court precedent, and only occasionally examine the impact of judicial decisions on the ultimate consumers of those rulings - the members of society who are subject to them. Significant questions thus remain, such as whether and to what extent lower courts in fact comply with precedent and what if any role fear of reversal plays in compliance. To address these gaps, we use regression analysis to examine how the district courts in …

Deception, Decisions, And Investor Education, Jayne W. Barnard

Faculty Publications

Tens of millions of dollars each year are spent on investor education. Because older adults (those aged sixty and older) are disproportionately victims of investment fraud schemes, many educational programs are targeted at them. In this Article, Professor Barnard questions the effectiveness of these programs. Drawing on recent studies from marketing scholars, neurobiologists, social psychologists, and behavioral economists examining the ways in which older adults process information and make decisions, she offers a model of fraud victimization (the "deception/decision cycle") that explains why older adults are often vulnerable to investment fraud schemes. She then suggests that many of the factors …

Leverage In The Board Room: The Unsung Influence Of Private Lenders In Corporate Governance, Frederick Tung

Faculty Scholarship

The influence of banks and other private lenders pervades public companies. From the first day of a lending arrangement, loan covenants and built-in contingency provisions affect managerial decision making. Conventional corporate governance analysis has been slow to notice or account for this lender influence. Corporate governance discourse has traditionally focused only on corporate law arrangements. The few existing accounts of creditors' influence over firm managers emphasize the drastic actions creditors take in extreme cases - when a firm is in serious trouble - but in fact, private lender influence is a routine feature of corporate governance even absent financial distress. …

When Is An Equity Participant Actually A Creditor? The Effects Of In Re Afi Holding On Ponzi Scheme Victims And The Good Faith Defense, James Butler Cash Jr.

Kentucky Law Journal

No abstract provided.

From Loyalty To Conflict: Addressing Fiduciary Duty At The Officer Level, Usha Rodrigues

Scholarly Works

Conflicts of interest are the quintessential agency cost-the constant, lurking danger that agents may seek their own personal gain, rather than the good of the corporation. Yet many corporate employees lack knowledge as to exactly what constitutes a conflict of interest. This ignorance facilitated the kind of fraud seen in Enron, WorldCom, and the options backdating scandals, and may help explain the out-sized payouts that many high-level corporate officers received even as the financial institutions they headed verged on self-destruction. Each case required not only affirmative fraudulent behavior on the part of a few, but also the tacit acceptance of …

Corporate Environmental Reporting And Climate Change Risk: The Need For Reform Of Securities And Exchange Commission Disclosure Rules, Constance Z. Wagner

All Faculty Scholarship

This article argues for strengthened Securities and Exchange Commission (“SEC”) rules mandating the disclosure by businesses of the impacts of climate change on their operations. The author surveys the existing SEC regulatory scheme and concludes that it is insufficient since few companies are currently disclosing climate change risks in their SEC filings. Alternative approaches to filling the environmental risk disclosure gap are examined, but found to be poor alternatives to enhanced SEC requirements, since they fail to provide a scheme for uniform and consistent disclosures across companies.

New Governance In The Teeth Of Human Frailty: Lessons From Financial Regulation, Cristie Ford

All Faculty Publications

New Governance scholarship has made important theoretical and practical contributions to a broad range of regulatory arenas, including securities and financial markets regulation. In the wake of the global financial crisis, question about the scope of possibilities for this scholarship are more pressing than ever. Is new governance a full-blown alternative to existing legal structures, or is it a useful complement? Are there essential preconditions to making it work, or can a new governance strategy improve any decision making structure? If there are essential preconditions, what are they? Is new governance “modular” – that is, does it still confer benefits …

Beyond Economics: The U.S. Recognition Of International Financial Reporting Standards As An International Subdelegation Of The Sec's Rulemaking Authority, Jacob L. Barney

Vanderbilt Journal of Transnational Law

A final rule promulgated by the Securities and Exchange Commission (SEC) in 2008 allowing foreign private securities issuers to prepare SEC-required financial disclosures under international financial reporting standards (IFRS) as promulgated by the International Accounting Standards Board (LASB) is a highly significant event for U.S. and global capital markets. However, surprisingly few questions have been asked regarding the SEC's legal authority to take such an unprecedented step.

This Note assesses the recent SEC action with regard to IASB from two perspectives--traditional administrative law, with particular emphasis on delegations by government entities to private parties, and international law, with particular emphasis …

Redesigning The Sec: Does The Treasury Have A Better Idea?, John C. Coffee Jr., Hillary A. Sale

Faculty Scholarship

Symposiums supply a snapshot in time. By observing the common assumptions and shared frameworks of a collection of scholars writing contemporaneously, one gains both insight into the intellectual world of a past era and the ability to measure its distance from our own. Twenty-five years ago the Virginia Law Review organized a noted symposium (the "1984 Symposium") to celebrate the 50th anniversary of the SEC. A number of prominent scholars participated, and its articles have been much cited.

Talking The Talk, Or Walking The Walk? Outcome-Based Regulation Of Transnational Investment, Jerry Ellig, Houman B. Shadab

Articles & Chapters

Today, individual U.S. retail investors have virtually limitless opportunities to invest their money, with a notable exception: they cannot directly invest in securities of foreign issuers and still be protected under U.S. law. This missing opportunity deprives U.S. investors of the ability to fully diversify their investments and also imposes undue costs and risks upon investors seeking to invest directly overseas. This Article shows that a Securities and Exchange Commission ("SEC") policy of "mutual recognition" of foreign regulatory regimes that achieve investor protection outcomes comparable to those of the SEC would solve this problem. A foreign issuer or other entity …

Insider Trading And The Gradual Demise Of Fiduciary Principles, Donna M. Nagy

Articles by Maurer Faculty

Recent SEC enforcement actions, such as the case filed against Dallas Mavericks' owner Mark Cuban, raise the question whether deception by a fiduciary is essential to the Rule 10b-5 insider trading offense. Under the Supreme Court's classical and misappropriation theories, the answer is clearly yes - each theory has a fiduciary principle at its core. Yet lower courts and the SEC frequently disregard the Court's explicit dictates, and a consensus is emerging that insider trading rests simply on the wrongful use of material nonpublic information, regardless of whether a fiduciary-like duty is breached. Although this view of insider trading can …

The Sec And The Madoff Scandal: Three Narratives In Search Of A Story, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

This essay, part of a symposium on narrative in corporate law, considers various portrayals of the complicity of the SEC in the Bernard Madoff scandal--including the Commission's own Inspector General's report issued in September 2009. It considers possible explanations (revolving door problems, incompetence and sloth, etc.) but suggests that the story is deeper and more frustrating, arising out of the relative poverty in which the SEC operates, which in turn leads to habits of thought and action that leave too much unnoticed and undone. The interesting question, then: why the poverty? The essay concludes with a political explanation. While by …

Coping In A Global Marketplace: Survival Strategies For A 75-Year-Old Sec, James D. Cox

Faculty Scholarship

Notwithstanding cynicism to the contrary, data bears witness to the fact that government agencies come and go. There are multiple causes that give rise to their disappearance but among the most powerful is that conditions that first gave rise to the particular agency's creation no longer exist so that the regulatory needs that once prevailed are no longer present or that there is a better governmental response than Congress' earlier embraced when it initially created an independent regulatory agency to address the problems needing to be addressed. Certainly the more rigid the regulatory authority conferred on an agency has much …

The ‘Principles’ Paradox, Steven L. Schwarcz

Faculty Scholarship

This essay, prepared for a University of Cambridge conference on ‘Principles Versus Rules in Financial Regulation’, posits a new issue in that debate. Although principles-based regulation is thought to more closely achieve normative goals than rules, the extent to which that occurs can depend on the enforcement regime. A person who is subject to unpredictable liability is likely to hew to the most conservative interpretation of the principle, especially where that person would be a potential deep pocket in litigation. This creates a paradox: unless protected by a regime enabling one in good faith to exercise judgment without fear of …

Do Differences In Pleading Standards Cause Forum Shopping In Securities Class Actions?: Doctrinal And Empirical Analyses, James D. Cox, Randall S. Thomas, Lynn Bai

Faculty Scholarship

No abstract provided.

The Future Of Securitization, Steven L. Schwarcz

Faculty Scholarship

Securitization, a process in which firms can raise low-cost financing by efficiently allocating asset risks with investor appetite for risk, has been one of the most dominant and fastest-growing means of capital formation in the United States and the world. The subprime financial crisis, however, has revealed certain defects with how securitization is sometimes utilized. This article examines these defects and the extent they can, and should, be remedied going forward.

Keynote Address: Understanding The ‘Subprime’ Financial Crisis, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.

The Coroner’S Inquest: Ecuador’S Default And Sovereign Bond Documentation, Mitu Gulati, Lee C. Buchheit

Faculty Scholarship

Conventional wisdom is that sovereigns will rarely, if ever, default on their external debts in circumstances where it is clear that they have the capacity to pay. The first line of defense against the errant sovereign is its concern about reputation. It may have to tap the external debt markets again in the future; and there is the fear that the markets will extract revenge. But reputational constraints do not always work because some governments heavily discount future costs in favor of current benefits. When reputational constraints fail, however, a second line of defense is supposed to come into play. …

Keynote Address: The Conflicted Trustee Dilemma, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.

Reinventing The Sec By Staring Into Its Past, James D. Cox

Faculty Scholarship

No abstract provided.

Keynote Address: The Case For A Market Liquidity Provider Of Last Resort, Steven L. Schwarcz

Faculty Scholarship

This short paper, prepared as a keynote address, explains why the credit crunch is fundamentally a story about financial markets, not banks. Its cause was a collapse of securitization and other debt markets, which have become major sources of financing for consumers and companies. Deprived of this financing, consumers have had difficulty purchasing homes and automobiles, and companies have had difficulty purchasing inventory and making capital investments, causing the real economy to shrink. This paper examines how these financial markets should be protected. Although already subject to many prescriptive regulatory protections, these markets evolve faster than regulation can adapt. The …

The Securities Laws And The Mechanics Of Legal Change, Barry Cushman

Journal Articles

This essay, prepared for the Virginia Law Review symposium marking the 75th anniversary of the Securities Exchange Commission, explores the mechanisms through which the Roosevelt Administration secured the Supreme Court's approval of various features of the New Deal's securities law program.