Securities Law Commons^™

Overseeing Controlling Shareholders: Do Independent Directors Constrain Tunneling In Taiwan?, Yu-Hsin Lin

San Diego International Law Journal

This Article intends to explore the extent to which independent directors constrain tunneling by controlling shareholders in Taiwan. Taiwan serves as an appropriate jurisdiction for research since the private benefits agency problem is prevalent among Taiwanese public companies. A further twist in Taiwan?s case is that independent directors were newly introduced to Taiwan?s corporate boards, which follow dual-board system where the traditional monitoring function is served by statutory supervisors, instead of board committees, which adds to the complexity in analyzing the effectiveness of independent directors in constraining tunneling activities. Part II reviews relevant literature and lays the foundation for this …

Mismatch: The Misuse Of Market Efficiency In Market Manipulation Class Actions, Charles R. Korsmo

William & Mary Law Review

Plaintiffs commonly bring two distinct types of claims under section 10(b) of the Securities Exchange Act of 1934: (1) claims of material misrepresentations or omissions, and (2) claims of tradebased market manipulation. Despite the distinctive features of the two types of claims, courts have tended to treat them identically when applying the “fraud on the market” doctrine. In particular, courts have required both types of plaintiffs to make identical showings that the relevant security was traded in an “efficient market” in order to gain a presumption of reliance. The reasons for requiring such a showing by plaintiffs in a misrepresentation …

Investors And Employees As Relief Defendants In Investment Fraud Receiverships: Promoting Efficiency By Following The Plain Meaning Of "Legitimate Claim Or Ownership Interest", Jared A. Wilkerson

W&M Law Student Publications

Relief defendants are nominal, innocent parties who hold funds traceable to the receivership but have no legitimate claim or ownership interest in them. These nominal parties, as opposed to full or primary defendants, have no cause of action asserted against them, and if they show no legitimate claim to the funds traced to the receivership, the funds are disgorged — generally at summary judgment. This seemingly simple relief defendant tool is used by receivers and regulatory agencies to quickly recover receivership funds for ultimate distribution to creditors. Recently, however, conflict has arisen in federal courts concerning the meaning of “legitimate …

Reflections On The Securities Law Of Jordan , Bashar H. Malkawi, Haitham A. Haloush

American University International Law Review

No abstract provided.

Reflections On The Securities Law Of Jordan , Bashar H. Malkawi, Haitham A. Haloush

American University International Law Review

No abstract provided.

The Howey Test Turns 64: Are The Courts Grading This Test On A Curve?, Miriam R. Albert

William & Mary Business Law Review

Sixty-four years ago, the Supreme Court decided SEC v. W.J. Howey, crafting a definition for one form of security, known as an investment contract. The Supreme Court’s definition of investment contract in Howey is flexible, consistent with the Congressional approach to defining the broader concept of what constitutes a security. This choice of adopting a flexible definition for investment contract is not without cost, and raises the specter of inconsistent interpretation and/or application by the lower courts that threatens to undermine the utility of the Howey test itself as a trigger for investor protection. The intentional breadth and adaptability of …

The Securities And Exchange Commission's 2010 Proxy Access Proposals: A Poison Pill For Corporate Health, Stephen W. Kiefer

William & Mary Business Law Review

The SEC has proposed proxy access rules in the wake of the recent financial crisis. With the stated purpose of removing impediments to the exercise of shareholder voice and increasing director accountability, the proposed rule changes are not without problems. The proposed rules enter a mix in which the corporate governance landscape, shaped by powerful role players, already presents troubling possibilities for activist shareholder abuse. This Article argues that adoption of the proposed rules could be the final piece to a puzzle in which shareholder power is achieved at the expense of long-term corporate health and shareholder value.

Liberalization Of Taiwan’S Securities Markets: The Case Of Cross-Taiwan-Strait Listings, Wen-Yeu Wang, Christopher Chao-Hung Chen

Research Collection Yong Pung How School Of Law

The purpose of this paper is to examine the liberalization of Taiwan’s capital market regarding cross-Taiwan-Strait listing of securities. Taiwan is in an advantageous position to compete with other Asian rivals to attract issuers and capital from China. However, the long political hostility ensures that there is little regulatory cooperation on both sides of the Taiwan Strait. Assuming that the creation of a cross-strait capital market is an unstoppable trend, this paper examines from the perspective of regulatory competition several regimes that may facilitate Taiwan to overcome regulatory obstacles arising from the special Sino-Taiwan relationship. This paper argues that regulatory …

The Wider Context: The Future Of Capital Markets Regulation In Developed Markets, Cally Jordan

Faculty Papers & Publications

At a time of such great turbulence, looking to the future directions of capital markets and their regulation in developed economies is a particularly risky business. We are in the midst of a great sea change. Nevertheless, there are several current, and readily observable, phenomena which are likely to shape capital markets regulation in the near future. First of all, the blurring of the distinctions between developed and developing markets themselves, as well as that between domestic and international markets, has put into question the adequacy of existing regulatory frameworks. Also, the transatlantic dialogue, London – New York, has given …

Stalled: Gender Diversity On Corporate Boards, Barbara Black

Faculty Articles and Other Publications

In this essay, prepared for the University of Dayton College of Law’s Symposium on Perspectives on Gender and Business Ethics: Women in Corporate Governance, held on February 25, 2011, I discuss the lack of progress in achieving gender diversity on corporate boards.

I first review the numbers that demonstrate that progress is stalled, despite the attention and resources devoted to the issue by a number of well-respected organizations, legal scholars and institutional investors. I argue that, because this is an issue of equal opportunity, it is not really necessary to make a business case to justify increased efforts toward board …

Mixed Statements: The Safe Harbor's Rocky Shore, Wendy Gerwick Couture

Articles

No abstract provided.

An Inquiry Into The Perception Of Materiality As An Element Of Scienter Under Sec Rule 10b-5, Allan Horwich

Faculty Working Papers

In any private action or enforcement proceeding based on SEC Rule 10b-5 the plaintiff, including the Securities and Exchange Commission, must prove that the defendant engaged in deception or manipulation with scienter, that is, an intent to deceive (which lower courts have held encompasses reckless conduct). Where the gravamen of the claim is deception, the deception must have been material. A fact, including forward-looking information, is material if there is a substantial likelihood that a reasonable shareholder would consider the fact important in making his investment decision. This Article demonstrates that in an appropriate case an assessment of whether the …

Going Long On The Nairobi Exchange, Bryan T. Shipp

Global Business & Development Law Journal

No abstract provided.

Can Behavioral Economics Inform Our Understanding Of Securities Arbitration, Barbara Black

Faculty Articles and Other Publications

This paper contributes to the ongoing debate over FINRA arbitration by invoking behavioral economics principles to understand why PDAAs in securities arbitration continue to resist powerful market and political forces calling for their elimination.

Part II of the paper sets forth background information to put the issue in context. It first describes several important distinctions between securities arbitration and other forms of consumer arbitration. It next summarizes pertinent economic theory, first classical economic theory in support of PDAAs and then behavioral economics principles that challenge the classical approach.

Part III poses three questions regarding the staying power of PDAAs and …

Corporate Governance Reform In A Time Of Crisis, Christopher M. Bruner

Scholarly Articles

In this article I argue that crisis-driven corporate governance reform efforts in the United States and the United Kingdom that aim to empower shareholders are misguided, and offer an explanation of why policymakers in each country have reacted to the financial crisis as they have. I first discuss the risk incentives of shareholders and managers in financial firms, and examine how excessive leverage and risk-taking in pursuit of short-term returns for shareholders led to the crisis. I then describe the far greater power and centrality that U.K. shareholders have historically possessed relative to their U.S. counterparts, and explore historical and …

Introductory Remarks: An Overview Of Investment Arbitration , Joshua Fellenbaum

Global Business Law Review

The topic I was asked to speak about today is investment arbitration. For those practitioners and scholars on the panel and in the audience who have experience in investment arbitration, you know that it contains a number of complex issues and nuances, so it is quite a tall task ahead of me. What I hope to do in the next twenty to twenty-five minutes is to provide you with a broad overview of investment arbitration. We will examine the structure of investment arbitration along with the substantive and procedural issues that tend to arise in investment disputes.

The Dodd-Frank Act's Specialized Corporate Disclosure: Using The Securities Laws To Address Public Policy Issues, David M. Lynn

Journal of Business & Technology Law

No abstract provided.

Investment Adviser Regulation Post-Madoff: A Brave New World, Kevin A. Zambrowicz

Journal of Business & Technology Law

No abstract provided.

Unreliable Securities For Retirement Income Security: Certifying The Erisa Stock-Drop Class, Lauren N. Fromme

Vanderbilt Law Review

Catherine Stevens had built her retirement savings "a dollar at a time over a lifetime of hard work" when it was "reduced to virtually zero" at Enron's collapse. "I feel very strongly that we have all been wronged," she said. Her plans for a secure future had been destroyed. Almost eight years after Enron's failure, stories like Catherine's persist, and employee retirement income security remains as comforting as an imaginary friend. A falling stock market in the wake of financial finagling leaves many employee retirement plans dangerously insecure. Employees like Catherine who bet their futures on their company's stock have …

Shareholder Access And Uneconomic Economic Analysis: Business Roundtable V. Sec, J. Robert Brown Jr.

Sturm College of Law: Faculty Scholarship

Business Roundtable v. SEC, arose out of a legal challenge to what is probably the most controversial rule ever adopted by the Securities and Exchange Commission (SEC or Commission). Rule 14a-11 mandated that public companies allow long term shareholders to include nominees for the board of directors in the company’s proxy statement. The rule held out the promise that shareholders would be able to more easily nominate and elect their own candidates to the board. Access was popular among shareholders and strenuously opposed by public companies.

The DC Circuit struck down the rule, imposing a “nigh impossible” standard with respect …

Addressing Inept Sec Enforcement Efforts: Lessons From Madoff, The Hedge Fund Industry, And Title Iv Of The Dodd-Frank Act For U.S. And Global Financial Systems, Cheryl Nichols

Northwestern Journal of International Law & Business

A global regulatory framework for hedge fund custodians is needed, in addition to Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act or Dodd-Frank), to reduce the risk of the occurrence of another Madoff fraud and to assess systemic risk posed by hedge fund activities in the global financial system. This article recommends the creation of a single global regulator for independent, qualified hedge fund custodians to which country regulators must submit sufficient information to protect investors and to assess the level of systemic risk posed by hedge fund activities in the global …

The Derivative Market’S Black Sheep: Regulation Of Non-Cleared Security-Based Swaps Under Dodd-Frank, Barry Le Vine

Northwestern Journal of International Law & Business

This paper seeks to comprehensively analyze the SEC's security-based swaps mandate and how it should regulate those non-cleared OTC derivatives within its regulatory ambit to promote market stability, protect counterparties, and reduce the incentives for cross-border regulatory arbitrage which leads to systemic risk creation. It argues that there are many legitimate and compelling reasons for entering into bespoke security-based swap transactions and that imposing collateral and margin requirements would only distort the economics of these trades. It further argues that the SEC should not be in the business of setting margin requirements, which would be an unprecedented move for the …

When Is It Wrong To Trade Stocks On The Basis Of Non-Public Information?: Public Views Of The Morality Of Insider Trading, Stuart P. Green, Matthew B. Kugler

Fordham Urban Law Journal

No abstract provided.

Transnational Securities Fraud And The Extraterritorial Application Of U.S. Securities Laws: Challenges And Opportunities, Genevieve Beyea

Global Business Law Review

With globalization, securities markets have become increasingly interconnected, and securities fraud has frequently crossed borders, creating problems for national regulators seeking to deter and punish fraud. The United States’ well-developed private enforcement mechanism for securities fraud is very attractive to investors around the world who are harmed by transnational securities fraud, particularly those from countries where private enforcement mechanisms do not exist or fraud is under-regulated. The application of U.S. securities law to foreign investors, however, presents a number of challenges, creating the potential for both under and overregulation as well as possible conflict with the regulatory systems of other …

The Emerging Federal Class Actions Brand , John C. Massaro

Cleveland State Law Review

Class actions raise a fundamental question about our judicial system. Is the purpose first and foremost to achieve a societally-desired level of law enforcement and deterrence, or is the primary goal to foster citizen participation in the resolution of private disputes? This Article provides the first extended analysis of this question in light of five recent Supreme Court decisions regarding class actions, the evolution of legislative initiatives in the area, and the docket activity in sixteen of the largest recent federal securities class actions. A single conclusion follows: we are witnessing the emergence of a new national “brand” of class …

The Tenth Annual Albert A. Destefano Lecture On Corporate, Securities & Financial Law. Corporate Accountability: Governance And Compensation Issues, Stanley Sporkin, Todd Lang, Gary Naftalis, Jeffrey Sonnenfeld, Louise Story

Fordham Journal of Corporate & Financial Law

CORPORATE ACCOUNTABILITY: GOVERNANCE AND COMPENSATION ISSUES

Price Fraud, Wendy Gerwick Couture

Articles

No abstract provided.

Enhanced "Blue Sky" Enforcement: A Path To Help Solve Our Public School Funding Dilemma, Marc I. Steinberg

Faculty Journal Articles and Book Chapters

No abstract provided.

Whoops - The Imminent Reconciliation Of U.S. Securities Laws With International Comity After Morrison V. National Australia Bank And The Drafting Error In The Dodd-Frank Act, Andrew Rocks

Villanova Law Review (1956 - )

The article contends that the Dodd-Frank Act and the case, Morrison v. National Australia Bank, restrict the extraterritorial reach of U.S. fraud laws to private rights of action involving domestic transactions of U.S. securities. The author notes that the U.S. legal jurisdiction is governed by the policy of minimal interference and respect for sovereignties and by the principle of comity. He states that this position will help establish a cooperative regulatory effort across global markets.

Mismatch: The Misuse Of Market Efficiency In Market Manipulation Class Actions, Charles R. Korsmo

Faculty Publications

Plaintiffs commonly bring two distinct types of claims under Section 1(b) of the Securities Exchange Act of 1934: 1) claims of material misrepresentations or omissions; and 2) claims of trade-based market manipulation. Despite the distinctive features of the two types of claims, courts have tended to treat them identically when applying the “fraud on the market” doctrine. In particular, courts have required both types of plaintiffs to make identical showings that the relevant security traded in an “efficient market” in order to gain a presumption of reliance. The reasons for requiring such a showing by plaintiffs in a misrepresentation case …