Securities Law Commons^™

Feeling Insecure—A State View Of Whether Investors In Municipal General Obligation Bonds Have A Mere Promise To Pay Or A Binding Obligation, Randle B. Pollard

Scholarly Articles

The City of Detroit's filing for municipal bankruptcy in July, 2013, has added to a continuing controversy of whether general obligation bondholders have a secured lien. The City of Detroit claimed its general obligation bondholders did not have a fully secured lien because the law of the state of Michigan did not create a statutory lien. Without the creation of a lien by state law, during the insolvency or bankruptcy of municipalities, general obligation bondholders will potentially have a mere promise to pay versus a binding obligation to pay, and therefore, will not have a secured lien. Treating otherwise secured …

Disaggregated Classes, Benjamin P. Edwards

Faculty Scholarship

No abstract provided.

Class-Action Tolling, Federal Common Law, And Securities Statutes Of Repose: A Recommendation, Wendy Gerwick Couture

Articles

This Essay focuses on a narrow, but potentially outcome determinative, question: Does the filing of a securities class action toll the three-year outer time limit applicable to claims under sections 11 and 12(a)(2) of the Securities Act and the five-year outer time limit applicable to claims under section 10(b) of the Securities Exchange Act, such that potential class members-after a decision on class certification-can assert an individual federal action, even if those outer time limits would have elapsed absent tolling? There is currently a circuit split on this issue, with the Tenth Circuit answering "yes" and the Second Circuit answering …

Global Systemic Risk And International Regulatory Coordination: Squaring Sovereignty And Financial Stability, Federico Lupo-Pasini, Ross P. Buckley

American University International Law Review

No abstract provided.

It's Not Just About The Money: A Comparative Analysis Of The Regulatory Status Of Bitcoin Under Various Domestic Securities Laws, Vesna Harasic

American University Business Law Review

No abstract provided.

Closed-End Fund Ipo Considerations, Benjamin P. Edwards

Faculty Scholarship

No abstract provided.

Materiality And A Theory Of Legal Circularity, Wendy Gerwick Couture

Articles

This Article argues that the materiality doctrine, which lies at the heart of securities fraud, has the potential to operate as a self-fulfilling prophecy. This Article labels this phenomenon "legal circularity." In order to place the potential legal circularity of materiality in context among the various other legal doctrines that share this potential, this Article proposes a two part Theory of Legal Circularity. First, this Article proposes the following Legal Circularity Test to identify potentially circular doctrines: A legal doctrine is potentially circular if: (1) the legal doctrine incorporates the behavior or attitude of a population or person, either hypothetical …

Professor Alan R. Bromberg And The Scholarly Role Of The Treatise, Wendy Gerwick Couture

Articles

No abstract provided.

False Statements Of Belief As Securities Fraud, Wendy Gerwick Couture

Articles

No abstract provided.

Corporate Law And The Limits Of Private Ordering, James D. Cox

Faculty Scholarship

Solomon-like, the Delaware legislature in 2015 split the baby by amending the Delaware General Corporation Law to authorize forum-selection bylaws and to prohibit charter or bylaw provisions that would shift to the plaintiff defense costs incurred in connection with shareholder suits that were not successfully concluded. The legislature acted after the Boilermakers Local 154 Retirement Fund. v. Chevron Corp ATP Tour, Inc. v. Deutscher Tennis Bund, broadly empowered the board vis-à-vis the shareholders through the board’s power to amend the bylaws. Repeatedly the analysis used by each court referenced the contractual relationship the shareholders had through the articles of …

When Governments Write Contracts: Policy And Expertise In Sovereign Debt Markets, W. Mark C. Weidemaier, Mitu Gulati, Anna Gelpern

Faculty Scholarship

At least three times in the past two decades, national governments and institutions at the regional and international levels have tried to reform sovereign bond contracts to facilitate debt restructuring. Increasingly, these efforts have focused on promoting majority modifications clauses, a species of collective action clause (CAC) that facilitates a binding debt restructuring. Rather than legislate or regulate, governments have convened expert commissions, produced model CACs, and aggressively marketed these clauses to debtors and creditors. When events prove the existing CAC template inadequate or irrelevant, the process begins anew. This paper considers this mode of government intervention, which has a …

The Costs Of Mandatory Cost-Benefit Analysis In Sec Rulemaking, Donna M. Nagy

Articles by Maurer Faculty

Cost-benefit analysis can be a valuable tool when deployed at the Securities and Exchange Commission's discretion to improve its rulemaking process and the overall quality of SEC rules. However, when a cost-benefit analysis obligation is imposed externally whether from an explicit statutory command or from a de facto requirement enforced through judicial review-the costs of that mandatory cost-benefit analysis can be quite substantial. This Article identifies and explores the qualitative costs that that have already been incurred, and are bound to continue, if the adequacy of the SEC's cost-benefit analysis remains subject to extensive judicial scrutiny. These costs will only …

Piercing The Fiduciary Veil, Colin P. Marks

Faculty Works

Limited partnerships (LPs) and limited liability companies (LLCs) permit formation with a unique management structure in that these entities may be managed by another limited liability entity, such as a corporation. Thus, the true managers are those individuals who manage the manager. It is well settled that the managing entity, such as a corporate general partner, owes default fiduciary duties, but what of these second-tier managers? Technically, it is the managing entity that owes the duties, not the managing entity's owners, officers, and directors, yet courts have struggled with strict adherence to this separation when it would seem inequitable to …

Trusting Strangers: Dispute Resolution In The Crowd, Anjanette H. Raymond, Abbey Stemler

Cardozo Journal of Conflict Resolution

Hoping to be the next Pebble, entrepreneurs and businesses have flocked to various crowdfunding platforms to contribute dollars to fund initial launches of products and other investments. As readers are undoubtedly aware, Kickstarter was the first and bestknown crowdfunding website, having helped to launch more than 95,000 projects to date. On March 3, 2014, Kickstarter reported that it passed $1 billion in pledges with over 5.7 million people donating to creative projects. There are currently over 800 crowdfunding platforms, with the bulk of dollars contributed going to social campaigns. Of course, as donations grew and the number of backers surged, …

New Weaknesses: Despite A Major Win, Arbitration Decisions In 2014 Increase The Us’S Future Exposure To Litigation And Liability, Lise Johnson

Columbia Center on Sustainable Investment Staff Publications

In 2014, the US continued its overall record of success in defending investment treaty claims. But it did suffer losses on a number of important issues, and those losses will render the US (and its treaty parties) vulnerable to future claims, litigation expense, and liability. The US’s recent losses, which have thus far been largely ignored in commentary on the US’s experiences in investment arbitration, are highlighted in this briefing note.

India, Kavita Mohan, Raj Barot, Aseem Chawla, Ashish Jerjurkar, Divya Ashta, Gagan Kumar, Niyati Chanana, Sharanya G. Ranga, Laxmi Joshi, Fatema Merchant, Priyanka Sharma Goswami, Poorvi Chothani

The International Lawyer

This article surveys significant legal developments in India during the year 2014.

Mandatory Disclosure And Individual Investors: Evidence From The Jobs Act, Colleen Honisberg, Robert J. Jackson Jr., Yu-Ting Forester Wong

Faculty Scholarship

One prominent justification for the mandatory disclosure rules that define modem securities law is that these rules encourage individual investors to participate in stock markets. Mandatory disclosure, the theory goes, gives individual investors access to information that puts them on a more equal playing field with sophisticated institutional shareholders. Although this reasoning has long been cited by regulators and commentators as a basis for mandating disclosure, recent work has questioned its validity. In particular, recent studies contend that individual investors are overwhelmed by the amount of information required to be disclosed under current law, and thus they cannot and do …

Halliburton Ii: A Loser's History, Adam C. Pritchard

Articles

The Supreme Court was presented with an opportunity to bring fundamental reform to securities class actions last term in Halliburton Co. v. Erica P John Fund, Inc.. The Court ducked that opportunity, passing the buck to Congress to undo the mess that the Court had created a quarter century prior in Basic Inc. v. Levinson. Congress's history in dealing with securities class actions suggests that reform is unlikely to come from the legislature anytime soon. The Securities and Exchange Commission appears to be satisfied with the status quo as well. With these institutional actors resisting reform, corporations and …

Loser Pays: The Latest Installment In The Battle-Scarred, Cliff-Hanging Survival Of The Rule 10b-5 Class Action, John C. Coffee Jr.

Faculty Scholarship

When I was an upper-year student at Yale Law School in the late 1960s, I was sometimes as undermotivated as contemporary upper-year law students regularly appear to be. But there was then an appropriate role model for us: a graduate student, brimming with efficiency and self-discipline, who occupied a carrel in the law library, seemingly working day and night on a special research project. He had piled law review articles and cases a foot or more about his carrel, and anyone walking by could see that he seemed obsessed with something called Rule 10b-5. I had dimly heard of this …

The New Stock Market: Sense And Nonsense, Merritt B. Fox, Lawrence R. Glosten, Gabriel Rauterberg

Faculty Scholarship

How stocks are traded in the United States has been totally transformed. Gone are the dealers on NASDAQ and the specialists at the NYSE. Instead, a company’s stock can now be traded on up to sixty competing venues where a computer matches incoming orders. High-frequency traders (HFTs) post the majority of quotes and are the preponderant source of liquidity in the new market.

Many practices associated with the new stock market are highly controversial, as illustrated by the public furor following the publication of Michael Lewis’s book Flash Boys. Critics say that HFTs use their speed in discovering changes in …

Ceo Stock Ownership Policies: Rhetoric And Reality, Nitzan Shilon

Indiana Law Journal

This Article is the first academic endeavor to analyze the efficacy and transparency of stock ownership policies (SOPs) in U.S. public firms. SOPs generally require managers to hold some of their firms’ stock for the long term. Following the 2008 financial crisis, firms universally adopted these policies and cited them more than any other policy as a key element in their mitigation of risk. However, my analysis of the recent SOPs of S&P 500 CEOs disputes what firms claim about these policies. First, I find that SOPs are extremely ineffectual in making CEOs hold on to their firm’s stock; this …

Recklessness As A State Of Mind In 10(B) Cases: The Civil-Criminal Dialectic, Patricia S. Abril, Ann M. Olazabal

Articles

No abstract provided.

Anticipating A Sea Change For Insider Trading Law: From Trading Plan Crisis To Rational Reform, John P. Anderson

Journal Articles

The Securities and Exchange Commission is poised to take action in the face of compelling evidence that corporate insiders are availing themselves of rule-sanctioned Trading Plans to beat the market. These Trading Plans allow insiders to trade while aware of material nonpublic information. Since the market advantage insiders have enjoyed from Plan trading can be traced to loopholes in the current regulatory scheme, increased enforcement of the existing rules cannot address the issue. But, simply tweaking the existing rule structure to close these loopholes would not work either. This is because the SEC adopted the current rule as a part …

What’S The Harm In Issuer-Licensed Insider Trading?, John P. Anderson

Journal Articles

There is growing support for the claim that issuer-licensed insider trading (when the insider’s firm approves the trade in advance and has disclosed that it permits such trading pursuant to published guidelines) is economically efficient and morally harmless. But for the last thirty-five years, many scholars and the U.S. Supreme Court have relied on Professor William Wang’s “Law of Conservation of Securities” to rebut claims that insider trading can be victimless. This law is purported to show that every act of insider trading, even those licensed by the issuer, causes an identifiable harm to someone. This article argues that the …

Stock-Market Law And The Accuracy Of Public Companies’ Stock Prices, Kevin S. Haeberle

Faculty Publications

The social benefits of more accurate stock prices—that is, stock-market prices that more accurately reflect the future cash flows that companies are likely to produce—are well established. But it is also thought that market forces alone will lead to only a sub-optimal level of stock-price accuracy—a level that fails to obtain the maximum net social benefits, or wealth, that would result from a higher level. One of the principal aims of federal securities law has therefore been to increase the extent to which the stock prices of the most important companies in our economy (public companies) contain information about firms’ …

Memo To The Obama Administration On The U.S. National Action Plan On Responsible Business Conduct, Kaitlin Y. Cordes, Lisa E. Sachs

Columbia Center on Sustainable Investment Staff Publications

In January 2015, CCSI sent a memo to President Obama to provide input on the U.S. National Action Plan on responsible business conduct. The memo applauded the U.S. Government’s decision to develop a National Action Plan consistent with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, noting that responsible and rights-respecting outward investment can support sustainable development in host countries, and that the U.S. Government has an important role to play in promoting responsible business operations. The memo urged the government to explore in particular how the National Action Plan can address …

The Macroprudential Turn: From Institutional 'Safety And Soundness' To Systematic 'Financial Stability' In Financial Supervision, Robert C. Hockett

Cornell Law Faculty Publications

Since the global financial dramas of 2008-09, authorities on financial regulation have come increasingly to counsel the inclusion of macroprudential policy instruments in the standard ‘toolkit’ of finance-regulatory measures employed by financial supervisors. The hallmark of this perspective is its focus not simply on the safety and soundness of individual financial institutions, as is characteristic of the traditional ‘microprudential’ perspective, but also on certain structural features of financial systems that can imperil such systems as wholes. Systemic ‘financial stability’ thus comes to supplement, though not to supplant, institutional ‘safety and soundness’ as a regulatory desideratum.

The move from primarily micro- …

Halliburton, Basic, And Fraud On The Market: The Need For A New Paradigm, Charles W. Murdock

Faculty Publications & Other Works

No abstract provided.

Rodrigo’S Abstraction: Capitalism Inequality & Reform Over Time And Space, Steven A. Ramirez

Faculty Publications & Other Works

No abstract provided.

The Significance And Impact Of Price Distortion And The Fraud-On-The-Market Theory After Halliburton Ii, Charles W. Murdock

Faculty Publications & Other Works

This past summer, the United States Supreme Court handed down its decision in Halliburton v. Erica P. John Fund, Inc. (“Halliburton II”), in which the Court held that a defendant may establish lack of price impact at the certification stage to establish a lack of reliance based upon the fraud-on-the-market theory. This was the third decision in three years dealing with the fraud-on-the-market approach to establishing commonality with respect to reliance by plaintiffs on management’s misrepresentations. In so doing, the Supreme Court retained market efficiency as an element of the fraud-on-the-market theory, but also reflected a broader and …