Securities Law Commons^™

Theories And Solutions On Wolf Pack Activism, Kimberly Goldman

Michigan Business & Entrepreneurial Law Review

Section I will describe the key players involved in wolf pack activism and their conflicting motives, including both the members of wolf packs and those affected by them. Given that not all shareholders have common interests, this will include an analysis of the motives of various types of shareholders and an analysis of how these diverse motives may affect the wealth sustainability of companies. Section II will explain the phenomenon of wolf packs in corporate governance by describing the circumstances that lead to their formation and the various regulations (or lack thereof) pertaining to them. Section III will describe divergent …

Kokesh V. Sec: The Supreme Court Redefines An Effective Securities Enforcement Tool, Conor Daly

Maryland Law Review Online

No abstract provided.

China's Anti-Corruption Crackdown And The Foreign Corrupt Practices Act, Daniel C.K. Chow

Texas A&M Law Review

China’s highly publicized crackdown on corruption may affect the type and number of cases in China that arise under the Foreign Corrupt Practices Act (“FCPA”), but it should not be assumed that the crackdown will necessarily lead to fewer FCPA prosecutions. Although there is some overlap of the goals of China’s corruption crackdown and the goals of the FCPA, China’s crackdown also serves important goals of the ruling Communist Party. The main goal of the current crackdown is to reinforce the Party’s power by targeting enemies and rivals of the current leadership. The crackdown is not aimed at prohibiting bribes …

Ethereum And The Sec: Why Most Distributed Autonomous Organizations Are Subject To The Registration Requirements Of The Securities Act Of 1933 And A Proposal For New Regulation, Tiffany L. Minks

Texas A&M Law Review

In a world full of new technology, the risk of fraud is constantly increasing. In the securities industry, this risk existed long before the use of technology. Congress enacted the Securities Act of 1933 to combat the risk of fraud and misrepresentation in the sale of securities. By requiring full disclosure, investors have the opportunity to make informed decisions prior to investing. However, Distributed Autonomous Organizations (“DAOs”), through the use of blockchains and smart-contracts, engage in the sale of securities without fully disclosing the risks or complying with the registration requirements of the Securities Act of 1933. Compliance with the …

Reconciling The Volcker Rule With The Dodd-Frank Act’S Objectives: How To Best Combat Systemic Risk, Michael Leonidas Nester

Fordham Law Review

This Note examines the Dodd-Frank Act’s ban on proprietary trading and on banks sponsoring hedge funds and private equity funds, known as the Volcker Rule. This Rule has been a point of contention since the Act was passed in 2010. Some argue that the ban is either a detriment to bond market liquidity or is unnecessary because a tenuous nexus exists between proprietary trading and true causes of the 2008 financial crisis. Proponents cite the role of proprietary trading in the crisis and the inherent risk that banks accept when engaging in such trading. The controversy surrounding the Volcker Rule …

Consumer Bitcredit And Fintech Lending, Christopher K. Odinet

Faculty Scholarship

The digital economy is changing everything, including how we borrow money. In the wake of the 2008 crisis, banks pulled back in their lending and, as a result, many consumers and small businesses found themselves unable to access credit. A wave of online firms called fintech lenders have filled the space left vacant by traditional financial institutions. These platforms are fast making antiques out of many mainstream lending practices, such as long paper applications and face-to-face meetings. Instead, through underwriting by automation — utilizing big data (including social media data) and machine learning — loan processing that once took days …

What Would We Do Without Them: Whistleblowers In The Era Of Sarbanes-Oxley And Dodd-Frank, Sean Griffith, Jane A. Norberg, Ian Engoron, Alice Brightsky, Tracey Mcneil, Jennifer M. Pacella, Judith Weinstock, Jason Zuckerman

Fordham Journal of Corporate & Financial Law

No abstract provided.

Securities Fraud Embedded In The Market Structure Crisis: High-Frequency Traders As Primary Violators, Stanislav Dolgopolov

William & Mary Business Law Review

This Article analyzes approaches to attaching liability for securities fraud to high-frequency traders as primary violators in connection with the current market structure crisis. One of the manifestations of this crisis pertains to inadequate disclosure of advanced functionalities offered by trading venues, as exemplified by the order type controversy. The Article’s analysis is applied to secret arrangements between trading venues and preferred traders, glitches and gaming, and the reach of the doctrine of market manipulation, and several relevant issues are also viewed from the standpoint of the integrity of the trading process. The Article concludes by arguing for a balanced …

'Deriving' An Understanding Of The Extraterritorial Applicability Of The Commodity Exchange Act, Gabrielle Schwartz

St. John's Law Review

(Excerpt)

This Note argues that courts should return to using a holistic approach, similar to the traditional “conducts” and “effects” test previously used by courts to analyze extraterritorial securities and commodities claims, to assess claims brought under the CEA. Furthermore, this Note argues that both the Commodity Futures Trading Commission and private individuals including foreign plaintiffs, should be permitted to bring these claims to uphold Congress’s intent in establishing a regulatory regime and maintaining the integrity of the international derivatives market. Part I discusses the history of derivative regulation and how both court decisions and statutory changes have created the …

Third-Party Institutional Proxy Advisors: Conflicts Of Interest And Roads To Reform, Matthew Fagan

University of Michigan Journal of Law Reform

With the rise of institutional activist investors in recent decades—including a purported 495 activist campaigns against U.S. corporations in 2016 alone—the role that third-party institutional proxy advisors play in corporate governance has greatly increased. The United States Office of Government Accountability estimates that clients of the top five proxy advisory firms account for about $41.5 trillion in equity throughout the world. For several years, discussions have developed regarding conflicts of interest faced by proxy advisors. For example, Institutional Shareholder Services, the top proxy advisory firm in the world, frequently provides advice to institutional investors on how to vote proxies while …

Clearing The Path: Withdrawal Of Consent And Termination As Next Steps For Reforming International Investment Law, Lise Johnson, Jesse Coleman, Brooke Güven, Lisa E. Sachs

Columbia Center on Sustainable Investment Staff Publications

This is a crucial moment in international investment policymaking. Two factors have converged, calling for a new direction. First, it has become increasingly difficult to justify investor-state dispute settlement (ISDS); even governments that had been among its strongest proponents are now changing course and have raised a range of fundamental, systemic and inter-related issues relating to ISDS. Second, policy makers and other stakeholders have a greater awareness of the need to design appropriate policies to maximize the contributions cross-border investment can make to sustainable development. Influenced by these factors, various reform efforts related to investment policy are underway at the …

The Gatekeepers Of Crowdfunding, Andrew A. Schwartz

Washington and Lee Law Review

Securities crowdfunding is premised on two core policy goals: inclusivity and efficiency. First, crowdfunding is conceived as an inclusive system where all entrepreneurs are given a chance to pitch their idea to the “crowd.” Second, crowdfunding is supposed to be an efficient way to channel funds from public investors to promising startup companies. There is a fundamental tension between these two policy goals, however. A totally inclusive system would ensure that platforms list any and every company that wants to participate. But platforms need to curate and select the companies they list in order to establish a reputation as a …

Cash For Your Conscience: Do Whistleblower Incentives Improve Enforcement Of The Foreign Corrupt Practices Act?, Amy Deen Westbrook

Washington and Lee Law Review

No abstract provided.

The Leidos Mixup And The Misunderstood Duty To Disclose In Securities Law, Matthew C. Turk, Karen E. Woody

Washington and Lee Law Review

This Article concerns the recent Supreme Court case, Leidos,Inc. v. Indiana Public Retirement System (Leidos), and examines the broader issues that it raised for securities law. The consensus among scholars and practitioners is that Leidos presented a direct conflict among the circuit courts over a core question of securities law—when a failure to comply with the SEC’s disclosure requirements can constitute fraud under Rule 10b-5. This Article provides a much different interpretation of the case. It begins by demonstrating that the circuit split which is presumed to have brought Leidos to the Supreme Court does not in fact exist. …

A Legal Frankenstein’S Monster: The Complete Bar Order In Securities Fraud Class Action Lawsuits, Jonathan C. Stanley

Washington and Lee Law Review

No abstract provided.

Making A Market For Corporate Disclosure, Kevin S. Haeberle, M. Todd Henderson

Faculty Publications

It has long been said that market forces alone will result in a problematic under-sharing of information by public companies. Since the 1930s, the main regulatory response to this market failure has come in the form of the massive mandatory-disclosure regime that sits at the foundation of modern securities law. But this regime—especially when viewed along with its speech-chilling antifraud overlay—no doubt leaves society without all the corporate information from which it would benefit. The typical fix offered to the problem has been more of the same: add to the 100-plus-page list of what firms must disclose, often based on …

Insider Trading Law And The Ambiguous Quest For Edge, A. C. Pritchard

Michigan Law Review

A review of Sheelah Kolhatkar, Black Edge.

The Shadow Of Free Enterprise: The Unconstitutionality Of The Securities & Exchange Commission’S Administrative Law Judges, Linda D. Jellum, Moses M. Tincher

Journal of the National Association of Administrative Law Judiciary

Six years ago, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), for the first time giving the Securities and Exchange Commission (SEC) the power to seek monetary penalties through its in-house adjudication. The SEC already had the power to seek such penalties in federal court. With the Dodd-Frank Act, the SEC’s enforcement division could now choose between an adjudication before an SEC Administrative Law Judge (ALJ) or a civil action before an Article III judge. With this new choice, the SEC realized a significant home-court advantage. For example, in 2014, the SEC’s enforcement division prevailed …

Fighting Technology With Technology: Taking Aim At Electronic Sales Suppression, Richard Thompson Ainsworth, Robert Chicoine

Faculty Scholarship

Electronic sales suppression (ESS) is a fraud that has been a (prominent) feature of the North American retail business since at least 1996. The first EES case in the US dates from 1981. ESS is a global problem. Depending on the jurisdiction, and the research study consulted, ESS is estimated to be present in 34% (of Canadian), 50% (of German – two studies), and 70% (of Swedish and Slovenian) businesses. It may be the case today, that “you cannot leave home without” encountering (or participating in) ESS.

The most common types of sales suppression technology are Zappers and Phantomware programming. …

Governing Land Investments: Do Governments Have Legal Support Gaps?, Sam Szoke-Burke, Kaitlin Y. Cordes

Columbia Center on Sustainable Investment Staff Publications

In the wave of efforts to encourage and support more “responsible” land investments, one aspect has been largely overlooked: are governments equipped with the legal and technical support needed to effectively negotiate and conclude investment contracts that lead to responsible outcomes?

CCSI researched how host governments access legal support in the planning, negotiation, and monitoring of land investments, with a view to better understanding where legal support gaps for governments exist, and how these can be addressed by governments themselves, as well as by donors, support providers and investors.

By scrutinizing “legal support gaps,” CCSI sought to identify possible weak …

Costs And Benefits Of Investment Treaties: Practical Considerations For States, Lise Johnson, Jesse Coleman, Brooke Guven, Lisa E. Sachs

Columbia Center on Sustainable Investment Staff Publications

This paper analyzes the expected benefits of investment treaties, including: increased inward investment, increased outward investment, and depoliticization of investment disputes. It then considers evidence of the costs of investment treaties, including: litigation, liability, reputational cost, reduced policy space, distorted power dynamics, reduced role for domestic law-making, and uncertainty in the law. The authors set forth practical steps that states can take relating to both existing treaties as well as future treaties with an objective of increasing desired benefits and decreasing unexpected and high costs of investment treaties.

Unicorns, Guardians, And The Concentration Of The U.S. Equity Markets, Amy Deen Westbrook, David A. Westbrook

Journal Articles

No abstract provided.

Public And Private Enforcement Of Corporate And Securities Laws: An Empirical Comparison Of Hong Kong And Singapore, Wai Yee Wan, Christopher C. H. Chen, Say Hak Goo

Research Collection Yong Pung How School Of Law

No abstract provided.

The Shifting Tides Of Merger Litigation, Randall Thomas, Matthew D. Cain, Jill Fisch, Steven D. Solomon

Vanderbilt Law School Faculty Publications

In 2015, Delaware made several important changes to its laws concerning merger litigation. These changes, which were made in response to a perception that levels of merger litigation were too high and that a substantial proportion of merger cases were not providing value, raised the bar, making it more difficult for plaintiffs to win a lawsuit challenging a merger and more difficult for plaintiffs’ counsel to collect a fee award. We study what has happened in the courts in response to these changes. We find that the initial effect of the changes has been to decrease the volume of merger …

Selective Disclosure And Insider Trading, Michael D. Guttentag

Florida Law Review

Determining when the selective disclosure of material nonpublic information should trigger insider trading liability is a deeply problematic aspect of insider trading doctrine.

The current rule is that a selective disclosure can only trigger insider trading liability if “the insider [making the selective disclosure] personally will benefit, directly or indirectly, from his disclosure.” Dirks v. SEC introduced this “personal benefit” test in 1983 to balance four competing rationales for determining when a tip should trigger insider trading liability. Two developments since Dirks have made problems with this personal benefit test insurmountable. First, the SEC’s enactment of Regulation Fair Disclosure in …

High‐Frequency Trading And The New Stock Market: Sense And Nonsense, Merritt B. Fox, Lawrence R. Glosten, Gabriel V. Rauterberg

Articles

The stock market has been transformed during the last 25 years. Human suppliers of liquidity like the NASDAQ dealers and NYSE specialists have been replaced by algorithmic market making; stocks that once traded on a single venue now trade across twelve exchanges and a multitude of alternative trading systems. New venues like dark pools, and new participants like high‐frequency traders, have emerged to take on prominent roles. This new market has had more than its share of controversy and regulatory scrutiny, particularly in the wake of Michael Lewis’s bestseller Flash Boys. In this article, the authors analyze five of the …

Resourcing Green Technologies Through Smart Mineral Enterprise Development: A Case Analysis Of Cobalt, Saleem Ali, Perrine Toledano, Nicolas Maennling, Nathaniel Hoffman, Lola Aganga

Columbia Center on Sustainable Investment Staff Publications

Achieving the goals of the Paris Agreement requires the world to adopt ‘green technologies’ such as renewable energies and electric transportation at an unprecedented scale. While many countries have implemented policies to spur the adoption of such technologies, a lack of focus has been placed on the sourcing of minerals that are required as inputs. As a result, there is likely to be a significant deficit that may constrain the adoption of green technologies.

In this report, we argue that a neglected area in addressing the mineral scarcity challenge is the private sector’s current trajectory for geological mineral exploration and …

Insider Tainting: Strategic Tipping Of Material Nonpublic Information, Andrew Verstein

Northwestern University Law Review

Insider trading law is meant to be a shield, protecting the market and investors from unscrupulous traders, but it can also be a sword. Insofar as we penalize trading on the basis of material, nonpublic information, it becomes possible to share information strategically in order to disable or constrain innocent investors. A hostile takeover can be averted, or a bidding war curtailed, because recipients of such information must then refrain from trading. This Article offers the first general account of “insider tainting,” an increasingly pervasive phenomenon of weaponizing insider trading law.

The Risk Of Regulatory Arbitrage: A Response To Securities Regulation In Virtual Space, Wendy Gerwick Couture

Washington and Lee Law Review Online

In Securities Regulation in Virtual Space, Eric. C. Chaffee explores the potential applicability of the securities laws to virtual transactions based on virtual activity and argues that, although many of these transactions likely qualify as “investment contracts” under S.E.C. v. W.J. Howey Co., they should be excluded under the context clause because, among other reasons, application of the securities laws would stifle creativity within this innovative space. This Response proposes a reframing of the Howey test as a response to the risk of regulatory arbitrage, argues that the context clause should only exclude transactions that do not pose …

Optimal Issuer Disclosure Of Opinions, Wendy Gerwick Couture

Articles

This Article adds to the scholarly literature about the optimal level of disclosure by issuers of securities by proposing a new theoretical framework that encompasses not only the choice between silence and disclosure, which has been widely discussed, but also the subsidiary decision between disclosure as an opinion and as a statement of fact, which has been ignored. This framework informs the Securities and Exchange Commission’s ongoing review of mandatory disclosure rules and contextualizes the potential impacts of the Supreme Court’s recent decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund,1 which clarified that differential liability standards …