Securities Law Commons^™

Reading Reflection Privacy And Security, Paul Sujith Rayi

School of Information Studies - Post-doc and Student Scholarship

No abstract provided.

Texas Gulf Sulphur: A Case Study On Responding To Market Rumors, Wendy Gerwick Couture

Articles

This essay uses Texas Gulf Sulphur as a case study on an issue that companies continue to face today: whether, and how, to respond to market rumors. This essay analyzes the countervailing incentives that influence whether companies respond to market rumors, applies those pressures to the facts of Texas Gulf Sulphur, and concludes that counsel today would likely advise similarly situated companies to remain silent rather than respond to market rumors. Drawing therefrom, this essay argues that silence is not the socially optimal response and that the dueling pressures on companies should be adjusted to incentivize companies to respond to …

Investors' Paradox, Anita K. Krug

Articles

For the first time in an era, new investment products for smaller ("retail ") investors are emerging. These products are mutual funds that engage in the types of trading and investment activities that have long been the province of sophisticated investors. Accordingly, the new funds (called "alternative funds") promise to reduce the gulf between retail investors and their sophisticated counterparts, in terms of portfolio diversification and investment results.

This Article describes the complex mix of factors that spawned alternative funds and critically evaluates the funds' potential, the first scholarly work to do so. It additionally unearths the paradox that impedes …

Foreign Initial Coin Offering Issuers Beware: The Securities And Exchange Commission Is Watching, Julianna Debler

Cornell International Law Journal

No abstract provided.

Corporate Governance, Capital Markets, And Securities Law, Adam C. Pritchard

Book Chapters

This chapter explores the dividing line between corporate governance and securities law from both historical and institutional perspectives. Section 2 examines the origins of the dividing line between securities law and corporate governance in the United States, as well as the efforts of the SEC to push against that boundary. That history sets the stage for section 3, which broadens the inquiry by examining the institutional connections between capital markets and corporate governance. Are there practical limits to the connection between securities law and corporate governance? The US again illustrates the point, as Congress has increasingly crossed the traditional boundary …

Why Salman Is A Game-Changer For The Political Intelligence Industry, Kendall R. Pauley

American University Law Review

No abstract provided.

Jumpstart Regulation Crowdfunding: What Is Wrong And How To Fix It, Jo Won

Lewis & Clark Law Review

In 2015, the Securities and Exchange Commission adopted Regulation Crowdfunding, which permitted small businesses and startups to raise capital from the general public online. Unfortunately, Regulation Crowdfunding failed its essential purpose to facilitate capital formation for small businesses and startups due to its high transaction costs and low offering limit. But it turns out that equity crowdfunding in other countries—especially in Great Britain—is highly successful, and in some cases, exceeds venture capital funding. In these countries, equity crowdfunding’s transaction costs and disclosure requirements are much lower than, and issuers may raise more money than, offerings under Regulation Crowdfunding. Furthermore, the …

Insider Trading And The Myth Of Market Confidence, John P. Anderson

Journal Articles

This Article challenges the validity of the market-confidence claim as a justification for the regulation of insider trading on two grounds. First, insofar as it relies on a sociopsychological claim-that most investors perceive insider trading as economically harmful or morally wrong-it is subject to the problem of false consciousness (i.e., the psychological claim could be true though the shared belief is demonstrably false). Second, even if the problem of false consciousness is set aside, the market-confidence argument's empirical claims of a chilling effect among potential investors must be proven, not simply assumed.

The Regulation Of Trading Markets: A Survey And Evaluation, Paul G. Mahoney, Gabriel V. Rauterberg

Book Chapters

This chapter was prepared for a conference exploring the desirability and structure of a new special study of the securities markets. Our objective is not to resolve all of the questions that commentators have raised about the new equity markets, but to lay the groundwork for a new special study by surveying the state of market regulation, identifying issues, and offering preliminary evaluations.

Securities Regulation, George L. Flint Jr.

SMU Annual Texas Survey

No abstract provided.

Sunrise, Sunset: An Empirical And Theoretical Assessment Of Dual-Class Stock Structures, Andrew William Winden

UF Law Faculty Publications

A battle is brewing for control of America’s most dynamic companies. Entrepreneurs are increasingly seeking protection from interference or dismissal by public investors through the adoption of dual-class stock structures in initial public offerings. Institutional investors are pushing back, demanding that sucks structures be abandoned or strictly limited through subset provisions. The actual terms of dual-class stock structures, however, have been remarkably understudied, so the debate between proponents of prohibition and private ordering is ill-informed. This paper presents the first empirical analysis of the initial, or sunrise, and terminal, or sunset, provisions found in the charters of dual-class companies, with …

Shareholder Voting And The Symbolic Politics Of Corporation As Contract, Matthew T. Bodie, Grant M. Hayden

All Faculty Scholarship

American corporations are structured in such a way that shareholders, and shareholders alone, have the right to vote in all significant corporate decisions. Over the years, this exclusive shareholder franchise has been supported by an ongoing procession of justifications. But as those arguments have fallen by the wayside, shareholder primacists have circled back and latched upon a final argument for the special voting status of shareholders, arguing that this fundamental feature of corporate governance is the product of the set of freely-bargained-for agreements among all corporate constituents. Because this set of agreements reflects the preferences of all parties to the …

The Statutory Authority For Court-Ordered Disgorgement In Sec Enforcement Actions, Donna M. Nagy

Articles by Maurer Faculty

What empowers the U.S. Securities and Exchange Commission (SEC) to seek, and federal district courts to order, the disgorgement of ill-gotten gains from securities law violators? The short answer, which stood largely unchallenged for 46 years, is that federal courts may award disgorgement, at the request of the SEC, pursuant to the equitable powers that Congress conferred in the jurisdictional provisions of the federal securities laws. During the 2017 oral argument in Kokesh v. SEC, however, five justices of the U.S. Supreme Court interjected statements expressing varying degrees of skepticism. The tenor of the questions during the Kokesh argument, as …

Are Charter Schools The Second Coming Of Enron?: An Examination Of The Gatekeepers That Protect Against Dangerous Related-Party Transactions In The Charter School Sectors, Preston C. Green Iii, Bruce D. Baker, Joseph O. Oluwole

Indiana Law Journal

INTRODUCTION

OVERVIEW OF ENRON

A. ENRON AND DEREGULATION

B. THE LJM SPES

C. ENRON’S COLLAPSE

II: ENRON’S GATEKEEPER PROBLEMS

A. ARTHUR ANDERSEN

B. INDEPENDENT ANALYSTS

C. CREDIT RATING AGENCIES

D. ENRON’S BOARD OF DIRECTORS

E. SECURITIES AND EXCHANGE COMMISSION (SEC)

III: CHARTER SCHOOLS AND RELATED-PARTY TRANSACTIONS

A. CHARTER SCHOOL DEREGULATION AND PRIVATE INVESTORS

B. EXAMPLES OF ENRON-LIKE RELATED-PARTY TRANSACTIONS

1. IMAGINE SCHOOLS

2. IVY ACADEMIA CHARTER SCHOOL

3. AMERICAN INDIAN MODEL CHARTER SCHOOLS

4. GRAND TRAVERSE ACADEMY

5. PENNSYLVANIA CYBER CHARTER SCHOOL

C. THE FEDERAL GOVERNMENT, RELATED-PARTY TRANSACTIONS, AND THE NEED FOR STRONG GATEKEEPING

IV: CHARTER SCHOOL GATEKEEPERS

A. AUDITORS …

Implementing Shared-Use Of Mining Infrastructure To Achieve The Sustainable Development Goals, Perrine Toledano, Nicolas Maennling

Columbia Center on Sustainable Investment Staff Publications

Many of the Sustainable Development Goals will only be achieved if the population has access to basic services, such as access to water, power, transport, and telecommunications. However, in many developing countries there is a lack of infrastructure to guarantee these services and there are insufficient public funds to finance growing needs. In resource-rich countries, the mining sector can play a key role in increasing access to infrastructure. Mining-related infrastructure is often developed to serve the exclusive need of the investors, but if it is shared and developed to serve the broader needs and uses of the host economy it …

You Don't Need Love . . . But It Helps: Insider Trading Law After Salman, Matthew J. Wilkins

Kentucky Law Journal

No abstract provided.

Legitimate Yet Manipulative: The Conundrum Of Open-Market Manipulation, Gina-Gail S. Fletcher

Articles by Maurer Faculty

Is manipulation possible in the absence of misconduct? This is the foundational inquiry at the heart of open-market manipulation. Open-market manipulation captures the attention of lawmakers and courts because it is market manipulation effected entirely through facially legitimate transactions. Whereas traditional, well-accepted forms of market manipulation involve deception, fraud, and monopolistic prices, open-market manipulation involves no objectively bad acts and, instead, is accomplished through permissible transactions executed on the open market. As enforcement of this form of manipulation increases, the question arises—when, if ever, is a legitimate transaction manipulative?

To the Securities Exchange Commission and the Commodity Futures Trading Commission …

Guardians Of The Galaxy: How Shareholder Lawyers Won Big For Their Clients And Vindicated The Integrity Of Our Economy, Daniel J. Morrissey

Loyola of Los Angeles Law Review

Securities class actions are the most economically significant form of litigation. Highly skilled lawyers expend huge sums and relentless efforts in these matters but because of the costs involved and the potential for enormous liability very few of them ever make it to trial. This Article is the story of one that did, a mammoth fraud where a jury returned a $1.5 billion verdict that, with interest, increased to almost $2.5 billion by the time the case reached the appellate court.

There the Court upheld the shareholders’ theory that their damages could be measured by the excessive amounts they had …

Caremark's Hidden Promise, Ezra Wasserman Mitchell

Loyola of Los Angeles Law Review

In re Caremark, decided in 1996, established for the first time a director’s duty to monitor under Delaware law. A significant amount of jurisprudence and commentary has developed. Almost all of this literature parses the language of the case and those following, and disregards the underlying claims for damages. As a result of this linguistic focus, many have concluded that the duty to monitor largely is toothless and, importantly, deals only with claims of failure to monitor legal risk. A duty to monitor business risk has been disavowed.

Following the money reveals a different story. Classifying the cases according to …

From Texas Gulf Sulphur To Laudato Si': Mining Equitable Principles From Insider Trading Law, Michael Kaufman

Faculty Publications & Other Works

In SEC v. Texas Gulf Sulphur, the Second Circuit declared that all investors trading on impersonal exchanges should have equal access to material information, and therefore anyone who possesses material inside information must either turn it over to the investing public or not trade. The broad reach of that insider trading prohibition sent shock waves throughout the financial markets and encountered significant judicial resistance from the Supreme Court.

Although the Supreme Court initially rejected the insider trading prohibition announced in Texas Gulf Sulphur, the fundamental equitable trading principles underlying that decision have endured. This article shows that TGS …

Whistling Loud And Clear: Applying Chevron To Subsection 21f Of Dodd–Frank, Shaun M. Bennett

Washington and Lee Law Review

This Note addresses a circuit court split arising from a portion of the anti-retaliation provisions in the Dodd–Frank Wall Street Reform and Consumer Protection Act. Subsection 21F’s retaliation prohibitions apply to those employers whose employees make required or protected disclosures under the Sarbanes–Oxley Act of 2002 (SOX) or any other rule or regulation under the SEC’s jurisdiction. SOX provides anti -retaliation protections — similar to those available under Dodd–Frank — for employees of publicly traded companies who report misconduct. However, SOX expressly affords protections to those who provide information to “a Federal regulatory or law enforcement agency; any Member of …

Canons Of Construction For Dysfunctional Statutes: A Comment On Bennett, Paul G. Mahoney

Washington and Lee Law Review

No abstract provided.

Comment On Whistling Loud And Clear: Applying Chevron To Subsection 21f Of Dodd–Frank, Sarah C. Haan

Washington and Lee Law Review

No abstract provided.

The Evolution Of Entrepreneurial Finance: A New Typology, J. Brad Bernthal

Publications

There has been an explosion in new types of startup finance instruments. Whereas twenty years ago preferred stock dominated the field, startup companies and investors now use at least eight different instruments—six of which have only become widely used in the last decade. Legal scholars have yet to reflect upon the proliferation of instrument types in the aggregate. Notably missing is a way to organize instruments into a common framework that highlights their similarities and differences.

This Article makes four contributions. First, it catalogues the variety of startup investment forms. I describe novel instruments, such as revenue-based financing, which remain …

Shareholder Divorce Court, Ann Lipton

Publications

No abstract provided.

Stock Market Manipulation And Its Regulation, Merritt B. Fox, Lawrence R. Glosten, Gabriel Rauterberg

Articles

More than eighty years after federal law first addressed stock market manipulation, the federal courts remain fractured by disagreement and confusion concerning manipulation law's most foundational issues. There remains, for example, a sharp split among the federal circuits concerning manipulation law's central question: Whether trading activity alone can ever be considered illegal manipulation under federal law? Academics have been similarly confused-economists and legal scholars cannot agree on whether manipulation is even possible in principle, let alone on how to properly address it in practice.

Arbitration Law Update: 2017-2018, Teresa J. Verges, Elissa Germaine

Faculty Publications

(Excerpt)

This article summarizes the leading federal and state arbitration cases during the last year that are of particular relevance to the securities arbitration practitioner. In its sole arbitration decision during the 2017-18 term, the U.S. Supreme Court held in Epic Systems Corp. v. Lewis that employers could require their employees to waive their right to class actions and collective arbitration. Courts also addressed a host of novel issues, including whether investors can force a non-FINRA member and municipal bond indentured trustee to arbitrate before FINRA, the arbitrability of claims against a cryptocurrency exchange, and the applicability of a state's …

Financial Exploitation Of The Elderly: An Overview Of Regulatory Action, Christine Lazaro

Faculty Publications

(Excerpt)

Financial exploitation of the elderly is a significant problem, which is only getting worse over time. A study by MetLife estimated that seniors lost $2.9 billion as a result of financial abuse, recognizing that the number was likely low due to underreporting of abuse. Each year, the elder population increases as the baby boomer generation ages. By the year 2050, it is estimated that 83.7 million people will be aged 65 or older, double what it was in 2012.

The Regulation Of Digital Investment Advice, Christine Lazaro

Faculty Publications

Digital investment advice, or robo-advice, is a growing trend in the financial services industry. It is expected that by 2022, robo-advisers will manage over $4 trillion in assets. Robo-advice covers a wide range of services, however all involve advice derived from algorithms. This article will discuss what robo-advice is as well as how it is regulated by the SEC and FINRA.

The Death Of Appraisal Arbitrage: Ending Windfalls For Deal Dissenters, William J. Carney, Keith Sharfman

Faculty Publications

In this article, we take note of a new and positive development in Delaware's law of appraisal: more robust enforcement of Section 262(h), which expressly excludes from fair value in appraisal litigation the value that is uniquely associated with the deal from which the shareholders seeking appraisal are dissenting. For public firms, this implies that deal dissenters are entitled to no more than the price that prevailed prior to the deal's announcement.

In a salutary development, the Delaware Chancery Court took this approach in its recent appraisal decision in Verition Master Fund Partners, Ltd. v. Aruba Networks, Inc., awarding …