Securities Law Commons^™

Duties, Disclosure, And Discord: Necessity To Resolve Circuit Split And Certainty Leidos Could Have Clarified For Litigation Strategy And Risk Allocation, Damian P. Gallagher

William & Mary Business Law Review

Securities litigation is a complex, specialized, and detailed practice of the law that depends on the expertise of courts and the Securities and Exchange Commission. From its inception, the securities laws, namely the Securities Act of 1933 and the Securities Exchange Act of 1934, provided a baseline expectation and prescription for the Securities and Exchange Commission to promulgate rules to fulfill the organic statute’s demands. Through time, technology, and the law generally, the securities laws have expanded significantly, not only asking, but also requiring, the courts to answer questions never contemplated by the original drafters of the laws to guide …

"Liberty Requires Accountability": The Appointments Clause, Lucia V. Sec, And The Next Constitutional Controversy, Michael A. Sabino

William & Mary Business Law Review

“Liberty requires accountability” is the essential precept which animates the Appointments Clause of Article II. This constitutional safeguard assures that those who exercise the sovereign power of the United States remain accountable both to the Chief Executive who appointed them and to the People who elected that President. The proviso was most recently tested in Lucia v. SEC, and, most assuredly, shall be in controversy again. After first expositing the high Court’s extensive Appointments Clause jurisprudence presaging Lucia, this Article thoroughly explores this newest Article II landmark, before concluding with commentary upon future Appointments Clause challenges expected to soon …

Preparing Legal Frameworks For Environmental Disasters: Practical Considerations For Host States, Brooke Guven, Perrine Toledano, Lise Johnson

Columbia Center on Sustainable Investment Staff Publications

Projects in the extractives sector carry risks of lasting, and sometimes irreversible, damage to the environment. Nonetheless, these projects are important for accelerating the economic development of host countries. Governments seeking to mitigate the adverse effects of foreign investment often face pushback from investors that are unwilling to change their practices in order to avert environmental disaster. This report sets forth certain steps that host-governments can take during the pre-investment, operation, and enforcement phases of extractives projects to provide financial and other protection in the context of environmental disasters associated with private sector investments.

Upon comparative review of five Case …

Electric Utility Alignment With The Sdgs & The Paris Climate Agreement, Perrine Toledano, Aniket Shah, Nicolas Maennling, Ryan J. Lasnick

Columbia Center on Sustainable Investment Staff Publications

The 2030 Sustainable Development Agenda poses a unique and critical challenge to the energy sector: how to scale access to clean energy to power sustainable, economic development for a growing population, while simultaneously decarbonizing global energy supply. Expanding access to clean energy will play a crucial role in achieving nearly every one of the Sustainable Development Goals, including those related to agricultural production, health outcomes, educational performance, water systems, access to infrastructure, and reducing inequalities. However, practices by some actors in the energy sector, and continued over-reliance on greenhouse gas-intensive fossil fuels also undermine global efforts to mitigate climate change …

The Importance Of Inferior Voting Rights In Dual-Class Firms, Dov Solomon

BYU Law Review

Over the past several years, corporate law scholarship has carefully analyzed the effects of dual-class capital structures, which allocate superior voting rights to insiders and inferior voting rights to public shareholders. This Article adds to the literature by focusing on a unique and novel type of dual-class structure—one in which the public shares have no voting rights at all. It notes that this structure is fundamentally different because in the absence of even highly diluted voting rights in public hands, the firm does not have to abide by certain types of disclosure rules and corporate governance standards. Nonvoting shareholders are …

Spotify’S Direct Listing And Foreign Private Issuers: Protecting Investors When Foreign Private Issuers List On A U.S. Exchange But Not On Their Home Exchange, Tayler Tanner

BYU Law Review

No abstract provided.

Securing The Best Odds: Why Congress Should Regulate Sports Gambling Based On Securities-Style Mandatory Disclosure, Ryan Grandeau

Cardozo Law Review

No abstract provided.

Basel Iii F: Callable Commercial Paper, Christian M. Mcnamara, Rosalind Bennett, Andrew Metrick

Journal of Financial Crises

One of the Basel Committee on Banking Supervision’s responses to the global financial crisis of 2007-09 was to introduce the Liquidity Coverage Ratio (LCR), a short-term measure that evaluates whether a bank has enough liquidity to meet expected cash outflows during a 30-day stress scenario. One area in which this incentive has already resulted in changed practices is in the market for commercial paper. Banks often provide backup liquidity facilities to the issuers of commercial paper that the issuers can draw upon to repay a maturing issue of commercial paper if they are unable to sell a new issue to …

Basel Iii E: Synthetic Financing By Prime Brokers, Christian M. Mcnamara, Andrew Metrick

Journal of Financial Crises

Hedge funds rely on “prime brokerage” units within banks to provide leverage. With the enhanced capital requirements and new liquidity standards introduced by Basel III driving up the cost to banks of engaging in such financing, prime brokers have begun to offer an alternative means of providing hedge fund clients with leveraged exposure to securities. Known as synthetic financing, this alternative requires the prime broker to enter into derivatives contracts with the clients. Under the Basel III framework, the ability of banks to hedge and net such derivative positions results in capital and liquidity costs for synthetic financing that are …

Basel Iii B: Basel Iii Overview, Christian M. Mcnamara, Michael Wedow, Andrew Metrick

Journal of Financial Crises

In the wake of the financial crisis of 2007-09, the Basel Committee on Banking Supervision (BCBS) faced the critical task of diagnosing what went wrong and then updating regulatory standards aimed at preventing it from occurring again. In seeking to strengthen the microprudential regulation associated with the earlier Basel Accords while also adding a macroprudential overlay, Basel III consists of proposals in three main areas intended to address 1) capital reform, 2) liquidity standards, and 3) systemic risk and interconnectedness. This case considers the causes of the 2007-09 financial crisis and what they suggest about weaknesses in the Basel regime …

Boards In Information Governance, Faith Stevelman, Sarah C. Haan

Scholarly Articles

This Article focuses on the evolving role of boards of directors. It charts the decline of the two leading, twentieth-century conceptual frameworks shaping corporate boards’ roles: agency cost theory, which produced the limited “monitoring board,” and “separate realms” theory, which ceded board responsibility for matters other than profit maximization to government regulation. Hedge fund activism and wild stock market swings have exposed the limits of the board’s role in agency cost theory. The 2020 pandemic, economic crises, investors’ demands for socially responsible stewardship, and corporations’ own political activism have rendered separate realms thinking untenable.

Although much theorizing in corporate law …

The Regulation Of Equity Index Futures, Lin (Lynn) Bai

Faculty Articles and Other Publications

Equity index futures are one of the most actively traded derivative instruments in financial markets around the world. Advancements in trading and clearing technologies transformed the marketplace over the past two decades. Regulation drastically changed to keep pace with the market’s development. New rules have been implemented covering trading activities, risk management, market surveillance, and customer protection. Legal literature on the regulation of this important financial instrument is surprisingly antiquated. Existing papers were written decades ago and do not reflect the true metes and bounds of today’s regulatory landscape. This paper fills the void. It provides a comprehensive discussion of …

Delaware's New Competition, William J. Moon

Faculty Scholarship

According to the standard account in American corporate law, states compete to supply corporate law to American corporations, with Delaware dominating the market. This “competition” metaphor in turn informs some of the most important policy debates in American corporate law.

This Article complicates the standard account, introducing foreign nations as emerging lawmakers that compete with American states in the increasingly globalized market for corporate law. In recent decades, entrepreneurial foreign nations in offshore islands have used permissive corporate governance rules and specialized business courts to attract publicly traded American corporations. Aided in part by a select group of private sector …

A Tale Of Two Markets: Regulation And Innovation In Post-Crisis Mortgage And Structured Finance Markets, William Wilson Bratton, Adam J. Levitin

Articles

This Article takes stock of post-financial crisis regulatory developments to tell a tale of two markets within a political economy of financial regulation. The financial crisis stemmed from excessive risk-taking and dodgy practices in the subprime home mortgage market, a market that owed its existence to private-label securitization. The pre-crisis boom in private label mortgage-backed securities could never have happened, however, without financing from an array of structured products and vehicles created in the capital markets-CDOs, CDO2 s, and SIVs. It was these capital markets products that magnified mortgage credit risk and transmitted it into the financial system's vulnerable nodes. …

Golden Parachutes And The Limits Of Shareholder Voting, Albert H. Choi, Andrew C.W. Lund, Robert Schonlau

Vanderbilt Law Review

With the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, Congress attempted to constrain change-in-control payments (also known as “golden parachutes”) by giving shareholders the right to approve or disapprove such payments on an advisory basis. This Essay is the first to empirically examine the experience with the Say-on-Golden-Parachute (“SOGP”) vote. We find that unlike shareholder votes on proposed mergers, there is a significant amount of variation with respect to votes on golden parachutes. Notwithstanding the variation, however, the SOGP voting regime is likely ineffective in controlling golden parachute (“GP”) compensation. First, proxy advisors seem …

The Dodd-Frank Death Knell, Celia R. Taylor

Sturm College of Law: Faculty Scholarship

This Essay recounts a panel discussion regarding certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). It begins by discussing the repeal of the provision requiring SEC adoption of resource extractive industries rules. It then considers the fate of the conflict minerals rule promulgated by the SEC pursuant to Section 1502 of Dodd-Frank. Next, it details several provisions of the CHOICE Act, which is aimed at undermining Dodd-Frank, including the Act’s attempt to change the scope of the SEC’s whistleblower program. The Essay further discusses the Trump administration’s attempt to defund and restructure the Consumer Financial …

The Indian Securities Fraud Class Action: Is Class Arbitration The Answer?, Brian T. Fitzpatrick, Randall S. Thomas

Northwestern Journal of International Law & Business

Abstract:

In 2013, India enacted one of the most robust private enforcement regimes for securities fraud violations in the world. Unlike in most other countries, Indian shareholders can now initiate securities fraud lawsuits on their own, represent all other defrauded shareholders unless those shareholders affirmatively opt out, and collect money damages for the entire class. The only thing missing is a better financing mechanism: unlike the United States, Canada, and Australia, India does not permit contingency fees, so class action lawyers cannot front the costs of litigation in exchange for collecting a percentage of what they recover. On the other …

Post-Crisis Financialization Through Product Innovation: Assessing Complexity, Growth & Design In Exchange Traded Funds, Ryan Clements

Duke Law SJD Dissertations

This dissertation examines emerging risks and regulatory concerns in exchange traded funds (ETFs). It makes four core arguments through four published or accepted (and forthcoming) law review articles, alongside two published blog posts, all of which were written and previously submitted to the SJD Committee during the author’s dissertation research period. These articles are organized herein as dissertation chapters together with a contextual introduction and a summary conclusion which frames the dissertation within the scholarly literature on economic “financialization,” and emerging challenges associated with the growth of large interconnected asset managers.

The four core arguments in this dissertation are as …

De Facto Shareholder Primacy, Jeff Schwartz

Maryland Law Review

No abstract provided.

Halliburton Ii At Four: Has It Changed The Outcome Of Class Certification Decisions?, Noah Weingarten

Fordham Journal of Corporate & Financial Law

The U.S. Supreme Court's decision in Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S. 258 (2014) (Halliburton II) appeared to give corporate defendants a new tool to defeat class certification in the context of securities fraud class action litigation: rebutting the requisite presumption of reliance by showing a lack of "price impact"-a term that Halliburton II used to describe whether the price of an allegedly affected company's stock went up or down. However, based on an empirical study of pre- versus post-Halliburton II class certification decisions, it appears that the outcomes of class certification decisions have become even …

Shapeshifting Securities, Wendy Gerwick Couture

Articles

No abstract provided.

Securities Regulation And Social Media, Seth C. Oranburg

Loyola University Chicago Law Journal

Federal securities regulation originally divided corporate finance into two neat categories, public and private. In 1933, private financing was limited to “sophisticated” investors but otherwise lightly regulated. Public financing became heavily regulated. In 1982, the SEC introduced Reg D, which introduced the concept of “general solicitation” to clarify the distinction between public and private offerings. Reg D is well understood to prohibit newspaper advertisements and permit direct solicitations to venture capital investors. This enabled great wealth consolidation in regions like Silicon Valley while effectively banning general solicitations in private offerings.

Now, social media communication challenges the definition of “general solicitation.” …

The Fate Of State Investor Protection, Benjamin P. Edwards

Scholarly Works

In June 2019, the Securities & Exchange Commission made significant changes to the regulation of investment advice, issuing regulations and new interpretations of the Investment Advisers Act of 1940. Industry advocates have argued that states lack power to enact their own regulations on the theory that various federal statutes and regulations combine to preempt and sharply limit state authority. This article examines the current state of reforms around the country and the policy and legal arguments for and against limiting state efforts to raise the standards for investment advice.

Adversarial Failure, Benjamin P. Edwards

Scholarly Works

Investors, industry firms, and regulators all rely on vital public records to assess risk and evaluate securities industry personnel. Despite the information's importance, an arbitration-facilitated expungement process now regularly deletes these public records. Often, these arbitrations recommend that public information be deleted without any true adversary ever providing any critical scrutiny to the requests. In essence, poorly informed arbitrators facilitate removing public information out of public databases. Interventions aimed at surfacing information may yield better informed decisions. Although similar problems have emerged in other contexts when adversarial systems break down, the expungement process to purge information about financial professionals provides …

Table Of Contents, Seattle University Law Review

Seattle University Law Review

Table of Contents

Investments And Security: Balancing International Commerce And National Security With Expanded Authority For The Committee On Foreign Investment In The United States, Christopher Jusuf

Catholic University Journal of Law and Technology

What happens when the interests of international trade conflict with those of national security? This article analyzes this question within the context of the Committee on Foreign Investment in the United States (CFIUS), an obscure but increasingly powerful executive panel that exercises the president's broad authority to unilaterally interfere with and stop international mergers and acquisitions. With the passage of the Foreign Investment Risk Review Modernization Act (FIRRMA), CFIUS is more powerful now than it has ever been, and should be a key consideration for any company seeking to do business with foreign investors. This is especially true as America …

The New Mechanisms Of Market Inefficiency, Kathryn Judge

Faculty Scholarship

Mechanisms of market inefficiency are some of the most important and least understood institutions in financial markets today. A growing body of empirical work reveals a strong and persistent demand for “safe assets,” financial instruments that are sufficiently low risk and opaque that holders readily accept them at face value. The production of such assets, and the willingness of holders to treat them as information insensitive, depends on the existence of mechanisms that promote faith in the value of the underlying assets while simultaneously discouraging information production specific to the value of those assets. Such mechanisms include private arrangements, like …

Revising Boilerplate: A Comparison Of Private And Public Company Transactions, Stephen J. Choi, Robert E. Scott, G. Mitu Gulati

Faculty Scholarship

The textbook model of commercial contracts between sophisticated parties holds that terms are proposed, negotiated and ultimately priced by the parties. Parties reach agreement on contract provisions that best suit their transaction with the goal of maximizing the joint surplus from the contract. The reality, of course, is that the majority of the provisions in contemporary commercial contracts are boilerplate terms derived from prior transactions and even the most sophisticated contracting parties pay little attention to these standard terms, focusing instead on the price of the transaction. With standard-form or boilerplate contracts, this dynamic of replicating by rote the terms …

A Mission Statement For Mutual Funds In Shareholder Litigation, Sean J. Griffith, Dorothy S. Lund

Faculty Scholarship

This Article analyzes the conduct of mutual funds in shareholder litigation. We begin by reviewing the basic forms of shareholder litigation and the benefits such claims might offer mutual fund investors. We then investigate, through an in-depth docket review, whether and how the ten largest mutual funds participate in shareholder litigation. We find that although shareholder suits offer potential benefits, the largest mutual funds have essentially forfeited their use of litigation. This finding is particularly striking given that index funds and other long-term oriented mutual funds generally cannot sell their shares when they are dissatisfied with company performance, leaving them …

Working Hard Or Making Work? Plaintiffs’ Attorney Fees In Securities Fraud Class Actions, Jessica M. Erickson

Law Faculty Publications

In this paper, we study attorneys’ fees awarded in the largest securities class actions: “mega-settlements.” Consistent with prior work, we find larger fee awards but lower percentages in these cases. We also find that courts are more likely to reject or modify fee requests made in connection with the largest settlements. We conjecture that this scrutiny provides an incentive for law firms to bill more hours, not to advance the case, to help justify large fee awards – “make work.” The results of our empirical tests are consistent with plaintiffs’ attorneys investing more time in litigation against larger companies, particularly …