Securities Law Commons^™

Front Matter

DePaul Business & Commercial Law Journal

No abstract provided.

Now You Have It, Now You Don’T: Taxing Crypto, Part 2, Reuven S. Avi-Yonah

Articles

In “Coinbase: Are Cryptoassets Securities?” Tax Notes contributing editor Lee A. Sheppard highlights a recent district court decision indicating that some forms of cryptoassets are securities for securities law purposes and therefore fall under the jurisdiction of the SEC:

There are potential tax ramifications. Some, indeed many, cryptoassets could be securities under the securities law. That means that losses can’t be recognized on wash sales (section 1091). The IRS should issue a notice stating that many cryptoassets other than bitcoin are securities, so losses on wash sales can’t be recognized. A notice would not be a heavy lift. The taxpayers …

Esg Factors In Municipal Securities Disclosures: Toward A Materiality Concept, Justin Marlowe

Northern Illinois University Law Review

State and local governments in the United States finance most of their infrastructure investment with debt instruments known as municipal bonds. The federal government does not directly regulate when or how municipal issuers access the municipal bond market, and only indirectly regulates the content of municipal borrowers’ disclosure to investors. A consequence of that unique regulatory structure is that municipal borrowers have wide discretion on whether to disclose falling property values, rising crime rates, and other long-term threats to their ability to repay investors. This is at odds with the ever-expanding information needs of investors who seek to align their …

Regulating Congressional Insider Trading: The Rotten Egg Approach, Sarah J. Williams

Cardozo Law Review

A 2004 study revealed that the stock portfolios of members of Congress were consistently outperforming those of the investing public. The financial success of federal lawmakers was statistically correlated to the use of nonpublic information obtained while performing legislative responsibilities—reasonably characterizable as insider trading. Cries of dismay over such profiteering by lawmakers have been echoing in the public domain since Samuel Chase, Maryland’s representative in the Continental Congress, directed colleagues to corner the flour market in 1778 after learning that copious quantities of it would be purchased by the government to support the Continental Army. Notwithstanding efforts to apply insider …

Data Privacy By Contract, Ifeoma Ajunwa, Austin Kamer

Cardozo Law Review

Protecting consumer privacy rights presents a particular challenge given the prevalence of data breaches. This Article notes that current law is woefully inadequate in protecting the privacy rights of consumers. Notably, the law fails in the following four areas: (1) classification of consumer data, (2) lack of a comprehensive approach, (3) after-the-fact focus, and (4) limited accountability for third parties. Although it may be impossible to eliminate all data breaches, more regulations can bolster protection without restricting technological advancements. This Article proposes a contractual approach to privacy protection for consumers. It argues that the creation of mandatory implied contractual terms …

The Esg Gap, Sharon Hannes, Adi Libson, Gideon Parchomovsky

BYU Law Review

The corporate world is undergoing a transformation: there has been a dramatic influx in demand for companies to promote environmental, social, and governance (ESG) values. Yet these preferences do not necessarily translate into effective corporate actions. In this Article, we underscore the structural problems that prevent such preferences from steering the corporate ship full steam ahead toward ESG goals. We analyze the central actors in the corporate sphere that can potentially bring about such change on the ground: managers, institutional investors, and activist hedge funds. We demonstrate that none of these actors have the two central elements required for promoting …

Sec Enforcement: Balancing Deterrence With Due Process. Hearing Before The Committee On Financial Services Subcommittee On Capital Markets, House, One Hundred Eighteenth Congress, Second Session., Paul R. Eckert

Congressional Testimony

No abstract provided.

The Major Questions Doctrine’S Domain, Todd Phillips, Beau J. Baumann

Brooklyn Law Review

In West Virginia v. EPA, the Supreme Court elevated the major questions doctrine to new heights by reframing it as a substantive canon and clear statement rule rooted in the separation of powers. The academic response has missed two unanswered questions that will determine the extent of the doctrine’s domain. First, how will the Court apply the doctrine to a range of different regulatory schemes? The doctrine has so far only been applied to nationwide legislative rules that are both (1) economically or politically significant and (2) transformative. It is unclear whether the doctrine applies to alternative modes of regulation …

The Business Judgment Rule In Stakeholder Capitalism, Thiago Spercel

Northwestern Journal of International Law & Business

The tension between shareholder primacy and stakeholder capitalism embodies a fundamental debate about the purpose of a corporation. These two perspectives offer contrasting views on whether a company should primarily serve the interests of its shareholders or consider the broader spectrum of stakeholders in its decision-making process, taking into account environmental, social and governance factors alongside financial performance. The Dodd-Berle debate from the 1930s and Milton Friedman’s teachings in the 1970s regarding the purpose of a corporation and the tension between shareholder primacy and stakeholderism have been reinvigorated. On the one hand, ESG considerations have become increasingly important in risk …

Shocking Financed Emissions: The Effect Of Economic Volatility On The Portfolio Footprinting Of Financial Institutions, Ilmi Granoff, Tonya Lee

Sabin Center for Climate Change Law

Many financial institutions are now calculating and disclosing their financed emissions, a class of metrics enabling these institutions to calculate the greenhouse gas (GHG) emissions associated with investment and lending activities. These institutions have widely adopted the metric to estimate exposure to climate-related financial risk associated with GHG-emitting activities and to provide shareholders and investors a picture of how their financial activity impacts global climate change. Financed emissions metrics, despite widespread adoption, face two key methodological challenges: lack of comparability of outputs within and between portfolios, and vulnerability of calculations to portfolio volatility. Markets are naturally volatile, but the economic …

Modernizing The Power Of The Purse Statutes, Eloise Pasachoff

Georgetown Law Faculty Publications and Other Works

Two foundational statutes limit the executive branch’s important and necessary work in executing the budget against the backdrop of congressional control: the Antideficiency Act, dating back to the post-Civil War era, and the Impoundment Control Act, which emerged from the Nixon years. This Article, originally written as an invited contribution to The George Washington Law Review’s annual issue on administrative law, calls these the Power of the Purse statutes. While these statutes have been generally successful in responding to the problems that first prompted them, this Article illustrates gaps in the statutes that have become apparent in an era of …

Tying Law For The Digital Age, Daniel A. Crane

Notre Dame Law Review

Tying arrangements, a central concern of antitrust policy since the early days of the Sherman and Clayton Acts, have come into renewed focus with respect to the practices of dominant technology companies. Unfortunately, tying law’s doctrinal structure is a self-contradictory and incoherent wreck. A conventional view holds that this mess is due to errant Supreme Court precedents, never fully corrected, that expressed hostility to tying based on faulty economic understanding. That is only part of the story. Examination of tying law’s origins and development shows that tying doctrine was built on a now-dated paradigm of what constitutes a tying arrangement. …

Calpers V. Anz Securities: Securities Time Bars, Whit Kendall

MC Law Review

Statutes of limitations and statutes of repose are critical mechanisms that help to limit liability in civil actions. In many instances, these two time bars are paired together in order to protect a defendant from an interminable threat of liability. Although these time limits are present in many types of statutes, they are especially important in statutes involving securities offerings because of the need to protect financial security. In the Securities Act of 1933 ("Securities Act"), there are two time bars, a statute of limitations and a statute of repose, which attempt to protect potential defendants from liability regarding the …

Administrative Law Judges And The Erosion Of The Administrative State: Why Jarkesy May Be The Straw That Breaks The Camel's Back, Nicholas D'Addio

Catholic University Law Review

The Trump-era unitary executive movement sought to expand presidential

power and shrink the influence of the administrative state through deregulation.

This movement ripples into the present moment, as Trump’s overhaul of the

federal judiciary installed a comprehensive system to delegitimize

administrative agency action— a system that is certain to endure. The

independence and role of administrative law judges (ALJs) has proven a key

target of the movement. Most recently, in the 2022 case of Jarkesy v. Securities

and Exchange Commission, the Fifth Circuit held that the dual-tiered for-cause

removal protections of SEC ALJs violated the Take Care Clause of Article …

A Look Back In Time: Analyzing The Success And Value Of The 2014 Amendments To Rule 2a-7 And Reporting On Form N-Cr In Light Of The March 2020 Market Events, Jocelyn Near

Catholic University Law Review

Money market funds have frequently been a target of regulation by the Securities and Exchange Commission (“SEC”). Perhaps the most expansive regulation came as a response to the 2008 financial crisis, in which the Reserve Primary Fund “broke the buck.” The SEC’s misguided 2014 reforms exacerbated the inherent risks of money market funds, including the risk of runs and first mover advantage, particularly with the implementation of Form N-CR. Form N-CR requires a money market fund to publicly report when various events occur, including when a retail or government money market fund’s current net asset value per share deviates downward …

What's Past Is Prologue: Enforcing The Federal Securities Laws In The Age Of Crypto, Gurbir S. Grewal

William & Mary Business Law Review

No abstract provided.

Materiality In The Long Now: Navigating The Intersection Of Decision-Making, Time, And Strategy, Daniel M. Labovitz, Alexander Kontoleon

Dickinson Law Review (2017-Present)

Existing formulations of materiality in the federal securities laws contain an inherent limitation because they don’t adequately account for how risks and opportunities change over time. This can mislead investors looking to understand how well a company is poised to avoid long-dated risks and take advantage of evolving opportunities because those risks and opportunities don’t neatly fit into the rubric of “likelihood of occurrence times magnitude of harm equals materiality.” This is because the likelihood of any long-dated risk occurring within a short reporting time frame will always approach zero, which means the traditional model of materiality will always classify …

Book Review—Environmental, Social, Governance: The Professional’S Guide To The Law And Practice Of Esg, William J. Donohue

Dickinson Law Review (2017-Present)

No abstract provided.

A Mosaic Approach For Challenging Sec Crypto Regulation: The Major Questions Doctrine And Staff Accounting Bulletin 121, Megan Daye, J.W. Verret

William & Mary Business Law Review

The regulatory scheme for the crypto industry can be described as uncertain, at best. The lack of regulatory clarity and agency overreliance on enforcement actions in the place of proper rulemaking will stifle the industry in U.S. markets. The SEC’s haphazard regulatory approach has created more questions and uncertainty. Staff Accounting Bulletin 121 (“SAB 121”) is a prime example of how the SEC’s desperate grasp for regulatory authority implicates the major questions doctrine and the Administrative Procedures Act. This Article analyzes current crypto litigation alongside SAB 121. It identifies a pattern of circumventing the Administrative Procedures Act and violations of …

Contagion. Ftx, A Sector's Crisis & Crypto's Silent Victims, Lev E. Breydo

Faculty Publications

Late 2022 was crypto’s Minsky moment, characterized by wholesale sector collapse and over a dozen major bankruptcies, including FTX’s implosion. For millions of investors, it was the worst of all worlds, combining the frenetic contagion of 2008 with consumer protections most reminiscent of the Panic of 1907.

While the industry’s challenges are often attributed to the nature of crypto itself, the true root cause reflects a fundamental category error. This Article’s comprehensive market taxonomy identifies as the sector’s nexus of risk entities it terms “Crypto Platforms,” like FTX. Crypto Platforms are essentially financial institutions – a cauldron of externalities subject …

Disclosure, Greenwashing, And The Future Of Esg Litigation, Barbara Ballan, Jason J. Czarnezki

Washington and Lee Law Review

The Environmental, Social, and Governance (“ESG”) disclosure movement is expanding both voluntarily, as businesses choose to disclose this information, and mandatorily, as government agencies impose disclosure requirements. As ESG disclosure expands, so do the litigation risks. “Greenwashing” refers to presenting false or misleading environmental or sustainability (i.e., “green”) qualities of products, services, or practices. Businesses may greenwash consumers as well as investors with false and misleading ESG disclosures in advertising, securities filings, or other public statements activating greenwashing litigation from investors and consumers. This Article addresses (1) the laws and regulations that cover consumer and securities greenwashing litigation, (2) how …

Ask The Professor: How Has The Recent U.S. Supreme Court Opinion In Murray V. Ubs Securities Provided Much Needed Protection To Whistleblowers?, Ronald Filler

Articles & Chapters

No abstract provided.

Beyond Profit Motives, William J. Moon

Michigan Law Review

A review of The Profit Motive: Defending Shareholder Value Maximization By Stephen M. Bainbridge.

Trusting What You Can’T See: Audit Oversight And The Pcaob, J. Robert Brown Jr.

Sturm College of Law: Faculty Scholarship

The paper discusses steps that the PCAOB needs to take to improve audit quality and investor trust in audits. This includes a different approach to standard setting, including a reduction in the use of requirements that are entirely principles based. The approach should also address more explicitly address the conflict between audit quality and commercial interests.

The focus of inspections needs to shift away from a primary emphasis on deficiencies to actual improvements in the quality of financial disclosure. In part this means inspecting audits of issuers that have a higher risk of fraud or GAAP violations and, in selecting …

Emerging Technologies And Perfection Of Security Interests: A Financial University Of Uncertainty, Elizabeth M. Wagenbach

Brooklyn Law Review

Since the founding of Bitcoin in 2009, digital assets, such as cryptocurrency, have exploded in popularity. Cryptocurrency has been associated with stories of immense profit and immense loss. The lucky transactors have been able to capitalize on the price fluctuations of cryptocurrency, while the unlucky transactors became victims of the same volatility, losing tremendous amounts of money. The novelty and ingenuity of cryptocurrency has been coupled with mass confusion to transactors and regulators alike. These early days of cryptocurrency have been characterized by a sort of regulatory tug of war that is a direct result of confusion of what cryptocurrency …

In The Midst Of Bankruptcy: How Cryptocurrency's Classification Affects Creditors Who Were Once Customers, Mia Qu

Washington Law Review

In 2022, Congress proposed the Digital Commodities Consumer Protection Act to amend the Commodity Exchange Act and define a new type of commodity: digital commodity. The definition of digital commodity encompasses cryptocurrency and provides the Commodity Futures Trading Commission with jurisdiction over digital asset transactions. This definition of digital commodity has two important implications. First, it signals the lawmakers’ tendency to generalize cryptocurrency as a commodity. Second, it brings complications into how creditors—especially individual crypto account holders—can recover in the recent bankruptcy cases involving prominent crypto companies. This Comment contains four components. First, it provides a brief explanation of cryptocurrency …

Jarkesy V. Sec: Are Federal Courts Pushing The U.S. Toward The Next Financial Crisis?, Jennifer Hill

Pepperdine Law Review

In the wake of both the Great Depression and the Financial Crisis of 2008, Congress established and expanded the powers of the Securities and Exchange Commission (SEC). As part of this expansion, the SEC in-house administrative proceedings, designed to adjudicate SEC violations before the SEC’s administrative law judges (ALJs), were born. These in-house proceedings have faced multiple constitutional attacks in the past decade. In the most recent iteration of such challenges, Jarkesy v. SEC, the Fifth Circuit held that the SEC’s in-house proceedings were unconstitutional on three grounds: (1) the in-house proceedings deprived petitioners of their constitutional right to jury …

Covid-19 Risk Factors And Boilerplate Disclosure, Stephen J. Choi, Mitu Gulati, Xuan Liu, Adam C. Pritchard

Law & Economics Working Papers

The SEC mandates that public companies assess new information that changes the risks that they face and disclose these if there has been a “material” change. Does that theory work in practice? Or are companies copying and repeating the same generic disclosures? Using the shock of the COVID-19 pandemic, we explore these questions. Overall, we find considerable rote copying of boilerplate disclosures. Further, the factors that correlate with deviations from the boilerplate seem related more to the resources that companies have (large companies change updated disclosures more) and litigation risks (companies vulnerable to shareholder litigation update more) rather than general …

Where You Lead, I Will Follow: Professional Athletes' Ability To Influence Loyal Fans' Cryptocurrency Investments And The Broader Need For Cryptocurrency Regulation, Anna D'Eramo

Jeffrey S. Moorad Sports Law Journal (1994 - )

No abstract provided.

Liu And The New Sec Disgorgement Statute, Andrew N. Vollmer

William & Mary Business Law Review

In early 2021, Congress enacted a new statute for enforcement cases brought by the Securities and Exchange Commission. The new statute resolved important questions about the availability of disgorgement as a remedy in SEC enforcement cases, but it created other questions. The purpose of this Article is to discuss one interpretive issue that is already arising in the federal courts of appeals.

That interpretive issue is whether “disgorgement” as authorized by the new statute must abide by equitable limitations the Supreme Court imposed on disgorgement relief in SEC cases in Liu v. SEC, 140 S. Ct. 1936 (2020). The …