Securities Law Commons^™

In Re Firstenergy Corp. Securities Litigation: Where Macquarie Meets Affiliated Ute, Elizabeth Cosenza, Amanda M. Payne

Fordham Journal of Corporate & Financial Law

The central question this Article seeks to address is whether there is any world in which the Affiliated Ute presumption can still apply to cases under Rule 10b-5(b) after the Supreme Court’s decision in Macquarie? Put differently, if only half-truths and affirmative misrepresentations remain actionable under Rule 10b-5(b), is the Basic presumption the only pathway left for securities plaintiffs? The U.S. Court of Appeals for the Sixth Circuit will likely be the first court to address this issue in In re FirstEnergy Corp. Securities Litigation. The case will test the availability of the Affiliated Ute presumption post-Macquarie in cases based …

Cryptocurrencies, Nfts, And The Expanding Definition Of "Investment Contract": Has The Sec Already Torpedoed The Howey Test?, David B. Guenther

Fordham Journal of Corporate & Financial Law

The U.S. Supreme Court in SEC v. W.J. Howey Co. in 1946 famously defined the term “investment contract”—the catch-all term in the definition of “security” in the Securities Act of 1933—to mean (1) an investment of money, (2) in a common enterprise, (3) with an expectation of profits solely from the efforts of others. While the Howey test has endured as the standard definition of an investment contract, the Howey Court did not define the term “common enterprise,” and for more than fifty years, Howey’s common enterprise prong has eroded. Since 2017, the Securities and Exchange Commission has further eroded …

How To Evaluate Non-Majority Control: What History And Statutes Tell Us, J. Travis Laster

Fordham Journal of Corporate & Financial Law

Under American law, a person who controls a corporation is a fiduciary. Since the nineteenth century, American law has treated a person who wields a majority of the voting power as having control. For almost as long, American law has recognized that holding a majority of the voting power is sufficient but not necessary for control. During the past two decades in Delaware, two schools of thought co-existed regarding non-majority control. One school took a formal approach that (i) shifted from examining control over the business affairs of the enterprise to control over the board, (ii) discounted sources of influence …

Scienter Potentia Est: The Case For The Presumption Of Use Standard In Insider Trading, Audrey Nelson

Fordham Journal of Corporate & Financial Law

Is it possible to accidentally insider trade? The Supreme Court has held that scienter is a necessary element of all § 10(b) and Rule 10b-5 actions, but the federal appeals courts are split on how the scienter requirement applies to insider trading cases. In a non-insider- trading § 10(b) case, the Supreme Court stated that § 10(b) scienter requires intentional misconduct. Although the Supreme Court has not heard a case specifically about the scienter element in the context of insider trading, those who support a use requirement claim that the § 10(b) scienter element requires the plaintiff to show that …

Amending Regulation D'S Accredited-Investor Definition To Allow Natural Persons To Opt Out Of Unwanted Regulatory Protections, John L. Orcutt

Fordham Journal of Corporate & Financial Law

No abstract provided.

The Fortunate Demise Of Sec Staff Legal Bulletin No. 14l, Raffaele Felicetti

Fordham Journal of Corporate & Financial Law

In 2021, the SEC published its now rescinded Staff Legal Bulletin No. 14L (“the 2021 Bulletin”), revising its interpretations of the “ordinary business” and “economic relevance” exclusions under Rule 14a-8. This Article contends that the post-Bulletin landscape has proven undesirable. It empirically shows that environmental and social (“E & S”) shareholder proposals—including anti-E&S proposals—surged in response. Between 2022 and 2024 alone, E & S proposals accounted for 40% of all such filings in Russell 3000 companies over the entire 2014-2024 period, generating an estimated $23.3 million in additional processing costs for companies during that three-year window. Despite their volume, these …

Shareholder Activism & Unconstitutionally Compelled Speech, Steven J. Cleveland

Faculty Articles

No abstract provided.

Insider Trading & Unconstitutionally Complelled Speech, Steven J. Cleveland

Faculty Articles

The Supreme Court has recently weaponized the First Amendment to invalidate economic regulations. Consequently, the Court’s current analytical framework risks invalidating as unconstitutional certain speech compelled by Congress and the SEC to combat insider trading.

The government may compel speech to combat fraud, and many courts and commentators view insider trading as a fraud against the counterparty to the insider’s trade. Today, the government primarily resorts to Section 10(b) of the Securities Exchange Act of 1934 and its implementing regulations, including Rule 10b-5, to combat insider trading. Those regulations prohibit deceptive conduct and do not directly compel speech. Interestingly, in …

Urgensi Optimalisasi Regulasi Ico Dan Regulatory Sandbox Di Indonesia: Studi Komparatif Malaysia, Singapura, Dan Uea, Arfan Yanayir Akbar Sabillilah

Jurnal Hukum & Pembangunan

Regulasi aset kripto di Indonesia sedang mengalami transisi mendasar menyusul diberlakukannya Undang-Undang Pengembangan dan Penguatan Sektor Keuangan (UU P2SK), yang mengalihkan pengawasan dari Bappebti ke Otoritas Jasa Keuangan (OJK) dan Bank Indonesia. Meskipun demikian, kerangka kerja saat ini masih menyisakan celah yang signifikan, khususnya terkait mekanisme penggalangan dana publik seperti Initial Coin Offering (ICO), Initial Exchange Offering (IEO), dan Security Token Offering (STO), serta tidak adanya Regulatory Sandbox khusus untuk inovasi berbasis kripto. Celah-celah ini menciptakan ketidakpastian hukum, meningkatkan risiko penipuan, dan melemahkan perlindungan investor. Studi ini menggunakan metode yuridis-normatif dengan pendekatan hukum komparatif, menganalisis model regulasi di Malaysia, Singapura, …

The Sound Of Silence In Corporate Director Resignations, Asaf Eckstein, Ziv Granov

Washington and Lee Law Review

This Article seeks to provide an in-depth theoretical, empirical, and policy analysis of an underdeveloped topic in corporate law: director departure. We argue that outspoken director resignations are an integral aspect of effective corporate governance. Disgruntled corporate directors who disagree with the firm’s policies or practices alert shareholders to internal misconduct, encouraging market reactions that pressure the company to make necessary changes. Disclosure of conflict is particularly important in mitigating information asymmetry between shareholders and management, allowing investors to promptly react to relevant events within the firm.

Despite the governance benefits of resignations in protest, we show that outspoken director …

Securities Arbitration Case Law Update 2024–2025 (July 2025), Elissa Germaine, Anthony Rivera

Faculty Publications

(Excerpt)

This article summarizes recent cases regarding the constitutionality of FINRA and leading arbitration cases that are of particular relevance to securities arbitration practitioners.

Scaling 'Reverse Cfius': A Comparative Review Of Outbound Foreign Investment, Hannah Pérez

Cardozo International & Comparative Law Review

The note examines the evolution of U.S. regulations on outbound foreign investments, particularly under Executive Order 14105, known as "Reverse CFIUS," aimed at mitigating national security risks by restricting investments in critical industries in countries like China. It explores the legal, economic, and geopolitical implications of these regulations and compares them with similar measures in the EU, Japan, and Australia, emphasizing the need for international cooperation to effectively address these security concerns.

Should We Watch The Watcher Or The Watched? The Transparency Debate In Auditor Regulation, Sarah Williams

Faculty Scholarship

Federal law has mandated the use of outside auditors by public companies since 1934. For much of that time, the audit industry watched itself. It monitored audit quality and decided how to address auditor misconduct. In 2002, Congress created the Public Company Accounting Oversight Board (“PCAOB” or “Board”) to watch the auditors. The legislation designed a regulatory scheme that presumed audit performance could be improved through an open and cooperative relationship between the regulator and the regulated audit firm. Congress created accountability for the agency by mandating that it disclose its oversight activities to the public (an approach characterized as …

Opening Wall Street To Main Street: A Proposed Framework For Expanding Private Equity To The Public, Willis Huynh

Brooklyn Law Review

Private equity has become one of the most powerful engines of the modern economy, yet its gates remain closed to the vast majority of Americans. Under current federal securities laws, access to private funds is reserved for “accredited investors” and “qualified purchasers,” wealth-based categories that exclude most American households. This Note argues that these thresholds no longer serve as reliable proxies for sophistication and instead entrench economic inequality by reserving the highest-yielding asset class for the already wealthy. Tracing the development of private equity from its venture-capital roots through the SEC’s recent regulatory efforts—including the vacated 2023 Private Fund Rules—this …

Introduction: Corporate And Securities Law Responses To Climate Change: Law And Political Economy Perspectives, Sarah C. Haan, Faith Stevelman

Articles & Chapters

No abstract provided.

The Keys To The Kingdom: The Unexpectedly Unsettled Definitions Of Security And Sale And The Overruling Of Chevron, Joel Seligman

Scholarship@WashULaw

This article explores two important unresolved questions for the Federal Securities regulation under the Securities Act of 1933 and the Securities Exchange Act of 1934. The definition of security and the definition of sale were increasingly contested and potentially unstable before the United States Supreme Court decision in Loper Bright Enterprises v. Raimondo overruled the Chevron doctrine.

Can The Sec Mandate Disclosures That Contain Both Financial And Social Information? The Case Of The Human Capital Management Disclosures, Patrick M. Corrigan

Journal Articles

Human capital contributes directly to the top and bottom line of corporate financial performance. However, theory predicts, and empirical studies suggest, that firms underinvest in human capital because of a classic public goods problem: since employees can always leave to work for another employer, firms cannot expect to bear all the fruits of investments they make in human capital. As human capital becomes more important in the modern service and technology economy, the ills of this public good problem are growing and the deficiencies of underinvestment becoming more apparent. This Article studies the potential role of human capital management disclosures. …

How Artificial Intelligence Will Shape Securities Regulation, Gabriel Rauterberg

Faculty Scholarship

How will the increasing prevalence and sophistication of artificial intelligence (AI) change the doctrine and practice of securities law? My main thesis is that it will push securities regulation toward a more systems-oriented approach. This approach will replace securities law’s emphasis, in areas like manipulation, on forms of enforcement targeted at specific individuals and accompanied by punitive sanctions with a greater focus on ex ante rules designed to shape an ecology of actors and information.

Altering Rules: The New Frontier For Corporate Governance, Gabriel Rauterberg, Sarath Sanga

Faculty Scholarship

Corporate law has taken a contractarian turn. Shareholders are increasingly contracting around its foundational rules — statutory rights, the fiduciary duty of loyalty, even the central role of the board — and Delaware courts are increasingly enforcing these contracts. In the one case where they did not, the legislature swiftly overruled the decision and adopted a new statutory provision permitting boards to completely cede their powers to a shareholder by contract. These developments have sparked a polarized debate, with some calling for a return to mandatory rules, while others push for total contractual freedom.

We argue, however, that the best …

Volume 48 Masthead, Seattle University Law Review

Seattle University Law Review

Volume 48 Masthead

Table Of Contents, Seattle University Law Review

Seattle University Law Review

Table of Contents

Corporate Scenarios: Drawing Lessons From History, Madison Condon

Seattle University Law Review

As corporations are increasingly pressed to reveal information about their exposure to climate-related risks, they are often asked to undertake and disclose the outcome of “scenario analysis.” In this exercise, corporations, including financial institutions, examine how their business would fare under different pathways the future may take. One oft-used scenario, for example, is the International Energy Agency’s “Net-Zero by 2050: A Roadmap for the Energy Sector.” This Essay presents a history of the use of scenarios as a corporate planning tool, particularly in the oil industry, arguing that it is key for understanding our present moment and the role of …

Shareholder Expression In A Time Of Heightened Political Tension, Aaron A. Dhir

Seattle University Law Review

In this article, I provide context for my forthcoming research project on shareholder proposals and racial equity audits. Since the murder of George Floyd in May of 2020, progressive shareholder actors have increasingly used the proposal mechanism to advance diversity, equity, inclusion, and justice-related goals. These proposals have frequently gone beyond requesting the usual corporate fare of diversity trainings, intersectionality workshops, affinity groups, etc. Instead, a more ambitious type of proposal asks corporate America to conduct racial equity audits, defined as “an independent, objective and holistic analysis of a company’s policies, practices, products, services and efforts to combat systemic racism …

Corporate Governance Speech, Sarah C. Haan

Seattle University Law Review

The State has always regulated the intra-firm communications that make corporate governance possible, most commonly by mandating disclosures of information by a corporation to its shareholders. Some such laws are labeled “securities regulation,” but securities regulation is a broad category that extends to speech by actors who are outside the corporate enterprise as well. Also, the conventional securities regulation category does not capture all such laws; other examples, including informationforcing mandates, can be found in state corporate law. This Article uses the term “corporate governance speech” to describe the communications among shareholders, directors, and officers through which corporate governance is …

Dark Accounting Matter, Colleen Honigsberg

Seattle University Law Review

Physicists calculate that approximately 85% of the matter in the universe is composed of “dark matter” that “does not absorb, reflect, or emit electromagnetic radiation and is therefore difficult to detect.” The S&P 500 currently trades at a price-to-book value of 4.2, suggesting that book value accounts for less than 20% of the S&P 500’s market value. The remaining 80% appears nowhere in these firms’ balance sheets—it is invisible to contemporary accounting techniques and constitutes “dark accounting matter.”

Some “dark accounting matter” is composed of factors commonly described as components of “ESG.” Human capital, for example, is an intangible asset …

The Employees’ Dilemma: Balancing Internal Reporting, Whistleblowing, And Insider Trading Risks, Geeyoung Min

Seattle University Law Review

The Essay examines how recent developments in insider trading regulations and whistleblower reward programs can lead to unintended and counterproductive results of discouraging employees from using internal reporting channels within corporate compliance programs. While the presence of a robust and well-functioning corporate compliance program is a critical factor both in mitigating the level of public enforcement actions against companies and in protecting corporate managers from liability in private litigation, these programs often provide little incentive for employees to report potential misconduct internally.

Corporate compliance programs are designed to promote the upward information flow within the company, which is essential for …

How The Antidiscrimination Law Of Commercial Transactions Really Works, Helen Norton

Seattle University Law Review

A variety of businesses now cite 303 Creative when seeking First Amendment protection for their refusal to serve certain customers based on those customers’ protected class status. How this litigation will play out remains to be seen. But future courts need not, and should not, repeat the 303 Creative Court’s misunderstanding of how the antidiscrimination law of commercial transactions actually works.

Part I of this Essay explains the Court’s longstanding understanding of the antidiscrimination law of commercial transactions, and then describes the Court’s failure to engage with this precedent in 303 Creative. Part II then identifies the 303 Creative decision’s …

Understanding The Big Three’S Wavering Support Of Environmental And Social Shareholder Proposals, Jeff Schwartz, Jefferson Jensen

Seattle University Law Review

Because of their substantial equity portfolios, BlackRock, Vanguard, and State Street (the Big 3) are central players in corporate governance. It is, therefore, critical to understand how they vote. One puzzle is that their support for shareholder proposals on environmental and social matters appears to waiver. In 2020, for instance, BlackRock supported 11.1% of environmental proposals at S&P 500 firms. In 2021, it seemingly reversed course, supporting 55.2%. It then flipped again, supporting 32.1% in 2022. Such statistics suggest that the Big 3 are constantly changing their views on these topics. This Article seeks to better understand whether this is …

Volume 48 Masthead, Seattle University Law Review

Seattle University Law Review

Volume 48 Masthead

Ghosting The Crowd, Andrew A. Schwartz

Publications

Crowdfunded companies are legally bound to provide investors with an annual report--but most don't. This "ghosting of the crowd" violates federal securities laws and raises the risk of opportunism by entrepreneurs, who are more prone to misbehave if no one is watching. Most ominously, it threatens the very viability of the investment crowdfunding market, as investors who are ghosted by one company are less likely to invest in another.

This Article reports on the embarrassing record of noncompliance with the annual report rule imposed by the Jumpstart Our Business Startups ("JOBS") Act of 2012 and Regulation Crowdfunding, and proposes a …