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Articles 1 - 30 of 70
Full-Text Articles in Securities Law
Private Securities Enforcement And The Roberts Court, Michael A. Perino
Private Securities Enforcement And The Roberts Court, Michael A. Perino
St. John's Law Review
(Excerpt)
Thank you, Judge Lohier, thank you Professor Subotnik, and thank you to everyone who put this scholarship symposium together. I am acutely aware that I am the last panelist, on the last panel, on Friday afternoon, and so, I am going to try my best to keep my comments to the allotted ten minutes.
It is important to keep two key points in mind if we are going to talk about the Roberts Court’s approach to private securities enforcement. First, the Roberts Court contains no securities experts. In fact, except for Lewis F. Powell Jr. and William O. Douglas, …
Beyond Issuers: The Future Of Private Securities Litigation, Joshua Mitts
Beyond Issuers: The Future Of Private Securities Litigation, Joshua Mitts
Faculty Scholarship
Private securities litigation has traditionally been viewed as a subfield of corporate governance, reducing agency costs by disciplining wayward management. In this brief Symposium essay, I argue that the future of private securities litigation lies beyond issuers. I discuss how a fraud claim under Rule 10b-5 can be understood as a kind of economic tort, and set out, in broad strokes, an economic analysis of claims against non-issuer defendants. I then consider emerging trends in the case law against non-issuers in social media and market manipulation cases. I conclude by identifying some challenges and opportunities for securities litigation in a …
Lanza V. Drexel & Company: Rule 10b-5 And The Outside Director, Maine Law Review
Lanza V. Drexel & Company: Rule 10b-5 And The Outside Director, Maine Law Review
Maine Law Review
In Lanza v. Drexel & Company, the United States Court of Appeals for the Second Circuit, over two vigorous dissents, held that a corporate director was not liable for negligence when he neither participated in stock transfer negotiations nor had knowledge of material misrepresentations and omissions made in those negotiations. The court rejected the proposition that rule 10b-5 imposed liability on nonparticipating directors for the negligent failure to communicate material adverse information to prospective purchasers. The analysis used in Lanza raises still further questions about the implications of rule 10b-5 and its relationship to section 11 of the 1933 Securities …
The Encroachment Of Rule 10b-5 On State Corporation Law, Maine Law Review
The Encroachment Of Rule 10b-5 On State Corporation Law, Maine Law Review
Maine Law Review
In 1967, Santa Fe Industries undertook the acquisition of the Kirby Lumber Co. by the publication of a tender offer. By 1973, Santa Fe through its subsidiary, Santa Fe Natural Resources, had acquired ownership of 95% of Kirby's common stock. In 1974, Resources undertook the elimination of the remaining shareholders in Kirby by short form merger of Resources and Kirby. On July 11, Resources organized a shell corporation, Forest Products, Inc., under Delaware law and transferred to it its entire holdings in Kirby in return for all of Forest Products' stock. On July 30, the board of directors of Forest …
Scienter Potentia Est: The Case For The Presumption Of Use Standard In Insider Trading, Audrey Nelson
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 …
The Sec As An Entrepreneurial Enforcer, James J. Park
The Sec As An Entrepreneurial Enforcer, James J. Park
Northwestern University Law Review
The truth of disclosures by public companies is policed by both private plaintiffs and the Securities and Exchange Commission (SEC). The courts and many commentators have viewed the SEC as a more responsible enforcer than private litigants. Entrepreneurial enforcers with a profit motive have an incentive to advance questionable legal theories to expand the reach of Rule 10b-5, the primary federal prohibition of securities fraud. In contrast, the conventional view is that a public enforcer will bring straightforward cases against public companies. This Article argues that this perception is dated, and that the SEC has become more entrepreneurial in its …
Brief Of Law And Business Professors As Amici Curiae In Support Of Respondents, Macquarie Infrastructure V. Moab Partners, No. 22-1165, Dec. 20, 2023, Joan Macleod Heminway, J. Robert Brown, James D. Cox, Sarah C. Haan, Faith Stevelman
Brief Of Law And Business Professors As Amici Curiae In Support Of Respondents, Macquarie Infrastructure V. Moab Partners, No. 22-1165, Dec. 20, 2023, Joan Macleod Heminway, J. Robert Brown, James D. Cox, Sarah C. Haan, Faith Stevelman
Scholarly Works
Omissions of disclosure required by the Securities and Exchange Commission (SEC or Commission) in Item 303 of Regulation S-K can be a basis for an action under Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act). Disclosures mandated by the SEC in periodic reports are not optional. That these obligations can create a “duty” to disclose under Rule 10b-5(b) is consistent with congressional intent, state court opinions, the common law, and with the longstanding understanding of the federal securities laws (including those of legal scholars and the SEC). This case does not, therefore, seek to “impermissibly expand” the …
Undue Limitations In The Section 10(B) Purchaser-Seller Requirement, Marc I. Steinberg, Antonio R. Partida
Undue Limitations In The Section 10(B) Purchaser-Seller Requirement, Marc I. Steinberg, Antonio R. Partida
Faculty Journal Articles and Book Chapters
This article considers different applications of the Purchaser-Seller Rule that a plaintiff must satisfy to bring a Section 10(b) and Rule 10b-5 private action. The history and development of the Purchaser-Seller Rule under Supreme Court and lower federal court jurisprudence is considered, with emphasis on recent case law unduly constricting this Rule. In particular, the Second Circuit’s restrictions on Section 10(b) standing are addressed, focusing on that appellate court’s decision in Frutarom which adhered to an overly formulaic approach to Section 10(b) standing that is out of line with prior Second Circuit and Supreme Court precedent. The article then considers …
Regulating Congressional Insider Trading: The Rotten Egg Approach, Sarah Williams
Regulating Congressional Insider Trading: The Rotten Egg Approach, Sarah Williams
Faculty Scholarly Works
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 …
The Efficacy Of Insider Trading Regulation: An Analysis Of The 1942 Introduction Of Sec Rule 10b-5, Kamila Melikova, Eric Hughson
The Efficacy Of Insider Trading Regulation: An Analysis Of The 1942 Introduction Of Sec Rule 10b-5, Kamila Melikova, Eric Hughson
CMC Senior Theses
Existing research has thoroughly examined the impact of insider trading regulations, finding mixed results regarding the effectiveness of new law introductions. Although this topic has received considerable attention, there is still a notable lack of research on the first regulation of insider trading: the 1942 introduction of Section 10(b), an amendment to the Securities Exchange Act of 1934. This paper uses a newly compiled dataset of earnings announcements from large public companies between 1937 and 1946, combined with event study methodology, to investigate the effectiveness of the very first ban on insider trading. Through the application of t-tests and regression …
The Panuwat Snowball: Correlation Does Not Equal Materiality, Tanner Gattuso
The Panuwat Snowball: Correlation Does Not Equal Materiality, Tanner Gattuso
Catholic University Law Review
Insider trading is a term of art referencing the fraudulent practice of trading securities in a company on the basis of material, nonpublic information about that same company in breach of some duty owed to another. The practice erodes the public’s trust in the integrity of our capital markets for a reason that is rather intuitive: it is inherently unfair to allow an individual to make a quick and certain profit by exploiting material, nonpublic information to which he privy due solely to his position in a company or some other relationship of trust and confidence. In this context, unrelenting …
The Solution To Shadow Trading Is Not Found In Current Insider Trading Law: A Proposed Amendment To Rule 10b5-2, Jamel Gross-Cassel
The Solution To Shadow Trading Is Not Found In Current Insider Trading Law: A Proposed Amendment To Rule 10b5-2, Jamel Gross-Cassel
Fordham Journal of Corporate & Financial Law
Shadow trading is a lucrative way to exploit a loophole in insider trading law. Insiders abuse this loophole to make six-figure profits and escape liability when done at the right companies. Those who shadow trade use material, nonpublic information to trade not in the securities of their own company, which would be illegal, but in the securities of a closely related company where the information is just as impactful. Efforts to close this loophole rely on the individual insider trading policies of the involved companies. These policies vary in language, making liability for shadow trading dependent on specific language or …
The Insider Trading Prohibition Act: A Small Step Towards A Codified Insider Trading Law, Kayla Quigley
The Insider Trading Prohibition Act: A Small Step Towards A Codified Insider Trading Law, Kayla Quigley
Fordham Journal of Corporate & Financial Law
Many have called for reform to insider trading law, as the current judge-made doctrine is ambiguous, complicated, and ultimately permissive of many instances of trading on nonpublic information. Indeed, Congress has attempted several times to pass a uniform insider trading statute. Most recently, in December 2019, the House of Representatives passed the Insider Trading Prohibition Act (“ITPA”). The legislation codifies many current principles of insider trading jurisprudence while also expanding potential insider trading liability. Moreover, it attempts to fix gaps in the law that various cases, such as United States v. Newman, have declined to address.
Among other flaws, …
High Crimes: Liability For Directors Of Retail Marijuana Corporations, Lauren A. Newell
High Crimes: Liability For Directors Of Retail Marijuana Corporations, Lauren A. Newell
Law Faculty Scholarship
Selling retail marijuana in the United States is illegal — or is it? A rising number of states have legalized the retail sale of marijuana and are busily regulating these sales and the companies that make them. Even so, the sale of marijuana is a crime under federal law. Are companies that sell retail marijuana duly sanctioned, productive contributors to their state economies, or are they felons just waiting for the wheels of justice to turn in their direction? At this moment, no one can answer that question with certainty.
What is certain is that more companies are being formed …
Informed Trading And Its Regulation, Merritt B. Fox, Lawrence R. Glosten, Gabriel Rauterberg
Informed Trading And Its Regulation, Merritt B. Fox, Lawrence R. Glosten, Gabriel Rauterberg
Faculty Scholarship
Informed trading – trading on information not yet reflected in a stock’s price – drives the stock market. Such informational advantages can arise from astute analysis of varied pieces of public news, from just released public information, or from confidential information from inside a firm. We argue that these disparate types of trading are all better regulated as part of the broader phenomenon of informed trading. Informed trading makes share prices more accurate, enhancing the allocation of capital, but also makes markets less liquid, which is costly to the efficiency of trade. Informed trading thus poses a fundamental trade-off in …
Rebutting The Fraud On The Market Presumption In Securities Fraud Class Actions: Halliburton Ii Opens The Door, Victor E. Schwartz, Christopher E. Appel
Rebutting The Fraud On The Market Presumption In Securities Fraud Class Actions: Halliburton Ii Opens The Door, Victor E. Schwartz, Christopher E. Appel
Michigan Business & Entrepreneurial Law Review
In Halliburton Co. v. Erica P. John Fund, Inc. (Halliburton II), the United States Supreme Court reaffirmed the validity of the “fraud on the market” presumption underlying securities fraud class action litigation. This presumption is vital to bringing suits as class actions because it excuses plaintiffs from proving individual reliance on an alleged corporate misstatement on the theory that any public statements made by the company are incorporated into its stock price and consequently relied upon by all investors. Thus, the Court’s decision to uphold the validity of the presumption has been hailed as a significant victory for those …
Beyond Dirks: Gratuitous Tipping And Insider Trading, Donna M. Nagy
Beyond Dirks: Gratuitous Tipping And Insider Trading, Donna M. Nagy
Articles by Maurer Faculty
Did an investment banker who gratuitously shared material nonpublic information with his brother, with no expectation of receiving anything in return, commit securities fraud? And is the investment banker's brother-in-law jointly liable for trading securities on the basis of what he knew to be gratuitous tips? The Supreme Court is poised to answer those questions in Salman v. United States, after steering clear of insider trading law for nearly two decades. It has been even longer still since the Court last addressed securities fraud liability relating to stock trading tips-it articulated a "personal benefit" test for joint tipper-tippee liability in …
Better Bounty Hunting: How The Sec's New Whistleblower Program Changes The Securities Fraud Class Action Debate, Amanda M. Rose
Better Bounty Hunting: How The Sec's New Whistleblower Program Changes The Securities Fraud Class Action Debate, Amanda M. Rose
Northwestern University Law Review
No abstract provided.
Disaggregated Classes, Benjamin P. Edwards
Loser Pays: The Latest Installment In The Battle-Scarred, Cliff-Hanging Survival Of The Rule 10b-5 Class Action, John C. Coffee Jr.
Loser Pays: The Latest Installment In The Battle-Scarred, Cliff-Hanging Survival Of The Rule 10b-5 Class Action, John C. Coffee Jr.
Faculty Scholarship
When I was an upper-year student at Yale Law School in the late 1960s, I was sometimes as undermotivated as contemporary upper-year law students regularly appear to be. But there was then an appropriate role model for us: a graduate student, brimming with efficiency and self-discipline, who occupied a carrel in the law library, seemingly working day and night on a special research project. He had piled law review articles and cases a foot or more about his carrel, and anyone walking by could see that he seemed obsessed with something called Rule 10b-5. I had dimly heard of this …
The Tips Are For The Taking: The Supreme Court Limits Third Party Liability In Dirks V. Securities And Exchange Commission, W. Steven Shayer
The Tips Are For The Taking: The Supreme Court Limits Third Party Liability In Dirks V. Securities And Exchange Commission, W. Steven Shayer
Pepperdine Law Review
No abstract provided.
The Supreme Court And The Shareholder Litigant: Basic, Inc. V. Levinson In Context, Jayne W. Barnard
The Supreme Court And The Shareholder Litigant: Basic, Inc. V. Levinson In Context, Jayne W. Barnard
Pepperdine Law Review
No abstract provided.
The "In Connection With" Requirement Of Rule 10b-5, C. Edward Fletcher Iii
The "In Connection With" Requirement Of Rule 10b-5, C. Edward Fletcher Iii
Pepperdine Law Review
No abstract provided.
“Fine Distinctions” In The Contemporary Law Of Insider Trading, Donald C. Langevoort
“Fine Distinctions” In The Contemporary Law Of Insider Trading, Donald C. Langevoort
Georgetown Law Faculty Publications and Other Works
William Cary’s opinion for the SEC in In re Cady, Roberts & Co. built the foundation on which the modern law of insider trading rests. This paper—a contribution to Columbia Law School’s recent celebration of Cary’s Cady Roberts opinion, explores some of these—particularly the emergence of a doctrine of “reckless” insider trading. Historically, the crucial question is this: how or why did the insider trading prohibition survive the retrenchment that happened to so many other elements of Rule 10b-5? It argues that the Supreme Court embraced the continuing existence of the “abstain or disclose” rule, and tolerated constructive fraud notwithstanding …
Mapping The Future Of Insider Trading Law: Of Boundaries, Gaps, And Strategies, John C. Coffee Jr.
Mapping The Future Of Insider Trading Law: Of Boundaries, Gaps, And Strategies, John C. Coffee Jr.
Faculty Scholarship
The current law on insider trading is remarkably unrationalized because it contains gaps and loopholes the size of the Washington Square Arch. For example, if a thief breaks into your office, opens your files, learns material nonpublic information, and trades on that information, he has not breached a fiduciary duty and is presumably exempt from insider trading liability. But drawing a line that can convict only the fiduciary and not the thief seems morally incoherent. Nor is it doctrinally necessary.
The basic methodology handed down by the Supreme Court in SEC v. Dirks and United States v. O'Hagan dictates (i) …
The New Uniform Statute Of Limitations For Federal Securities Fraud Actions: Its Evolution, Its Impact, And A Call For Reform, Anthony Michael Sabino
The New Uniform Statute Of Limitations For Federal Securities Fraud Actions: Its Evolution, Its Impact, And A Call For Reform, Anthony Michael Sabino
Pepperdine Law Review
No abstract provided.
Determining The Proper Pleading Standard Under The Private Securities Litigation Reform Act Of 1995 After In Re Silicon Graphics , Erin Brady
Pepperdine Law Review
No abstract provided.
Bien Venue: Sec V. Johnson And The Policy For Broad Procedural Requirements In Public Securities Actions, Kelly Kylis
Bien Venue: Sec V. Johnson And The Policy For Broad Procedural Requirements In Public Securities Actions, Kelly Kylis
Catholic University Law Review
No abstract provided.
Like Moths To A Flame - International Securities Litigation After Morrison: Correcting The Supreme Court's Transactional Test, Marco Ventoruzzo
Like Moths To A Flame - International Securities Litigation After Morrison: Correcting The Supreme Court's Transactional Test, Marco Ventoruzzo
Faculty Scholarship
Because of the broad jurisdiction American courts have asserted in cases arising under the Securities Exchange Act of 1934, they have been called a Shangri-la for “foreign-cubed” class actions with little connection to the United States. Over the past forty years, the standards used by American courts to determine their jurisdiction in international securities disputes have evolved, culminating in the U.S. Supreme Court’s Morrison decision of 2010. The new transactional test promulgated in Morrison replaced all of its predecessor tests, from a test measuring whether the conduct in question took place in the United States to a test measuring whether …
Insider Trading, Congressional Officials, And Duties Of Entrustment, Donna M. Nagy
Insider Trading, Congressional Officials, And Duties Of Entrustment, Donna M. Nagy
Articles by Maurer Faculty
This article refutes what has become the conventional wisdom that insider trading by members of Congress and legislative staffers is “totally legal” because such congressional officials are immune from federal insider trading law. It argues that this well-worn claim is rooted in twin misconceptions based on: (1) a lack of regard for the broad and sweeping duties of entrustment which attach to public office and (2) an unduly restrictive view of Supreme Court precedents, which have interpreted Rule 10b-5 of the Securities Exchange Act to impose liability whenever a person trades securities on the basis of material nonpublic information in …