Securities Law Commons^™

Arizona Corporation Commission V. Media Products, Inc.: Clarification Of Competing Federal And State Securities Regulation, Marianne M. Jennings

Cleveland State Law Review

While most regulators at both the state and federal levels espouse an attitude and philosophy of cooperation, the fact is that, because of conflicts in authority and unresolved constitutional issues, most nationwide offerings are becoming more difficult to execute and are burdened by so many bureaucratic loopholes that the role of the United States as a capital market in the international sense may be greatly impaired. The purpose of this Article is to explain the coexistence of federal and state securities regulation, define the resolved constitutional issues, and discuss those that remain unresolved. Finally, the Article proposes a peaceful coexistence …

Risk Arbitrage And Insider Trading: A Functional Analysis Of The Fiduciary Concept Under Rule 10b-5, Laurence A. Steckman

Touro Law Review

No abstract provided.

The Second Circuit's Approach To The "In Connection With" Requirement Of Rule 10b-5, Barbara Black

Faculty Articles and Other Publications

This Commentary examines the evolution of the "in connection with" requirement within the Second Circuit, focusing on cases decided in the 1985-86 term. It attempts to illustrate the direction the Circuit has taken in dealing with complex issues of securities fraud.

Closing A Loophole: Insider Trading In Standardized Options, Steve Thel

Fordham Urban Law Journal

This article is a Commentary on a previous Note published in the Fordham Urban Law Journal (Note, Insiders, Options and the Fiduciary Principle: A Rule 10b-5 Loophole, 16 Fordham Urb. L.J. 295 (1988)). The Note argued that the Supreme Court has expressly endorsed only one theory of insider trading liability, in Chiarella v. United States. By the simple expedient of trading options on common stock rather than the common stock itself, an insider can escape Rule 10b-5 liability under Chiarella.

Tax Shelter As A Security: The Use Of Tax Returns In A 10b-5 Action, Risa A. Levine

Fordham Urban Law Journal

This student note examines the consequences to investors who initially invest through tax shelters, and whose investments later fail, resulting in liability. The author questions policy for treating those investments in a similar manner to other securities fraud, by looking at the history and procedure of a 10b-5 private cause of action. Tax returns can be used to evaluate the liability and penalties for SEC actions and the ensuing private actions. The author concludes that because 10b-5 actions are judicially created, they must be carefully cabined and screened for reliable indications of harm to the investor. Tax returns should be …

Foreign Bank Participation In The United States Capital Markets: A Legal Perspective, Roger M. Zaitzeff

Touro Law Review

No abstract provided.

Of Lollipops And Law -- A Proposal For A National Policy Concerning Tender Offer Defenses, Ted J. Fiflis

Publications

Early last year, Mesa Petroleum Company made a tender offer for shares of Unocal Corporation in an effort to take over Unocal. Unocal responded by using the "lollipop" defense, which is a discriminatory issuer self-tender offer. Unocal's use of this defense resulted in huge economic losses to many of Unocal's small shareholders who were not knowledgeable about the ramifications of their participation or non-participation in the tender offer. The Delaware Supreme Court upheld Unocal's use of this defense as an appropriate exercise of business judgment. A federal district court in California refused to strike down the lollipop under federal law …

An Open Attack On The Nonsense Of Blue Sky Regulation, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

The evolution of state securities laws (hereinafter "blue sky laws") in this country is a classic example of regulation that was, perhaps, initially justified and that was apparently promulgated with the best of motives, but which now is actually harmful to society. Today, blue sky laws are ineffective, philosophically unsound, and unnecessarily expensive, and they should be substantially eliminated. Because of the vested interests that have developed, however, it is unlikely that states will respond to this problem, and it will probably take action by the United States Congress to preempt the area. Such an action is appropriate and, indeed, …

The Plight Of Small Issuers (And Others) Under Regulation D: Those Nagging Problems That Need Attention, Rutheford B. Campbell Jr.

Kentucky Law Journal

No abstract provided.

The Draft Restatement: A Critique From A Securities Regulation Perspective, Douglas C. Michael, Daniel L. Goelzer, Jacob H. Stillman, Elisse B. Walter, Anne H. Sullivan

Law Faculty Scholarly Articles

For the past several years, the American Law Institute has been preparing a proposed revision of the Restatement (Second) of the Foreign Relations Law of the United States (“Draft Restatement”). This article is a critique from a securities regulation perspective of the Draft Restatement's sections 402, 403, 416, 418, 419, 420 and 431.1 In short, the Draft Restatement departs substantially from existing law. It would add dangerous vagueness and uncertainty to the jurisdictional analysis used to determine whether the United States securities laws will be applied to transnational securities activities. In particular, the complicated balancing inquiry required under the Draft …

The Plight Of Small Issuers (And Others) Under Regulation D: Those Nagging Problems That Need Attention, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

Regulation D traces its roots to section 4(2) and section 3(b) of the Securities Act of 1933. Both of these sections are designed to relieve an issuer from the pains of registration under the 1933 Act in situations where Congress deemed such registration inappropriate. Therefore, under section 4(2), no registration is required for "transactions by an issuer not involving any public offering." Section 3(b) is not a self-executing exemption but instead permits the Securities and Exchange Commission to enact rules and regulations exempting issuers from registration requirements "if it finds that ... [registration] is not necessary in the public interest …

Are Targets Of Sec Investigations Entitled To Notice Of Subpoenas Issued To Third Parties?, Carole Silver

Articles by Maurer Faculty

No abstract provided.

Stallion Syndicates As Securities, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

To people outside the horse business, the word “syndicate” may conjure up images of sinister characters and organized crime. People who invest in horses, however, attach quite a different meaning to the word syndicates. Mention of a syndicate may remind them of Secretariat, Niatross, Aladdinn or Easy Jet, depending upon the particular breed of horse that interests them. They also think of something else: money, big money.

Although one cannot seriously contend that syndicates alone are responsible for the spectacular monetary growth of the horse business, they certainly have facilitated that growth. Syndicates have been and continue to be the …

Choice Of Federal Or State Law For Attorneys' Professional Responsibility In Securities Matters, Ted J. Fiflis

Publications

Professional standards of duty are implicated in the federal securities laws in two types of cases: those instituted by the SEC to impose sanctions for lack of character or unethical conduct and those brought by the SEC or private parties for violations of substantive provisions of the securities laws. The question faced by Professor Fiflis is whether state or federal standards should define the duties imposed under these laws. He argues that the proper method of resolving this question is to apply an interest analysis. Analyzing the various state and federal interests leads Professor Fiflis to the conclusion that federal …

The Effect Of The New Sec Rules On The Constitutionality Of State Takeover Statutes, Kathleen E. Slusser

Fordham Urban Law Journal

This Note examines the constitutionality of state takeover statutes in light of the SEC's 1979 adoption of new merger rules governing tender offers. It discusses the procedural and substantive requirements of both the Williams Act and the new SEC rules, the state takeover statutes, and the preemption question that is raised by the combination of these laws. The author then argues that state takeover statutes are unconstitutional by virtue of their conflict with specific provisions of the new SEC rules.

Rolf V. Blyth, Eastman Dillon & Co., 570 F. 2d 38 (2d Cir. 1978), Michael S. Hawley

Florida State University Law Review

Securities Regulation-THE EXTENSION OF POTENTIAL AIDING AND ABETTING LIABILITY TO BROKER-DEALERS UNDER RULE 10B-5 OF THE SECURITIES AND EXCHANGE COMMISSION.

Stock Appreciation Rights And The Sec: A Case Of Questionable Rulemaking, Stuart R. Cohn

UF Law Faculty Publications

A stock appreciation rights (SARs) program is a form of deferred incentive compensation. Grantees are awarded SAR-units representing an equal number of the grantor’s equity shares currently being traded in public markets. SARs provide grantees the benefit of stock ownership without equity interest, investment, or risk of loss. Stock appreciation rights programs offer various advantages over other forms of executive compensation and have grown rapidly in number. These advantages include the availability of benefits without the requirement of monetary payments, the utilization of SARs as an interest-free form of financing the purchase of stock under tandem stock option programs, the …

The Plight Of Small Issuers Under The Securities Act Of 1933: Practical Foreclosure From The Capital Market, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

The thesis of this Article is simple: the Securities Act of 1933 does not work very well for small issuers, a premise which the Securities and Exchange Commission appeared to tacitly recognize in a series of announcements released early this year. Because of a combination of exorbitant costs, unmanageable levels of ambiguity, unworkable resale provisions and contamination caused by prior illegal sales of stock, a small issuer often is unable to comply with the 1933 Act. As a result it may be difficult or even impossible for a small issuer to raise capital by selling stock.

There are obvious pernicious …

Voluntary Recapitalization, Fairness, And Rule 10b-5: Life Along The Trail Of Santa Fe, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

In corporate recapitalizations, the board of directors will sometimes propose a recapitalization plan which substantially alters the “bundle of rights” represented by preferred shares. Although these plans cannot usually be completed without the approval of a majority of the preferred shareholders, the preferred shareholders are at a disadvantage to protect their interests for several reasons. Thus preferred shareholders who are dissatisfied with the change in their rights will sometimes call upon state courts to enjoin the recapitalization on the grounds that it is unfair or fraudulent; state courts, however, have provided only slight protection for preferred shareholders. In this article, …

The Securities And Exchange Commission And Corporate Democracy, Joel Seligman

Scholarship@WashULaw

On April 28th of last year, the Securities and Exchange Commission announced it would begin a comprehensive reexamination of the shareholders' role in corporate governance. After receiving close to one hundred and fifty letters of comment, the Commission commenced hearings on September 29th in Washington D.C.

Few issues are so worthy of the Commission's concern. Under state corporation law, shareholders have the power to nominate and elect members of the board of directors. Today this power is virtually meaningless in publicly held corporations. The vast majority of shareholders vote by proxy. But neither state nor federal law guarantees shareholders access …

Definition Of Control In Secondary Distributions, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

Section 2(11) of the Securities Act of 1933 (Act) generally subjects the sale of securities by a person "controlling an issuer" to the same rules that govern the sale of securities by an issuer. Accordingly, before a "control" person may sell the securities he holds in the controlled corporation he must either register them with the Securities and Exchange Commission (Commission) or qualify for an exemption from the registration requirement. While the Act clearly requires that a "control" person either register or qualify for an exemption, it fails to define "control." Thus, the task of defining has fallen to the …

Disclosure By Issuers Of Municipal Securities: An Analysis Of Recent Proposals And A Suggested Approach, Robert D. Tuke

Vanderbilt Law Review

The following considerations impacting on the disclosure issue have been developed in this Note: the uniqueness of the municipal securities industry, owing to the diverse natures of the securities, the wide variety of issuers, and the particular means of marketing the securities; the special circumstances created for underwriters by the competitive bidding process; the varied roles of other participants in the distribution process--fiscal agents, bond counsel, governmental accountants; the existing state machinery for regulation and control; the practical limitations on the SEC--both in staff capacity and expertise; the need for uniformity in disclosure to prevent weakened marketability of municipal securities …

Current Problems Of Accountants' Responsibilities To Third Parties, T. J. Fiflis

Publications

No abstract provided.

The Fairness Myth, Victor M. Earle, Iii

Vanderbilt Law Review

Any type of fairness doctrine for liability, no matter how superficially if not seductively appealing, would effectively destroy the guarantee of professionalism that the securities law and the ac-counting profession have for so long sought to instill in financial reporting. Without the assurance that accountants are consistently applying those principles that- find general acceptance within the accounting profession, the accountant's opinion will mean nothing to a shareholder, investor, or creditor, unless by some magic he can personally observe the particular "fairness" bias of the individual accountant who performed the audit.51 Instead of enhancing the stature of the accountant's opinion and …

Prospectus Liability For Failure To Disclose Post-Effective Developments: A New Duty And Its Implications, Jon S. Readnour

Indiana Law Journal

No abstract provided.

Short Tendering Rule In The Sale Of Securities, Larry A. Oday

Cleveland State Law Review

Rule 10b-4 of The Securities and Exchange Commission, also known as "the short tendering rule," might be described as one of the best kept secrets in securities regulation. Although it has been in effect for more than three years, very few attorneys or brokers know anything about it or have even heard of it.

Rule 10b-5:The Disclosure Of Finder's Fees In Connection With The Purchase Or Sale Of Securities, David L. Cocanower

Indiana Law Journal

No abstract provided.

Wall Street Trading Firms As Securities Insiders, Alan R. Johnston, Lawrence A. Coles Jr.

Cleveland State Law Review

The purpose of this article is to examine this view of the Blau case, the implications of the SEC's decision In The Matter of Cady, Roberts and Co. and the possible ramifications of this view and of the Cady, Roberts decision on the future trading activities of investment banking firms.

Around And Beyond The Sec-The Disenfranchised Stockholder, David C. Bayne

Indiana Law Journal

No abstract provided.