Securities Law Commons^™

Markets As Monitors: A Proposal To Replace Class Actions With Exchanges As Securities Fraud Enforcers, Adam C. Pritchard

Articles

Fraud in the securities markets has been a focus of legislative reform in recent years. Corporations-especially those in the high-technology industry-have complained that they are being unfairly targeted by plaintiffs' lawyers in class action securities fraud lawsuits. The corporations' complaints led to the Private Securities Litigation Reform Act of 1995 ("Reform Act"). The Reform Act attempted to reduce meritless litigation against corporate issuers by erecting a series of procedural barriers to the filing of securities class actions. Plaintiffs' attorneys warned that the Reform Act and the resulting decrease in securities class actions would leave corporate fraud unchecked and deprive defrauded …

The Political Economy Of Statutory Reach: U.S. Disclosure Rules In A Globalizing Market For Securities, Merritt B. Fox

Michigan Law Review

This Article addresses the appropriate reach of the U.S. mandatory securities disclosure regime. While disclosure obligations are imposed on issuers, they are triggered by transactions:- the public offering of, or public trading in, the issuers' shares. Share transactions are taking o n an increasingly transnational character. The barriers to a truly global market for equities continue to lessen: financial information is becoming increasingly globalized and it is becoming increasingly inexpensive and easy to effect share transactions abroad. There are approximately 41,000 issuers of publicly traded shares in the world. For an ever larger portion of these issuers, there will be …

United States V. O'Hagan: Agency Law And Justice Powell's Legacy For The Law Of Insider Trading, Adam C. Pritchard

Articles

The law of insider trading is judicially created; no statutory provision explicitly prohibits trading on the basis of material, non-public information. The Supreme Court's insider trading jurisprudence was forged, in large part, by Justice Lewis F. Powell, Jr. His opinions for the Court in United States v. Chiarella and SEC v. Dirks were, until recently, the Supreme Court's only pronouncements on the law of insider trading. Those decisions established the elements of the classical theory of insider trading under § 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act"). Under this theory, corporate insiders and their tippees who …

Small Issue Public Offerings Conducted Over The Internet: Are They ‘Suitable’ For The Retail Investor?, Jeffrey J. Haas

Articles & Chapters

No abstract provided.

Blue Sky Laws And The Recent Congressional Preemption Failure, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

Laws regarding the sale of securities may be understood as responses to perceived bargaining failures. The most extreme examples of these bargaining failures are seen in instances in which investors are intentionally misled or defrauded regarding the quality of the investments they receive for their money. Even without the presence of such culpability, however, bargaining failures are likely anytime the trading parties lack sufficient, accurate information necessary to effect value-enhancing trades. When that occurs in trades for capital, the parties to the transaction are misinformed respecting the trade, expectations are not protected, and that precious commodity, capital, may be turned …

Securities Market And Securities Regulations In China, Fengxia Dai

LLM Theses and Essays

China is a large developing country with a socialist ideology that is currently undergoing a period of reform and transformation. In December 1990, China opened its first national securities market - the Shanghai Securities Exchange. This was soon followed in November 1991 by the first special shares denominated in foreign currencies and sold only to overseas investors. These important steps in the development of China’s securities industry indicate commitment by Chinese authorities to the two key components of the nation’s economic reform program - economic systemic reform, and opening to the outside world. China’s securities market and securities regulations contain …

The Applicability Of Section 2462'S Statute Of Limitations To Sec Enforcement Suits In Light Of The Remedies Act Of 1990, Catherine E. Maxson

Michigan Law Review

This Note argues that section 2462's limitations period reaches all SEC civil suits for monetary fines but not those SEC actions seeking equitable relief. Part I interprets section 2462 and, in the process, demonstrates that the statute controls SEC enforcement suits for civil penalties. Part II argues that SEC actions requesting injunctions or disgorgement of profits, unlike those seeking monetary fines, are not subject to the time bar. Finally, Part III asserts that SEC administrative enforcement proceedings should not be immune from the statute of limitations found in section 2462 of title 28 because exempting administrative proceedings would be tantamount …

Decreasing The Costs Of Jurisdictional Gridlock: Merger Of The Securities And Exchange Commission And The Commodity Futures Trading Commission, Mark Frederick Hoffman

University of Michigan Journal of Law Reform

Jurisdictional conflict exists between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), primarily due to the language of the 1974 CFTC Act. This Act grants the CFTC exclusive jurisdiction to regulate certain financial instruments which, given the increasing complexity and "hybrid" nature of such instruments, might simultaneously be subject to SEC regulation. This Note first explores the history of the two agencies and the statutory language giving rise to the jurisdictional conflict. This Note then examines several instances of jurisdictional conflict that resulted in extensive costs for the respective agencies and the United States' financial …

The Obsolescence Of Wall Street: A Contextual Approach To The Evolving Structure Of Federal Securities Regulation, Joel Seligman

Michigan Law Review

As a matter of analytical style, this article illustrates a contextualist approach. For a considerable period of time, the dominant analytical style in corporate and securities .law has been a variant of economic, or law and economics, analysis. The virtue of this type of analysis is that it focuses on what its authors deem to be crucial variables and reaches conclusions derived from the core of a specific legal problem. The defect of this type of analysis is that so much is assumed or often assumed away.

Resales Of Securities Under The Securities Act Of 1933, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

This Article explains the failings of the Securities and Exchange Commission in dealing with resales of securities and suggests an appropriate statutory and policy framework for a principled approach to the matter. Part I of this article is an introduction to this issue. Part II of this Article describes the present situation regarding the law of resales. Part III of this Article offers a series of broad observations about resales under the 1933 Act, suggests an economic analysis for the registration provisions of the 1933 Act, and presents some more specific recommendations concerning resale rules.

A Monument To A Regulatory System, Norman S. Poser

Michigan Law Review

A Review of Securities Regulation by Louis Loss and Joel Seligman

The Bespeaks Caution Doctrine: Revisiting The Application Of Federal Securities Law To Opinions And Estimates, Royce De R. Barondes

Faculty Publications

Disclosure of estimates and opinions, which are often referred to as ‘soft information,‘ has presented a number of difficult issues to courts, the Securities and Exchange Commission (SEC) and companies issuing offering materials or required to file periodic reports with the SEC. Although this type of information often consists of projections, historical financial statements also include this type of information to varying degrees. For example, a bank's statement of financial position requires specification of loan loss reserves and is therefore dependent on an assessment of future events (the timing and extent of repayment). Similarly, determination of the timing of a …

The Sec And The Future Of Corporate Governance, Mark J. Loewenstein

Publications

No abstract provided.

The Integration Of Securities Offerings: A Proposed Formula That Fosters The Policies Of Securities Regulation, Cheryl L. Wade

Faculty Publications

(Excerpt)

The Securities Act of 1933 ("1933 Act" or "the Act") generally requires the filing of a registration statement with the Securities and Exchange Commission (the "SEC") prior to the offer or sale of any security and prohibits the sale of any security prior to the effective date of the registration statement. For the prospective issuer of securities, the preparation and filing of this registration statement can be costly and time-consuming. To prevent the hampering of commerce that results from unnecessary registration, the 1933 Act provides a variety of exemptions from registration that relieve issuers of the cost and delay …

An Examination Of The Current Status Of Rating Agencies And Proposals For Limited Oversight Of Such Agencies, Francis A. Bottini Jr.

San Diego Law Review

This Comment analyzes the market for ratings of both financial securities and insurance companies, and finds significant problems with rating agencies, such as lethargy in changing ratings, political influence, unsolicited ratings, and inaccurate ratings. To ensure that the federal securities laws continue to protect investors, this Comment recommends limited oversight of rating agencies. It proposes that Congress enact legislation granting the Securities and Exchange Commission explicit authority to mandate that all nationally recognized statistical rating organizations register with the SEC, and to establish minimum standards for their designation. Finally, the Comment examines First Amendment concerns associated with the regulation of …

Rationalizing The Disclosure Process: The Summary Annual Report, J. Robert Brown Jr., Stephen M. Detore

Sturm College of Law: Faculty Scholarship

In 1986 the staff of the Division of Corporate Finance of the SEC issued two letters approving the use of a summary annual report. These letters have acceded to management a great amount of discretion in connection with the annual report. The summary annual report costs less to produce than the con- ventional annual report and a decision about its use may en- courage a re-examination of the shareholder communication process. However, uncertainty exists over whether the summary annual report will implicate concerns under the securities laws.

Auditor Changes And Opinion Shopping- A Proposed Solution, Dale R. Rietberg

University of Michigan Journal of Law Reform

This Note argues that the existing regulatory mechanism has failed to address adequately the problem of opinion shopping, and that better means of ensuring the reliability of financial statements are needed. Part I describes the nature and extent of the opinion-shopping problem, including a discussion of its larger, macroeconomic impact. Part II argues that the underlying causes of the problem are systemic and that present safeguards against opinion shopping are inadequate. Finally, Part III examines some alternative solutions and proposes a system of Accounting Issue Inquiry Centers under the direction and auspices of the SEC. These Centers would be designed …

The Internationalization Of The Securities Markets: Preface To A Symposium, Joel Seligman

Michigan Journal of International Law

This preface begins by tracing certain of the initial steps taken by the SEC in the internationalization of securities trading. Regulations involving issuers of new securities are discussed in two contexts. First, when foreign private issuers offer securities into the United States, and second, when securities are simultaneously offered in the United States and abroad. The preface concludes by introducing each of the articles in this symposium.

Securities Regulation In The International Marketplace: Bilateral And Multilateral Agreements, Daniel L. Goelzer, Anne Sullivan, Robert Mills

Michigan Journal of International Law

This article examines the experience of the SEC in securities regulation with respect to the international securities markets, focusing first as background upon recent developments in those markets, and then on the actual regulation of issuer disclosure, the trading markets, and enforcement in general. In each of the latter three areas, the article will consider the Commission's direct domestic actions in response to international trade, and compare those with international approaches to establish standards in these areas. This comparison demonstrates that international cooperation can, and should, develop new protections and predictable, common themes of regulation, for disclosure, market regulation, and …

The Changing Structure Of The Securities Markets And The Securities Industry: Implications For International Securities Regulation, Aulana L. Peters, Andrew E. Feldman

Michigan Journal of International Law

This article addresses the impact internationalization has had on the world's securities markets with a particular focus on its role in forcing change in the structure of those markets. Part I describes the forces involved in the internationalization process, and analyzes capital movement and other phenomena that demonstrate the extent of internationalization. Next, it reviews the structural changes that securities markets and the securities industry have made in response to the internationalization process. Part II analyzes the measures regulators have taken to address the implications of those developments. Part III discusses the October Market Break and how it illustrates the …

Chinese Wall Or Emperor's New Clothes? Regulating Conflicts Of Interest Of Securities Firms In The U.S. And The U.K., Norman S. Poser

Michigan Journal of International Law

This article has two principal theses. The first is that, while Chinese Walls of securities firms are undoubtedly useful in some instances in preventing the flow of confidential information, the evidence that they actually do this is insufficient to justify basing a legal defense on the existence of a wall in a particular firm. In fact, it is difficult to avoid the conclusion that at some firms the Chinese Wall is nothing but a convenient fiction aimed at avoiding liability for market abuses. The article's second thesis is that the isolation of information within a department of a firm which …

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.

Capital Neutrality And Coordinated Supervision: Lessons For International Securities Regulation From The Law Of International Taxation And Banking, Charles Thelen Plambeck

Michigan Journal of International Law

Part I of this article provides some background on the legal forces which have influenced globalization and internationalization of the world's securities markets. Part II focuses on the international tax law principle of capital neutrality. Fundamentally, the principle of capital neutrality requires that regulations should not unintentionally direct the movement of capital. Part II analyzes the bases and parameters of the principle of capital neutrality, the experiences of international taxation in applying the principle to a globalizing economy, and the possibilities for applying the principle to international securities regulation. Part III focuses on the international banking law principle of coordinated …

The Tender Offer Regulation Battle Continues: Should States Regulate Only Local Companies?, Phyllis E. Grimm

Indiana Law Journal

No abstract provided.

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 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 …

Penalizing Insider Trading: A Critical Assessment Of The Insider Trading Sanctions Act Of 1984, Carole Silver

Articles by Maurer Faculty

No abstract provided.

Materiality, Law Reform, And Regulation By Prosecution, Michael Rosenzweig

Michigan Law Review

A Review of Regulation by Prosecution: The Securities & Exchange Commission Versus Corporate America by Roberta S. Karmel

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

Articles by Maurer Faculty

No abstract provided.