Securities Law Commons^™

Draft Treaty Language: Withdrawal Of Consent To Arbitrate And Termination Of International Investment Agreements, Brooke Güven, Lise Johnson

Columbia Center on Sustainable Investment Staff Publications

The United Nations Commission on International Trade Law (UNCITRAL) is currently working on how to reform international investment treaties, focusing in particular on those treaties’ provisions enabling investors to sue governments in international arbitration. As an observer organization in this process, CCSI has emphasized that in the context of investor-state dispute settlement (ISDS) reform, it is important to first consider what it is that investment treaties aim to achieve, and only then to consider what form(s) of dispute settlement will best advance those objectives. This means not only looking at reform of the existing ISDS mechanism, but also alternatives to …

Briefing For Civil Society Organizations – Understanding Commercial Eucalyptus Plantations: How Do They Work And What Are Their Environmental Impacts?, Columbia Center On Sustainable Investment

Columbia Center on Sustainable Investment Staff Publications

If a company wants to use a community’s land for eucalyptus plantations, the community should think carefully about whether this is a good idea. Civil society organizations that support communities can use this briefing to help communities understand the potential environmental impacts the community should be aware of. The briefing explains plantation forestry and the life-cycle of eucalyptus tree plantations. It also notes the different possible negative environmental impacts of eucalyptus plantations before exploring how this information can be factored into community decision-making about a proposed eucalyptus plantation. While the briefing focuses on eucalyptus plantations, a lot of it will …

Split Derivatives: Inside The World's Most Misunderstood Contract, Dan Awrey

Cornell Law Faculty Publications

Derivatives are the "bad boys" of modern finance: exciting, dangerous, and fundamentally misunderstood. These misunderstandings stem from the failure of scholars and policymakers to fully appreciate the unique legal and economic structure of derivative contracts, along with the important differences between these contracts and conventional equity and debt securities. This Article seeks to correct these misunderstandings by splitting derivative contracts open, identifying their constituent elements, and observing how these elements interact with one another. These elements include some of the world's most sophisticated state-contingent contracting, the allocation of property and decision-making rights, and relational mechanisms such as reputation and the …

Securities Treatment Of Tokenized Offerings Under U.S. Law, Carol Goforth

Pepperdine Law Review

This article considers how the SEC currently approaches the question of regulating cryptoassets and ICOs. It includes a brief overview and history of cryptotransactions (including problems of terminology), and then looks at the current crypto space to consider the kinds of interests being promoted today in comparison to Bitcoin and the original altcoins. It then examines the traditional approach taken by the SEC with regard to these interests and explains briefly the kinds of compliant offerings that are currently possible. It then covers the range of reasons why a specialized regulatory approach is called for, rather than simply relying on …

A Security By Any Other Name: An Inquiry Into Staking Agreements As Securities, Jacob D. Crawley

UNLV Gaming Law Journal

No abstract provided.

Entity Wagering And The Dream Of Making Las Vegas The Wall Street Of The West, Theresa Guerra

UNLV Gaming Law Journal

No abstract provided.

Modelling For Sustainable Development: New Decisions For A New Age, Andrea M. Bassi, Liesbeth Casier, David Laborde, Max Linsen, David Manley, Nicolas Maennling, Howard Mann, Morten Siersted, Carin Smaller, Iain Steele, David Uzsoki, Johnny West

Columbia Center on Sustainable Investment Books

This book outlines how next-generation models need to integrate social and environmental components in government and corporate decision-making. Traditionally, these models have focused on profits and taxes, but to achieve the UN’s Sustainable Development Goals, they need to take a more holistic view. The book builds on the expanding practices of modelling complex decision making requirements and indicators. It considers the challenges of decision making in the face of incomplete and sometimes inaccurate information, the role of multiple stakeholders, and the capacity of governments and others to use models effectively.

The Sec's Part 205.3(D)(2) And Wadler V. Bio-Rad Labs. Should Be Revisited: The Sec Exceeded Authority In Creating A Reporting Out Provision For In-House Attorneys, Briana Sheridan

Cardozo Law Review

This Note proceeds in three parts. Part I introduces relevant statutory law. Part I discusses federal law, notably Section 307 of the Sarbanes-Oxley Act and the SEC's Part 205.3(d)(2), as well as the American Bar Association (ABA) Model Rules and conflicting state law. Part II first examines case law involving the preemption of state ethics laws, including Wadler v. Bio-Rad Laboratories, which concluded broadly that Part 205 preempts California law.23 Part II then examines the doctrine of federal preemption, which is followed by a preemption analysis of Part 205.3(d)(2). Part III recommends that Part 205.3(d)(2) should be revisited, as the …

Strengthening The Passivity Default, Ian Ayres, Edward Fox

Articles

In The Prudence of Passivity, Bryon Harmon and Laura Fisher (hereafter HF) argue that "passive management become the default approach for the investment of trust funds, to be abandoned only when circumstances specifically dictate the use of active management."' In this comment we argue that their thesis could be strengthened (i) by more clearly distinguishing between default law and default investment practices, (ii) by more clearly articulating their favored altering rules.

Public And Private Enforcement Of Corporate And Securities Laws: An Empirical Comparison Of Hong Kong And Singapore, Wai Yee Wan, Christopher C. H. Chen, Say H. Goo

Research Collection Yong Pung How School Of Law

Current scholarship emphasises the correlation between enforcement of corporate and securities laws and strong capital markets. Yet, the issue of how private and public enforcement may achieve the objectives of compensation and optimal deterrence remains controversial. While enforcement strategies have been studied extensively in the US and the UK, comparatively less attention is placed on Asia, where concentrated shareholdings are the norm. This study fills the gap by focusing on Hong Kong and Singapore, two leading international financial centres in Asia. Post Asian financial crisis of 1997, Hong Kong and Singapore have changed their laws to strengthen the private enforcement …

Sec V. Creditors: Why Sec Civil Enforcement Practice Demonstrates The Need For A Reprioritization Of Securities Fraud Claims In Bankruptcy, Sean Kelly

St. John's Law Review

(Excerpt)

This Note examines how this tension has motivated the SEC to use receiverships as a preferred vehicle to maximize recovery for defrauded security holders and, in the process, create what amounts to an SEC-run bankruptcy proceeding. The use of these receiverships has triggered a high-stakes race to the courthouse among the SEC and creditors, where mere hours can be the difference between millions in recovery and nothing at all. To end this costly race, this Note proposes a solution that seeks to harmonize securities fraud enforcement with bankruptcy law, which starts with revisiting Bankruptcy Code § 510(b) to reprioritize …

Crowdfunding Capital In The Age Of Blockchain-Based Tokens, Patricia H. Lee

St. John's Law Review

(Excerpt)

To illustrate the findings, this Article proceeds like so. Part I provides a brief history of the Reg. CF exemption law and the research findings about investment crowdfunding, generally, and digital tokens, more specifically. Next, Part II provides insights on the current state of offering blockchain-based digital tokens to unsophisticated investors and the silver linings in the data. Finally, Part III provides recommendations for a path forward in Reg. CF. First, the SEC should re-evaluate its regulatory policy in light of the proliferation of blockchain-based token offerings and gaps in funding portals, and provide additional warnings to unsophisticated investors …

Requiring Broker-Dealers To Disclose Conflicts Of Interest: A Solution Protecting And Empowering Investors, Daniel P. Guernsey Jr.

University of Miami Law Review

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) instructed the Securities and Exchange Commission (“SEC”) to analyze the gaps in the regulatory regimes of investment advisers and broker-dealers. After analyzing the differences between the two regimes, the SEC proposed a rule that essentially created a fiduciary duty for broker-dealers equivalent to that of investment advisers. In theory, a uniform fiduciary duty would increase investor protection; however, such a drastic overhaul of broker-dealer regulation has attendant consequences. Indeed, as seen from the federal government’s previous attempts to create a broker-dealer fiduciary duty, increasing broker-dealer regulatory requirements limits lower-capital …

The Ever-Changing Scope Of Insider Trading Liability For Tippees In The Second Circuit, Sari Rosenfeld

Michigan Business & Entrepreneurial Law Review

Liability under insider trading law continues to change as federal courts attempt to find new ways to hold insiders liable under the law. As recently as two years ago, the Second Circuit—in analyzing past decisions regarding tipper-tippee insider trading violations—blurred the distinction between legal and illegal insider trading when it fundamentally altered the idea of “personal benefit.” These various decisions provide the basis for antifraud provisions of securities law applying to insider trading, the consequences of which can be detrimental. This Note will discuss the standard that the Second Circuit uses to hold tippees liable for insider trading violations under …

The Policy Implications Of Third-Party Funding In Investor-State Dispute Settlement, Brooke Guven, Lise Johnson

Columbia Center on Sustainable Investment Staff Publications

In this Working Paper, CCSI analyzes underexplored yet critical policy issues surrounding the use of third-party funding in ISDS. It considers the costs and benefits of the practice, asks whether it is desirable or undesirable that third-parties be permitted to invest in ISDS claims, and if so, under what circumstances and in order to achieve what objectives, and overviews policy responses, including a total or partial ban and various regulatory responses, that may be appropriate to manage identified impacts.

Primer: International Investment Treaties And Investor-State Dispute Settlement, Columbia Center On Sustainable Investment

Columbia Center on Sustainable Investment Staff Publications

What Are International Investment Agreements (IIAs)?
IIAs are bilateral or multilateral treaties that commit state-parties to afford specific standards of conduct to foreign investors from the other state-parties. These treaties grant foreign investors certain benefits, including recourse to Investor-State Dispute Settlement (ISDS) to resolve disputes with host states. Over 3,300 agreements have been concluded worldwide, including NAFTA and the Comprehensive and Progressive TransPacific Partnership.

What is Investor-State Dispute Settlement (ISDS)?
IIAs allow foreign investors (individuals and companies) to allege treaty violations by suing states through ad hoc arbitration. Arbitration tribunals are composed of party-appointed (and party-paid) private lawyers. Tribunals …

Ccsi Submits Written Views To Us Department Of State Regarding Uncitral’S Working Group Iii, Columbia Center On Sustainable Investment

Columbia Center on Sustainable Investment Staff Publications

In connection with the US Department of State’s Annual Advisory Committee on Private International law meeting in May 2019, CCSI submitted written views regarding UNCITRAL’s Working Group III on ISDS reform. CCSI’s comments highlighted specific areas of CCSI’s research as it relates to the US Government and its work within the Working Group. Specifically, US investment treaty negotiating objectives specify that covered foreign investors in the United States should not be accorded greater substantive rights than domestic investors. CCSI highlights the ways in which greater procedural rights afforded under investment treaties to foreign investors in practice result in greater substantive …

Global Standards For Securities Holding Infrastructures: A Soft Law/Fintech Model For Reform, Charles W. Mooney Jr.

Michigan Journal of International Law

This Article outlines a “soft-law-to-hard-law” approach for the development and implementation of reforms to systems for the holding of publicly traded securities. It proposes the development of global standards for securities holding systems (“Global Standards”), to be led by the International Organization of Securities Commissions (the “IOSCO”). This approach contemplates that States would be encouraged and expected to implement the Global Standards by adopting “hard law” reforms through statutory and regulatory adjustments to their securities holding systems as well as modifications of the architecture of their securities holding systems. The successes of past IOSCO initiatives inspire this Article’s proposal, as …

Corporate Governance By Index Exclusion, Scott Hirst, Kobi Kastiel

Faculty Scholarship

Investors have long been unhappy with certain governance arrangements adopted by companies undertaking initial public offerings, such as dual-class voting structures. Traditional sources of corporate governance rules—the Securities and Exchange Commission, state law, and exchange listing rules—do not constrain these arrangements. As a result, investors have turned to a new source of governance rules: index providers.

This Article provides a comprehensive analysis of index exclusion rules and their likely effects on insiders’ decision-making. We show that efforts to portray index providers as the new sheriffs of the U.S. capital markets are overstated. Index providers face complex and conflicting interests, which …

The Specter Of The Giant Three, Lucian Bebchuk, Scott Hirst

Faculty Scholarship

This Article examines the large, steady, and continuing growth of the Big Three index fund managers — BlackRock, Vanguard, and State Street Global Advisors. We show that there is a real prospect that index funds will continue to grow, and that voting in most significant public companies will come to be dominated by the future “Giant Three.”
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Activist Shareholders At De Facto Controlled Companies, Gaia Balp

Brooklyn Journal of Corporate, Financial & Commercial Law

Activist campaigns are likely to increasingly target controlled companies. Studies concerning activism at controlled companies focus on shareholder-empowering tools, such as the right to nominate and elect minority directors on the board, as a pathway for limiting the principal-principal agency problem. However, not enough attention has been paid to the distinction between de jure and de facto controlled companies. Building on a recent case concerning a leading Italian corporation, this Article analyzes the possible unexpected corporate governance consequences of successful activist intervention at de facto controlled companies, showing that, where minority shareholders are granted the right to appoint directors on …

Could Distributed Ledger Shares Lead To An Increase In Stockholder-Approved Mergers And Subsequently An Increase In Exercise Of Appraisal Rights?, Alyson Brown

William & Mary Business Law Review

Blockchain, the distributed ledger technology underlying cryptocurrencies like Bitcoin, is poised to revolutionize industries and processes across disciplines. In particular, government agencies and companies are looking for ways to leverage blockchain’s efficiencies to facilitate safe record-keeping. Municipalities are employing blockchain-issued deeds to accurately record property ownership. Progressive legal professionals are employing blockchainissued “smart-contracts” to more accurately record contract terms. Intellectual property attorneys and related government agencies are researching blockchain-issued copyrights and patents.

This Note examines how utilizing blockchain technology in securities trading to maintain accurate stockholder ledgers will allow for current market forces to be reflected in stockholder voting. Further, …

Alternatives To Investor-State Dispute Settlement, Lise Johnson, Jesse Coleman, Brooke Güven, Lisa E. Sachs

Columbia Center on Sustainable Investment Staff Publications

Proponents often explain support for international investment agreements (IIAs) for their ability to: (1) promote investment flows; (2) depoliticize disputes between investors and states; (3) promote the rule of law; and (4) provide compensation for certain harms to investors – objectives of varying degrees of importance to multinational enterprises, home states, host states, and other stakeholders.

While each of these objectives may seem desirable, it is important to consider what exactly they mean and whether IIAs are optimally tailored to achieve them.

This two-part series aims to consider just that. In the first blog installment, we asked of investor-state dispute …

Can Bad Law Do Good? A Retrospective On Conflict Minerals Regulation, Karen E. Woody

Maryland Law Review

Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) created a novel approach to corporate social responsibility (“CSR”) in supply chains by requiring public companies to disclose the presence of conflict minerals in their products. Dodd-Frank, as a whole, has faced a barrage of criticism since its passage, and Section 1502 was not immune from intense critical backlash. As I argued in prior scholarship and congressional testimony, Section 1502 was ill-conceived in substance and form. Its application resulted in the improper use of securities laws to the detriment of its laudable public international law …

Energy Re-Investment, Hari M. Osofsky, Jacqueline Peel, Brett H. Mcdonnell, Anita Foerster

Indiana Law Journal

Despite worsening climate change threats, investment in energy—in the United States and globally—is dominated by fossil fuels. This Article provides a novel analysis of two pathways in corporate and securities law that together have the potential to shift patterns of energy investment.

The first pathway targets current investments and corporate decision-making. It includes efforts to influence investors to divest from owning shares in fossil fuel companies and to influence companies to address climate change risks in their internal decision-making processes. This pathway has received increasing attention, especially in light of the Paris Agreement and the Trump Administration’s decision to withdraw …

Investment Treaties, Investor-State Dispute Settlement And Inequality, Lisa E. Sachs, Lise Johnson

Columbia Center on Sustainable Investment Staff Publications

International investment treaties entrench and exacerbate intra-national inequality by:

1. Providing stronger substantive legal rights to a certain class of actors that in turn strengthen the legal force of their economic rights and “expectations”, with potentially negative impacts on the competing rights and interests of other stakeholders; and
2. Providing unequal procedural rights to a certain class of actors, easing their ability, through ISDS, to challenge regulatory measures negatively impacting their economic interests, while other individuals and entities continue to face relatively high legal and practical barriers to using litigation to protect and/or enhance public interest objectives.

This Working Paper, adapted from …

Disclosure's Purpose, Hillary A. Sale

Georgetown Law Faculty Publications and Other Works

The United States securities regulatory infrastructure requires disclosure of a wide array of information both by and about covered companies. The basic purpose of the disclosures is to level the playing field – for investors, for issuers, and for the public. Although investor protection is the disclosure goal often touted, this article develops the purposes of disclosure extending beyond investors to issuers and the public. Indeed, the disclosure system is designed to level the playing field for issuers— addressing confidentiality concerns, for example. In addition, the system helps to promote confidence in the markets, which, in turn, enables growth and …

The Stock Exchange As Multi-Sided Platform And The Future Of The National Market System, Steven Mcnamara

BYU Law Review

Since Regulation National Market System (Regulation NMS) came into force a decade ago, computer technology has transformed the stock markets. While Regulation NMS benefited investors by lowering stated transaction costs, it also created today’s complex and fragmented trading system. An increasing amount of trading now occurs off-exchange in dark pools and other “non-lit” venues, and hidden costs proliferate. In addition to the profits taken by high-frequency traders, these include the defensive costs of the technological arms race, the possibility of another “Flash Crash,” public suspicions of “rigged” stock markets, reduced allocative efficiency, and rising proprietary data fees paid by stockbrokers …

Securities Disclosure As Soundbite: The Case Of Ceo Pay Ratios, Steven A. Bank, George S. Georgiev

Articles

This Article analyzes the history, design, and effectiveness of the highly controversial CEO pay ratio disclosure rule, which went into effect in 2018. Based on a regulatory mandate contained in the Dodd-Frank Act of 2010, the rule requires public companies to disclose the ratio between CEO pay and median worker pay as part of their annual filings with the Securities and Exchange Commission (SEC). The seven-year rulemaking process was politically contentious and generated a level of public engagement that was virtually unprecedented in the long history of the SEC disclosure regime. The SEC sought to minimize compliance costs by providing …

Revolving Elites: The Unexplored Risk Of Capturing The Sec, Randall S. Thomas, James D. Cox

Vanderbilt Law School Faculty Publications

Fears have abounded for years that the sweet spot for capture of regulatory agencies is the “revolving door” whereby civil servants migrate from their roles as regulators to private industry. Recent scholarship on this topic has examined whether America’s watchdog for securities markets, the Securities and Exchange Commission (“SEC”), is hobbled by the long-standing practices of its enforcement staff exiting their jobs at the Commission and migrating to lucrative private sector employment where they represent those they once regulated. The research to date has been inconclusive whether staff revolving door practices have weakened the SEC’s verve. In this paper, we …