Securities Law Commons^™

Tales From A Form Book: Stock Stories And Transactional Documents, Susan M. Chesler, Karen J. Sneddon

Montana Law Review

Tales from a Form Book: Stock Stories and Transactional Documents

Private Enforcement Of Company Law And Securities Regulation In Korea, Hwa-Jin Kim

Book Chapters

This chapter offers a brief overview of the private enforcement of corporate law and securities regulation in Korea, with particular reference to the current legislative efforts in the Korean National Assembly and recent court cases. This chapter also talks about Korea’s ill-fated and misguided adoption of the fraud-on-the-market theory in securities fraud litigation.

Stock Market Futurism, Merritt Fox, Gabriel Rauterberg

Articles

The U.S. stock market is undergoing extraordinary upheaval. The approval of the application of the Investors Exchange (IEX) to become the nation's newest stock exchange, including its famous "speed bump," was one of the SEC's most controversial decisions in decades. Other exchanges have proposed a raft of new innovations in its wake. This evolving equity market is a critical piece of national infrastructure, but the regulatory scheme for its institutions is increasingly frayed. In particular, current regulation draws sharp distinctions among different kinds of markets for trading stocks, treating stock exchanges as self-regulatory organizations immune from private civil litigation, while …

The Perfect Storm Is Brewing Once Again: What Scaling Back Dodd-Frank Will Mean For The Credit Default Swap, Daniel Isaacson

The Journal of Business, Entrepreneurship & the Law

The current presidential administration has expressed a concerted desire to “scale back” and even “get rid of” the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd–Frank). Focusing specifically on Dodd–Frank’s regulation of the credit default swap (CDS), this Article explores two timely queries. First, whether Dodd–Frank’s regulatory response to these financial instruments is a justifiable one, and second, what effect a repeal may have. This Article will show that the “perfect storm” CDS—which contributed so significantly to the 2007–2010 financial crisis—flourished in a regulatory environment that contained two key weaknesses: (1) few restrictions on excessive speculation; and (2) the …

Typology Of Public-Private Equity, Sung Eun (Summer) Kim

Florida State University Law Review

Private equity, which pools funds for investment in private businesses, is one of the largest and fastest growing investment opportunities in the markets today. Private equity traditionally sought investments exclusively from sophisticated investors such as high net worth individuals and institutional investors. More recently, however, a growing number of private equity businesses have gone public and opened their doors to public investors, who are drawn to these investments because of the possibility of high returns and the opportunity to diversify their investment portfolios. In this Article, I review the universe of public-private equity (or PPE) businesses that are traded on …

A Textual Analysis Of Whistleblower Protections Under The Dodd-Frank Act, Brent T. Murphy

Notre Dame Law Review

This Note endorses the reasoning of the Fifth Circuit in Asadi v. G.E. Energy (USA), L.L.C., and argues that the plain language of Dodd-Frank limits its whistleblower protections to individuals who provide information to the SEC. This Note argues that the reasoning of the Second Circuit in Berman v. Neo@Ogilvy LLC relying on the Supreme Court’s decision in King v. Burwell is inapposite, and that the Second Circuit introduced ambiguity where no ambiguity previously existed and improperly extended Chevron deference to the SEC.

Rest In Peace, Rule 505, Wendy Gerwick Couture

Articles

After 37 years in existence,1 the Rule 505 exemption from registration has been repealed, effective May 22, 2017. This essay reviews the evolution of Rule 505 over its lifetime; examines Rule 505’s role within Regulation D and analyzes why that role eventually became obsolete; and argues that Rule 505 leaves behind a legacy that should continue to inform policy discussions about exemptions from registration.

Evaluating Stock-Trading Practices And Their Regulation, Merritt B. Fox, Kevin S. Haeberle

Faculty Publications

High-frequency trading, dark pools, and the practices associated with them have come under tremendous scrutiny lately, giving rise to much hot rhetoric. Missing from the discussion, however, is a principled, comprehensive standard for evaluating such practices and the law that governs them. This Article fills that gap by providing a general framework for making serious normative judgments about stock-trading behavior and its regulation. In particular, we argue that such practices and laws should be evaluated with an eye to the secondary trading market's impact on four main aspects of our economy: the use of existing productive capacity, the allocation of …

Discrimination Platforms, Kevin S. Haeberle

Faculty Publications

Off-exchange trading today has become defined by its opacity. Indeed, the framing of this symposium on What Happens in the Dark: An Exploration of Dark Pools and High Frequency Trading and its goal of "exam[ing] a portion of the modern market that remains largely outside of the public eye"l is much in line with contemporary thinking in policymaking, academic, and industry circles alike. Yet, off-exchange trading through "dark" pools and the like is far more transparent than thought, and exchange trading the opposite. In fact, much trading through off-exchange platforms is even more transparent than that facilitated by exchanges.

Despite …

Comment On Us Trade And Investment Agreements Submitted To Ustr, Columbia Center On Sustainable Investment

Columbia Center on Sustainable Investment Staff Publications

Comments to USTR Re: Review of US Trade and Investment Agreements (July 17, 2017): CCSI, in response to the United States Trade Representative’s request for public comment to inform its performance review of US trade and investment agreements, submitted Comments that focused on the impact that investment protection provisions, enforceable through investor-state dispute settlement, have on rights-compliant, inclusive sustainable development within the United States and abroad.

To Be A "Whistleblower," Or Not To Be A "Whistleblower? " That Is The Question-Whether 'Tis Nobler In The Mind Of The Courts To Suffer For Reporting Wrongdoing To The Sec Or Employers Internally: Examining The Recent Circuit Split Regarding The Definition Of A Whistleblower Under Dodd-Frank, Luke I. Landers

The Journal of Business, Entrepreneurship & the Law

Under the current state of the law, the circuit courts are split over whether an employee must report corporate wrongdoing directly to the Securities and Exchange Commission (SEC), or report wrongdoing to a company’s management in order to receive whistleblower protection under Dodd–Frank. The resolution of this circuit split not only will have implications for American employees caught in situations similar to the fiction above, but also will provide a prime opportunity for the Supreme Court to clarify how courts are to understand the interpretive and deferential relationship between the language of legislative statutes and their corresponding bureaucratic regulations. In …

Regulating Moral Hazard: The True Risk Of Dodd-Frank's Risk Retention Requirement, Ethan T. Mobley

The Journal of Business, Entrepreneurship & the Law

Dodd–Frank was implemented in response to the Great Recession as a means to curb abuses on Wall Street. The Act mandated broad reform of the financial system, and in particular, required regulators to promulgate rules controlling the complex structure of Asset-Backed Security (ABS). Dodd–Frank required securitizers to retain a portion of the credit risk associated with ABS. The goal was to curb moral hazard—the market failure commonly blamed for the Financial Crisis. However, there is reason to believe Dodd–Frank may “not adequately address” the moral hazard problem. In Part I, this Article will set forth the nuts and bolts of …

The Legal Aspects Of Portfolio Margining: A Move Toward The Lsoc Model, Christian Chamorro-Courtland

The Journal of Business, Entrepreneurship & the Law

This Article focuses on the legal aspects of “portfolio margining” in the United States and their potential for reducing costs and facilitating the management of collateral for the participants involved. First, this Article outlines the level of protection that customer “margin” deposits receive in clearing systems using a Central Counterparty (CCP). Second, it explains the process of portfolio margining from a legal perspective and discusses the benefits of adopting these arrangements. Thirdly, it argues that adopting the “Legal Segregation and Operationally Commingled Model” (LSOC Model) in the futures industry can facilitate the implementation of portfolio margining. Finally, the conclusion explains …

Clarifying The Original Clawback: Interpreting Sarbanes-Oxley Section 304 Through The Lens Of Dodd-Frank Section 954, J. Royce Fichtner, Patrick Heaston, Lou Ann Simpson

The Journal of Business, Entrepreneurship & the Law

In the early 2000s, major accounting scandals involving reporting violations and audit failures sent the United States financial markets into turmoil. Congress and President George W. Bush reacted to the controversy by passing the Public Company Accounting Reform and Investor Protection Act, better known as the Sarbanes–Oxley Act (SOX), in July of 2002. Section 304 created an explicit procedure, whereby the SEC could disgorge or clawback a CEO or CFO’s incentive-based compensation or stock gains when such profits were based on inflated financial statements later required to be restated to reflect the company’s true financial position. When the stock market …

Reconceptualizing The Whistleblower's Dilemma, Miriam Baer

Faculty Scholarship

No abstract provided.

How Oil And Gas Companies Can Help Meet The Global Goals On Energy And Climate Change, Lisa E. Sachs, Nicolas Maennling, Perrine Toledano

Columbia Center on Sustainable Investment Staff Publications

The sustainable development goals (SDGs) and the Paris Agreement lay out a global consensus on the need to curb human-induced climate change and to achieve sustainable development. These concepts are linked. The urgency of addressing climate change is critical for global efforts to reduce poverty and advance sustainable development, but also climate-change mitigation must be pursued in a manner consistent with ending poverty, promoting economic development, respecting human rights, and ensuring social inclusion. CCSI and the UN Sustainable Development Solutions Network (SDSN) have published a briefing note summarizing the ways in which international oil and gas companies can help expand …

Small Investments, Big Losses: The States' Role In Protecting Local Investors From Securities Fraud, Carlos Berkejó

Washington Law Review

The securities regulation landscape has changed dramatically in recent years. Federal laws have increasingly preempted the regulatory power of states, while at the same time expanding the universe of securities offerings that are not subject to registration at the federal level. These political and policy choices reflect a balancing of two sometimes competing goals: protecting investors and facilitating capital formation. While policies centered on preemption and deregulation might reduce the cost of raising capital, these could also lead to more pervasive securities fraud. Any resulting increase in fraudulent practices is likely to disproportionately affect small securities offerings that are local …

Securities Regulation In Virtual Space, Eric C. Chaffee

Washington and Lee Law Review

No abstract provided.

No Smoke And No Fire: The Rise Of Internal Controls Absent Antibribery Violations In Fcpa Enforcement, Karen E. Woody

Cardozo Law Review

The Foreign Corrupt Practices Act (FCPA) prohibits bribery of foreign public officials in order to obtain or retain business. It is, for all intents and purposes, an anti-bribery statute. To detect bribery, the FCPA contains accounting provisions related to bookkeeping and internal controls. The books and records provision requires issuers to make and maintain accurate books, records, and accounts; likewise, the internal controls provision requires that issuers devise and maintain reasonable internal accounting controls aimed at preventing and detecting FCPA violations. If one considers the analogy that bribery is the 'fire" in FCPA enforcement actions, and books and records violations …

Getting Specific About The Policy And Tools Of Securities Regulation: A Limited Response To Diversifying To Mitigate Risk: Can Dodd–Frank Section 342 Help Stabilize The Financial Sector?, Joan Macleod Heminway

Washington and Lee Law Review Online

No abstract provided.

The Case For Federal Preemption Of State Blue Sky Laws, Rutheford B. Campbell Jr.

Law Faculty Popular Media

In our market economy, imposing rules on capital formation makes economic sense. Well-constructed rules regarding capital formation can promote the efficient flow of capital to its highest and best use and prevent or ameliorate fraud or unfairness to investors. These rules, however, generate additional offering costs that may retard or in some cases completely choke off the flow of capital from investors to businesses. The problem with state blue sky laws is their registration requirements, which significantly impede efficient capital formation and provide no material economic or societal benefits, such as protection of investors from fraud.

The Unsettled State Of Compelled Corporate Disclosure Regulation After The Conflict Mineral Rule Cases, Celia R. Taylor

Sturm College of Law: Faculty Scholarship

No abstract provided.

Sec In-House Tribunals: A Call For Reform, Drew Thornley, Justin Blount

Villanova Law Review (1956 - )

No abstract provided.

Are Disclosures Really Standardized? An Empirical Analysis, Uri Benoliel

Villanova Law Review (1956 - )

No abstract provided.

Lead Plaintiffs And Their Lawyers: Mission Accomplished, Or More To Be Done?, Adam C. Pritchard, Stephen Choi

Law & Economics Working Papers

This chapter, written for the Research Handbook on Shareholder Litigation, surveys empirical work studying the lead plaintiff provision of the Private Securities Litigation Reform Act (PSLRA). That work finds that the lead plaintiff provision has encouraged institutional investors to participate in securities class actions and that those institutional investors have negotiated lower attorneys' fees. Those benefits from the lead plaintiff provision are undercut, however, by political contributions made by plaintiffs' lawyers. We suggest additional reforms to promote transparency and competition among lawyers for lead plaintiffs. We also suggest reforms to the lead plaintiff provision intended to enhance the screening effect …

Statutory Interpretation Lessons Courtesy Of Pilgrim’S Pride, Philip G. Cohen

University of Miami Business Law Review

In Pilgrim’s Pride Corp. v. Commissioner, the Fifth Circuit reversed the Tax Court and held that the taxpayer was entitled to an ordinary loss deduction from its abandonment of securities. While the conclusion reached by the Fifth Circuit has been overshadowed by the promulgation of Treasury Regulation section 1.165-5(i) that effectively treats an abandoned security as worthless and thus characterizes the loss as capital, the case remains noteworthy because it provides an opportunity to examine the statutory interpretation of two distinct Internal Revenue Code sections, section 165(g)(1) and section 1234A. The article focuses on what methods of statutory construction …

What Happens In Delaware Need Not Stay In Delaware: How Trulia Can Strengthen Private Enforcement Of The Federal Securities Laws, Ryan Lewis

BYU Law Review

Class-action lawsuits have been used by private plaintiffs to enforce the federal securities laws since those laws were enacted in the 1930s. With the SEC retaining concurrent authority to enforce federal securities laws, a debate has emerged as to whether the private right of action helps or hinders public enforcement. The primary criticism of private securities litigation is that rent-seeking attorneys abuse the system by bringing frivolous litigation aimed at achieving a settlement and a fee. In the public merger context, the potentially disastrous consequences of failing to close an announced deal on time make corporations eager to settle potentially …

Much Ado About Nothing: The Limits Of Liability For Item 303 Omissions And The Circuit Split That Never Was, Brian Currie

William & Mary Business Law Review

The implied private action for violations of SEC Rule 10b-5 has a contentious history. When plaintiffs base such actions on representations of forward-looking information, however, the stakes are even higher. Recently, the federal circuit courts revisited this divisive issue while deciding whether an omission from required disclosure of Management’s Discussion and Analysis (MD&A) of financial conditions and results of operations. The apparent disparity between the federal circuit courts has caused great consternation and uncertainty in the corporate legal sphere.

This Note will examine the origins and controversial history of Rule 10b-5 private actions, discuss the treatment of MD&A omissions throughout …

Med-Arb Adoption In Securities Law Disputes: Advantages And Costs, Hyung Kyun Kwon

Concordia Law Review

This Article considers the adoption of a hybrid method of Alternative Dispute Resolution (ADR)—Med-Arb—in securities law disputes. Because securities law ADR is currently monopolized by claims that proceed through arbitration, this Article argues that the benefits of settling a claim through mediation are being lost. Med-Arb allows parties to access the benefits of both mediation and arbitration with potentially lower economic costs and the assurance of finality of the dispute. This Article therefore presents how best to use Med-Arb to successfully resolve securities law disputes.

Corporate Purpose And Litigation Risk In Publicly Held U.S. Benefit Corporations, Joan Macleod Heminway

Seattle University Law Review

With the likely prospect of publicly held U.S. benefit corporations in mind, this Article engages in a thought experiment. Specifically, the Article views the publicly held U.S. benefit corporation from the perspective of litigation risk. It first situates, in Part I, the U.S. benefit corporation in its structural and governance context as an incorporated business association. Corporate purpose and the attendant managerial authority, responsibilities, and fiduciary duties are the key points of reference. Then, in Part II, the Article seeks to identify and describe the salient, unique litigation risks that may be associated with publicly held corporations with the structural …