Securities Law Commons^™

The Private Offering: Rule 146 And Offeree Sophistication, Maine Law Review

Maine Law Review

The fundamental premise of the Securities Act of 1933 is that protection of the investor is achieved by requiring the dissemination of information essential to an informed investment decision. Carved from this general requirement are exemptions from registration dealing with certain types of securities and transactions. This lack of clarity has created a situation in which the SEC continues to list the characteristics of a private offering while the judiciary seizes upon particular factors as determinative tests. In response to the need for "greater certainty in the application of the Section 4(2) exemption, the SEC has recently proposed Rule 146 …

The Private Offering: Rule 146 And Offeree Sophistication, Maine Law Review

Maine Law Review

The fundamental premise of the Securities Act of 1933 is that protection of the investor is achieved by requiring the dissemination of information essential to an informed investment decision. Carved from this general requirement are exemptions from registration dealing with certain types of securities and transactions. This lack of clarity has created a situation in which the SEC continues to list the characteristics of a private offering while the judiciary seizes upon particular factors as determinative tests. In response to the need for "greater certainty in the application of the Section 4(2) exemption, the SEC has recently proposed Rule 146 …

Variable Life Insurance And The Federal Securities Laws, Maine Law Review

Maine Law Review

The Securities and Exchange Commission has recently ruled that variable life insurance contracts are "securities" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 and, therefore, subject to the registration and disclosure requirements of those acts. Perhaps more significantly, the SEC also found the Investment Company Act of 1940 and the Investment Advisers Act of 1940 applicable to companies issuing variable life insurance, but decided to exempt insurance companies from the requirements of these statutes in deference to developing state regulation. This comment explores the legal issues raised by the SEC decision.

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 …

Forbes V. Wells Beach Casino And The Contemporaneous Ownership Rule, Maine Law Review

Maine Law Review

Prior to the enactment of Title 13-A of the Maine Business Corporation Act in January 1972, it was unsettled in Maine law whether a stockholder suing in a derivative action had to allege ownership of stock at the time of the wrongful transaction. In Forbes v. Wells Beach Casino, Inc., initiated before Title 13-A became effective, the Maine Supreme Judicial Court handed down its initial pronouncement on the stockholder standing issue. The decision makes clear that even in those jurisdictions where contemporaneous ownership is required, the rule is not absolute. The Maine court found that there are instances in which …

Corenco V. Schiavone: The Cash Tender Offeror As Corporate Raider, Maine Law Review

Maine Law Review

The concern of both the federal and state courts in the litigation between Schiavone and Corenco was to provide adequate protection to the existing shareholders of the target company during the battle for corporate control. Viewed together, these cases illustrate the limits of federal protection and the possibility of further protection through state law. This Note analyzes the rationales of both decisions and considers whether further regulation is warranted.

No Lawyer, No Jail: A Critical Case Study Of Pragmatism And The Flaws Of “Purposeful” Decision Making In Argersinger V. Hamlin, Alisa Smith, Sarah K. Stice

Seattle University Law Review

By releasing conference notes and internal communications, Supreme Court Justices provide insight into the otherwise private decisionmaking process, shedding light on how case outcomes and legal reasoning are framed and negotiated. The watershed case of Argersinger v. Hamlin (1972) extended the constitutional right to counsel to some, but not all, misdemeanor defendants. The case was argued twice, and the Court relied on empirical and authoritative sources to answer complex and practical questions about requiring counsel. This case study employs critical discourse analysis to uncover what influenced the Justices’ decisions and how they framed, shaped, and constructed social realities to foreground …

The Race To Erase: Destruction Of Government Documents Undermines Freedom-Of-Information Laws, Frank D. Lomonte

Seattle University Law Review

In August 2019, reporters with Chattanooga’s daily newspaper, the Times Free Press, filed what seemed to be a routine request for access to emails and other public records held by their local county government. The seemingly unremarkable request set the newspaper’s staff on a months-long journey of unpleasant surprises. The first was a demand to pay the county $717 in advance before being allowed to inspect the documents. The second was that—during prolonged haggling over the fee assessment— the county attorney’s office simply destroyed almost all of the disputed records. Third, and most glaringly, the journalists discovered that Tennessee law …

When You’Re Arrested For A Felony In Seattle, You’Ll Meet Me., Austin Field

Seattle University Law Review

In this Essay, Austin Field, a practicing public defender, uses a first-person perspective to describe what it is like to meet a criminal defendant for the first time. He explains the process from start to finish, detailing everything from the way he introduces himself to how bail works.

"I’ll ask you for your name. Most of the time, you tell me. I check your name against my list. On any given day I’m supposed to interview between five and fifteen people. I have a lot of questions for you. We only have about ten minutes."

The Public Square In A Private-Property Obsessed Country: What New York City’S Pops Regulations Get Right And Why Other Cities Should (Mostly) Copy Them, Carson Mcgregor

Seattle University Law Review

When New York City (NYC) was first becoming the metropolitan monolith it is today, it had a problem: the city streets were chock full of skyscrapers, and sunlight, air, and usable open space were at a premium. In response, the City promulgated its first Privately Owned Public Spaces (POPS) regulations, which allowed developers to build skyward in exchange for providing public space on the street level. Unfortunately, in July of 2023, the New York Times (NYT) discovered that New Yorkers received only a fraction of what they were promised. Building owners received billions of dollars’ worth of added floor space, …

Volume 48 Masthead, Seattle University Law Review

Seattle University Law Review

Volume 48 Masthead

Defining Deference: Impacts Of Abandoning Chevron On Emerging Technology Governance And Administrative Law, R. Aubrey Davis Iii

Seattle University Law Review

Emerging technologies, particularly Artificial Intelligence (AI), often lead to unforeseen legal outcomes. Notable abuses in areas such as facial recognition, employment bias, and housing discrimination are well known. However, legislative responses to these issues either have been largely reactive or there has been no legislative response at all. In lieu of legislation, agencies have sought to fill the gap. For example, the Federal Communications Commission (FCC) recently proposed a rule mandating voter notification for all AI-generated political phone calls citing the Telephone Consumer Protection Act (TCPA) of 1991 as authority. However, the TCPA was originally passed to curtail telemarketing, not …

Intellectual Property Or Modern Folklore? The Problem With Open Gaming Licenses In Tabletop Gaming, Rosie Midget

Seattle University Law Review

This Note addresses how courts and legislatures should address “Open Gaming Licenses” commonly attached to tabletop roleplaying games (TTRPGs), which game publishers use to promote a false image of accessibility—misleading consumers and building goodwill from the misunderstanding. Part I discusses what TTRPGs are, including the defining features of the hobby and culture surrounding it, as well as the unique interplay between publishers and players. Part II explores the question of which elements in a TTRPG system may be subject to copyright protection. Part III examines these elements in practice using Wizards of the Coast’s Dungeons and Dragons TTRPG as a …

Modern Day Colonialism Through HawaiʻI’S Quiet Title And Partition Laws, Cheyann Fujii

Seattle University Law Review

This Note will attempt to highlight important aspects of Hawaiian history to provide readers with a clear picture on how Native Hawaiians are still impacted by colonialism, specifically when plaintiffs bring a quiet title or partition action against Native Hawaiian owners of kuleana lands. Before colonization, the concept of private land ownership did not exist in Hawai‘i, and Native Hawaiians adopted a feudal system by dividing land into geographical areas. Missionaries and businessmen brought Western ideas to Hawai‘i and influenced legislation such as the Great Māhele and the Kuleana Land Act of 1850, which solidified the concept of private property. …

Data Advantage And Merger Review: Can Entrenchment Theory Reform Antitrust Enforcement?, Shin-Ru Cheng

Seattle University Law Review

A merger involving giant digital companies is likely to dampen competition, as it allows those companies to combine and control data access, enabling them to entrench their dominant positions in relevant markets and extend those positions into related markets. While competition law in many jurisdictions aims to prohibit mergers that may substantially lessen competition or create a monopoly, arguably the review of digital mergers is failing because antitrust agencies lack an effective approach to identify data-generated anticompetitive harms. This Article demonstrates that entrenchment theory, recently reintroduced in the 2023 U.S. Merger Guidelines, would help reform the process of antitrust enforcement. …

Table Of Contents, Seattle University Law Review

Seattle University Law Review

Table of Contents

Caution: Potholes In E-Scooter Data Collection, Dakota Rakestraw

Seattle University Law Review

Lime scooters keep ending up in major waterways in Washington state metro areas, a testament to the ubiquity of e-scooters in the metropolitan landscape. How they get there is unclear. Why they get there is even murkier. Perhaps the answer lies in the implications of modern geolocation data collection through e-scooters and gaps in current data collection regulation curbing individual liberties.

Since September 2020, electric scooters have run Seattle’s streets and have dramatically overtaken ridesharing bike trips. For example, from September 2020 to September 2021, there were about 1.4 million scooter and bike trips with September 2021 seeing 300,000 scooter …

Machinists Preemption In The New Administrative Law, Andrew J. Ziaja

Seattle University Law Review

This Article assesses Machinists preemption—a labor-specific form of implied field preemption—while freshly considering implications both for and of new developments in administrative law. The radical transformation of administrative law in the Supreme Court, particularly its newfound emphasis on clear-statement rules, provides opportunities to reconsider the Machinists rationale. Aligning with scholars who have called to question the doctrine’s “ossifying” influence on labor and employment policy, it argues that the modern-day version of Machinists preemption clashes with the Supreme Court’s newly constrained view of delegated power and its differing conceptions of the major questions doctrine.

On the other hand, Machinists preemption might …

Shaq, Ripple, And The Future Of Crypto Regulation, James C. Spindler

William & Mary Law Review

Crypto is at a regulatory crossroads. The Securities and Exchange Commission (SEC) and other regulators have taken a hard line on enforcing traditional regulatory requirements that would severely limit crypto offering activities. At the same time, crypto advocates seek preferential treatment, under the guise of “regulatory clarity,” that would allow them to bypass much of the applicable regulatory regimes. After a halt to legislative activities, brought on by the FTX implosion and ensuing crypto winter, the battle for crypto’s future is currently in the courts. Two pending, bellwether cases—the class action against Shaquille O’Neal and other celebrity spokesmen for FTX, …

Litigating Corporate Risk, Henry B. Blaikie

Fordham Law Review

The Securities and Exchange Commission (SEC) requires companies to disclose risk factors in Item 105 of Regulation S-K, which calls for “a discussion of the material factors that make an investment speculative or risky.” Whether companies incur liability for omitting or mischaracterizing risk factors in their disclosures is the subject of a three-way split between eight federal courts of appeals. The majority approach among the circuits—consisting of the U.S. Courts of Appeals for the First, Second, Third, Fifth, Tenth, and District of Columbia Circuits—imposes liability when companies omit or mischaracterize a risk factor that, at the time of disclosure, is …

The Sec, Fraud, And Cryptocurrencies, Lawrence J. Trautman, Brian Elzweig, Neal F. Newman

Faculty Scholarship

The SEC’s Strategic Plan for Fiscal Years 2022–2026 is focused on the impact of the rapidly developing rate of change in new technologies that provide for markets to be more interconnected and interdependent than ever. Because Congress has yet to give the SEC, or any other agency, express authority to regulate cryptocurrency, the SEC has taken a regulation-by-enforcement approach. The SEC’s recent enforcement efforts relating to crypto asset securities were substantial, with enforcement actions addressing a range of alleged misconduct in the crypto asset securities space, including billion- dollar crypto fraud schemes; unregistered crypto asset offerings, platforms, and intermediaries; and …

Blunting The “Tools At Hand”: Recent Developments In Delaware Books-And-Records Demand Law, Daniel Meyer

University of Miami Business Law Review

In recent years, and despite their heeding the guidance of Delaware courts, stockholders’ use of the statutory books-and-records investigation mechanism under Delaware Code Title 8, Section 220 (“Section 220”) has been much maligned, with commentators blaming Section 220 actions for straining judicial resources and causing companies unnecessary costs and burdens. Moreover, Delaware’s legislature and courts have taken steps to curb stockholders’ inspection rights, blunting a crucial tool needed to develop allegations in meritorious cases so that stockholders can bring cases that survive motions to dismiss and continue into plenary discovery.

Instead of blindly accepting a narrative regarding a Section 220 …

Federal Deregulation Of Small Issues Of Securities: Rule 240, Maine Law Review

Maine Law Review

The fundamental purpose of the Securities Act of 1933 is the protection of the investor through the disclosure and distribution of information necessary to informed investment decisions. This disclosure is achieved through section 53 of the Act, which requires that, with certain enumerated exceptions, all issues of securities offered for sale to the public through the mails or other instrumentalities of interstate commerce shall be registered with the Securities and Exchange Commission. When filed, the registration statement becomes a public document setting forth all material facts about the offered securities and the issuer. No offer of securities is lawful until …

Liability Limitations Of Stock Exchange Maintenance Rules, Maine Law Review

Maine Law Review

The Securities Exchange Act of 1934 obligates individual exchanges and dealer associations to exercise a limited duty of self-regulation. The exchanges and associations have met their responsibility by promulgating rules governing the conduct of their members, including the exchange margin maintenance rules. For many years, enforcement of the rules was left to the exchanges and to the Securities Exchange Commission. Recently, however, courts and commentators have discussed and undertaken judicial enforcement of exchange rules by implying an investor's cause of action against a broker or dealer from the power of the federal courts to effectuate the purposes of the Securities …

Amending Regulation D’S Accredited-Investor Definition To Allow Natural Persons To Opt Out Of Unwanted Regulatory Protections, John Orcutt

Law Faculty Scholarship

Everyone can invest in the heavily regulated registered (or public) securities market, but the more lightly regulated unregistered securities markets are more restricted. The most important unregistered securities market for capital-raising purposes is Rule 506 of Regulation D, which has grown to become the United States’ largest capital-raising market. Far more capital is raised each year in Rule 506 offerings than registered offerings, and the Rule 506 market is where many of the country’s highest-growth (and highest-return) entrepreneurial companies sell their securities. But most Americans are excluded from investing in the Rule 506 market because it is fundamentally restricted to …

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 …

The Constitutionality Of The Maine Takeover Bid Disclosure Law, Maine Law Review

Maine Law Review

With the March 24, 1978 enactment of the Maine Takeover Bid Disclosure Law, more than two-thirds of the states purported to regulate the making of corporate tender offers. The Maine Act, which is by and large typical, requires that persons making tender offers (or takeover bids), by which the offeror attempts to control the target company through purchase of its shares, disclose certain specified information fully and accurately so as to guarantee adequate time for the dissemination and consideration of the disclosed information. During the 1960's, tender offers became a popular method of acquiring control of publicly traded corporations. Sound …

Santa Fe Industries, Inc. V. Green: An Analysis Two Years Later, Rutheford B. Campbell Jr.

Maine Law Review

It has been nearly two years since the Supreme Court decided Santa Fe Industries, Inc. v. Green. Although the outcome of that decision should have surprised no one, since the trend of the Court clearly had been to constrict the scope of the federal securities legislation, the case was a major decision that will have a substantial impact on the development of corporate law in this country. Indeed, it may turn out to be one of the most significant corporate cases decided by the Supreme Court in recent years. Since by this point the dust has settled from the case, …

Jarkesy, The Seventh Amendment, And Tax Penalties, Steve R. Johnson

University of Miami Law Review

In 2024, in the Jarkesy case, a divided Supreme Court held unconstitutional a provision of the Dodd-Frank Act that allowed the SEC to assert securities law anti-fraud penalties through administrative proceedings subject to judicial review. The Jarkesy majority concluded that the invalidated procedure violated the Seventh Amendment’s guarantee of jury trial in some civil cases.

The dissent predicted that the reasoning of Jarkesy could be applied outside of the securities law area, putting hundreds of other statutes at peril of constitutional invalidation. This Article examines one such possible “spillover.” The Article explores whether Jarkesy threatens the current procedures by which …

The Distinction Between Direct And Derivative Shareholder Claims, James An

Suffolk University Law School Faculty Works

One of the primary methods for shareholders to seek redress for corporate misconduct is the shareholder suit, in which shareholders may assert either “direct” or “derivative” claims. Under current legal doctrine, direct claims nominally seek to assert a right of the individual shareholder, while derivative claims seek to assert a right that formally belongs to the corporation and is asserted by the shareholder on the corporation’s behalf. Due to legitimate risks of shareholder and judicial overreach, courts have imposed numerous procedural hurdles upon derivative suits, making them much harder to bring than direct suits.

However, although the distinction between direct …