Securities Law Commons^™

How To Evaluate Non-Majority Control: What History And Statutes Tell Us, J. Travis Laster

Fordham Journal of Corporate & Financial Law

Under American law, a person who controls a corporation is a fiduciary. Since the nineteenth century, American law has treated a person who wields a majority of the voting power as having control. For almost as long, American law has recognized that holding a majority of the voting power is sufficient but not necessary for control. During the past two decades in Delaware, two schools of thought co-existed regarding non-majority control. One school took a formal approach that (i) shifted from examining control over the business affairs of the enterprise to control over the board, (ii) discounted sources of influence …

Scienter Potentia Est: The Case For The Presumption Of Use Standard In Insider Trading, Audrey Nelson

Fordham Journal of Corporate & Financial Law

Is it possible to accidentally insider trade? The Supreme Court has held that scienter is a necessary element of all § 10(b) and Rule 10b-5 actions, but the federal appeals courts are split on how the scienter requirement applies to insider trading cases. In a non-insider- trading § 10(b) case, the Supreme Court stated that § 10(b) scienter requires intentional misconduct. Although the Supreme Court has not heard a case specifically about the scienter element in the context of insider trading, those who support a use requirement claim that the § 10(b) scienter element requires the plaintiff to show that …

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

Fordham Journal of Corporate & Financial Law

No abstract provided.

The Fortunate Demise Of Sec Staff Legal Bulletin No. 14l, Raffaele Felicetti

Fordham Journal of Corporate & Financial Law

In 2021, the SEC published its now rescinded Staff Legal Bulletin No. 14L (“the 2021 Bulletin”), revising its interpretations of the “ordinary business” and “economic relevance” exclusions under Rule 14a-8. This Article contends that the post-Bulletin landscape has proven undesirable. It empirically shows that environmental and social (“E & S”) shareholder proposals—including anti-E&S proposals—surged in response. Between 2022 and 2024 alone, E & S proposals accounted for 40% of all such filings in Russell 3000 companies over the entire 2014-2024 period, generating an estimated $23.3 million in additional processing costs for companies during that three-year window. Despite their volume, these …

Shareholder Activism & Unconstitutionally Compelled Speech, Steven J. Cleveland

Faculty Articles

No abstract provided.

The Sound Of Silence In Corporate Director Resignations, Asaf Eckstein, Ziv Granov

Washington and Lee Law Review

This Article seeks to provide an in-depth theoretical, empirical, and policy analysis of an underdeveloped topic in corporate law: director departure. We argue that outspoken director resignations are an integral aspect of effective corporate governance. Disgruntled corporate directors who disagree with the firm’s policies or practices alert shareholders to internal misconduct, encouraging market reactions that pressure the company to make necessary changes. Disclosure of conflict is particularly important in mitigating information asymmetry between shareholders and management, allowing investors to promptly react to relevant events within the firm.

Despite the governance benefits of resignations in protest, we show that outspoken director …

Unequal Ownership, Ofer Eldar, Rory Van Loo

Faculty Scholarship

Market concentration and weak competition do not just lead to lower efficiency but also result in corporate profits flowing primarily to wealthy households that own a disproportionate share of public corporations. We demonstrate that this is a growing distributional problem not only due to familiar reasons in the literature, most notably shifts in market power, but also due to changes in the socio-economic makeup of ownership. Over the past twenty years, households in the bottom 90 percent of wealth have seen their share of stock ownership decline by half. That is, the ownership of corporations has become increasingly concentrated among …

Can The Sec Mandate Disclosures That Contain Both Financial And Social Information? The Case Of The Human Capital Management Disclosures, Patrick M. Corrigan

Journal Articles

Human capital contributes directly to the top and bottom line of corporate financial performance. However, theory predicts, and empirical studies suggest, that firms underinvest in human capital because of a classic public goods problem: since employees can always leave to work for another employer, firms cannot expect to bear all the fruits of investments they make in human capital. As human capital becomes more important in the modern service and technology economy, the ills of this public good problem are growing and the deficiencies of underinvestment becoming more apparent. This Article studies the potential role of human capital management disclosures. …

The Keys To The Kingdom: The Unexpectedly Unsettled Definitions Of Security And Sale And The Overruling Of Chevron, Joel Seligman

Scholarship@WashULaw

This article explores two important unresolved questions for the Federal Securities regulation under the Securities Act of 1933 and the Securities Exchange Act of 1934. The definition of security and the definition of sale were increasingly contested and potentially unstable before the United States Supreme Court decision in Loper Bright Enterprises v. Raimondo overruled the Chevron doctrine.

Scaling 'Reverse Cfius': A Comparative Review Of Outbound Foreign Investment, Hannah Pérez

Cardozo International & Comparative Law Review

The note examines the evolution of U.S. regulations on outbound foreign investments, particularly under Executive Order 14105, known as "Reverse CFIUS," aimed at mitigating national security risks by restricting investments in critical industries in countries like China. It explores the legal, economic, and geopolitical implications of these regulations and compares them with similar measures in the EU, Japan, and Australia, emphasizing the need for international cooperation to effectively address these security concerns.

Ghosting The Crowd, Andrew A. Schwartz

Publications

Crowdfunded companies are legally bound to provide investors with an annual report--but most don't. This "ghosting of the crowd" violates federal securities laws and raises the risk of opportunism by entrepreneurs, who are more prone to misbehave if no one is watching. Most ominously, it threatens the very viability of the investment crowdfunding market, as investors who are ghosted by one company are less likely to invest in another.

This Article reports on the embarrassing record of noncompliance with the annual report rule imposed by the Jumpstart Our Business Startups ("JOBS") Act of 2012 and Regulation Crowdfunding, and proposes a …

The Problem Of Purpose In Corporate Law, Grant M. Hayden, Matthew T. Bodie

Faculty Journal Articles and Book Chapters

For the last half century, shareholder primacy has reigned as the dominant definition of corporate purpose, as to both the purpose of individual companies and corporate law more generally. Recently, however, the Business Roundtable, the American Law Institute’s Restatement of the Law: Corporate Governance, and many business and legal academics have developed new answers to explain why we have corporations, and the ends to which their massive economic powers should be directed. This Essay endeavors to reframe the focus of the debate beyond purpose itself into the realm of actual governing power. In order to be meaningful, purpose needs governance. …

The Contractarian Joint Venture, Carla L. Reyes, Christine Hurt

Faculty Journal Articles and Book Chapters

In 2015, a group of entrepreneurs pooled their money together for the purpose of investing in other businesses. The entrepreneurs could have undertaken this activity through a traditional venture capital firm, but they wanted to cut out the middle-man, reduce fees, and retain more control over their capital, so they chose to undertake their investing on their own. The group of entrepreneurs chose not to form an entity. Instead, they attempted to limit their business and liability risk by conducting their activity entirely via software. Unfortunately, the software contained a bug, and an insider siphoned off millions of dollars belonging …

Democratization Of The Private Markets?, Colleen Baker, Christina M. Sautter

Faculty Journal Articles and Book Chapters

U.S. initial public offerings are declining and the amount of private market assets under management are exploding. Simultaneously, the number of retail investors opening taxable brokerage accounts is increasing. Private market assets are hot. Everyone–both institutional and retail investors–wants in on the action. Yet considerations such as financial resources and U.S. securities laws make such investment less accessible for many retail investors. In this short article, we explore this changing investment landscape and, specifically, one development within this craze: retail investments in private company shares via closed-end funds (or CEFs).

Recently, CEFs like ARK Venture Fund and Destiny Tech100, Inc. …

Unprincipled Investor Bifurcations, Anita K. Krug

American University Law Review

The investment world is full of bifurcations—that is, divisions among groups of investors that the securities laws establish for the purpose of furthering the regulatory goal of investor protection. The notion behind these bifurcations is that only more wealthy investors should be permitted to invest in riskier investment products. However, as this Article details, a more pernicious bifurcation has emerged in recent years, alongside the growing popularity of exchange-traded funds, or “ETFs.” Investing in ETFs is desirable for many investors because ETF shares, unlike shares of mutual funds, can be traded throughout the day. In addition, ETFs allow investors to …

Does It Take Four To Tango In The Regulatory Competition For Global Listings? Comparing Regulations On Dual Class Shares Among Singapore, Hong Kong, Mainland China, And Taiwan, Chang-Hsien Tsai, Luke Hung-Yu Chuang, Hui Wang

Northwestern Journal of International Law & Business

We provide a comparative analysis of regulatory competition among Singapore, Hong Kong, Mainland China, and Taiwan regarding the process, purpose, and actual results of deregulating Dual-Class Share (“DCS”) structure. The comparative analysis focuses on the role of regulatory competition in the convergence or divergence of DCS-structure regulations. To attract unicorn companies and China Concept Stock (“CCS”) companies to choose public offerings in regional exchanges, Hong Kong, Singapore, and Mainland China sequentially announced their amendments to listing rules, particularly in 2018, to allow public offerings of DCS-structure companies while considering their preference for the ownership structure of unicorns. We employ theories …

Introduction: Corporate And Securities Law Responses To Climate Change: Law And Political Economy Perspectives, Sarah C. Haan, Faith Stevelman

Articles & Chapters

No abstract provided.

Unflexed Muscle: Sec Enforcement And Officer Sox 302 Certifications, Marc I. Steinberg, A.B. Steinberg

Faculty Journal Articles and Book Chapters

This article represents the first work to analyze the Securities and Exchange Commission’s neglect in its enforcement of the chief executive officer (CEO) and chief financial officer (CFO) Sarbanes-Oxley certification requirement. The article addresses the appropriate construction of the statute’s reach, the enforcement proceedings instituted by the SEC under this provision, and the Commission’s failure to fulfill its legislative directive to enforce this statute and Rule 13a-14 promulgated thereunder. In its implementation of the CEO and CFO certification requirement, the SEC has brought relatively few enforcement actions during over a two-decade period. Its enforcement with respect to CEOs and CFOs …

Insider Trading & Unconstitutionally Complelled Speech, Steven J. Cleveland

Faculty Articles

The Supreme Court has recently weaponized the First Amendment to invalidate economic regulations. Consequently, the Court’s current analytical framework risks invalidating as unconstitutional certain speech compelled by Congress and the SEC to combat insider trading.

The government may compel speech to combat fraud, and many courts and commentators view insider trading as a fraud against the counterparty to the insider’s trade. Today, the government primarily resorts to Section 10(b) of the Securities Exchange Act of 1934 and its implementing regulations, including Rule 10b-5, to combat insider trading. Those regulations prohibit deceptive conduct and do not directly compel speech. Interestingly, in …

Securities Arbitration Case Law Update 2024–2025 (July 2025), Elissa Germaine, Anthony Rivera

Faculty Publications

(Excerpt)

This article summarizes recent cases regarding the constitutionality of FINRA and leading arbitration cases that are of particular relevance to securities arbitration practitioners.

Urgensi Optimalisasi Regulasi Ico Dan Regulatory Sandbox Di Indonesia: Studi Komparatif Malaysia, Singapura, Dan Uea, Arfan Yanayir Akbar Sabillilah

Jurnal Hukum & Pembangunan

Regulasi aset kripto di Indonesia sedang mengalami transisi mendasar menyusul diberlakukannya Undang-Undang Pengembangan dan Penguatan Sektor Keuangan (UU P2SK), yang mengalihkan pengawasan dari Bappebti ke Otoritas Jasa Keuangan (OJK) dan Bank Indonesia. Meskipun demikian, kerangka kerja saat ini masih menyisakan celah yang signifikan, khususnya terkait mekanisme penggalangan dana publik seperti Initial Coin Offering (ICO), Initial Exchange Offering (IEO), dan Security Token Offering (STO), serta tidak adanya Regulatory Sandbox khusus untuk inovasi berbasis kripto. Celah-celah ini menciptakan ketidakpastian hukum, meningkatkan risiko penipuan, dan melemahkan perlindungan investor. Studi ini menggunakan metode yuridis-normatif dengan pendekatan hukum komparatif, menganalisis model regulasi di Malaysia, Singapura, …

New, Derivative: Third-Party Litigation Finance And Derivatives Regulation, Martin Flores

Washington and Lee Law Review Online

Litigation finance is globally abundant and largely unregulated in the United States. The mechanics behind third-party litigation finance are simple: The funder fronts litigation costs in exchange for a promised share of the proceeds if the litigant succeeds. While the normative debate about the value of these contracts in society endures, the litigation finance industry has new players in hedge funds and other opaque investment firms seeking high returns from risky litigation. Many scholars agree on whether to regulate these third-party litigation finance firms. The key debate rages on how to rein in an unbridled industry.

To add to this …

Application Of The Federal Securities Acts To The Sale Of A Closely Held Corporation By Stock Transfer, Loftus C. Carson Ii

Maine Law Review

The purchase and sale of a closely held corporation is a commonly occurring transaction which may be accomplished by a transfer of stock or a transfer of assets. Structuring such a transaction as a sale of stock, however, may offer certain advantages not attainable if the transaction is structured as a sale of assets. For example, non-assignable contracts and leases, not transferable with a sale of assets, may pass to the transferee of corporate stock. The transferor generally will be absolved of all of the enterprise's liabilities since, by law, they pass with the transfer. Transferors subject to compliance with …

Misinformed Depositors, Raj Ashar

University of Miami Business Law Review

Social media enables information to travel faster and wider than ever before, creating endless new possibilities. However, it also has opened the door to misinformation or disinformation, which has already wreaked havoc in many industries, including the financial sector. Given the importance of accurate information in banking stability, false information poses a real risk of causing bank runs that lead to bank failures.

This Article documents the risks that false information poses to the banking industry. It then turns its attention to the regulation of false information in securities markets, which has grappled with the issue for many years. Drawing …

Anticipating The Effects Of The Brazilian New Business Environment Law's Corporate Governance Provisions On Minority Shareholder Protection, Dean Farmer

Michigan Business & Entrepreneurial Law Review

To encourage minority shareholder protections and public investment in Brazilian corporations, Brazil passed the New Business Environment Law. The New Business Environment Law’s Corporate Governance Provisions require that all corporations have at least one independent board member, have different individuals serving as their CEO and board chairperson, and grant increased power to the general shareholders’ meeting. This Note predicts that the New Business Environment Law’s Corporate Governance Provisions will have an inconsequential effect on Brazilian minority shareholder protections. Traditional American means of achieving minority shareholder protections may be ineffective in Brazil, due to legal, institutional, and cultural differences between the …

Unveiling Misconceptions Of Tunneling: Market Capitalization-Based Analysis, Sang Yop Kang

Michigan Business & Entrepreneurial Law Review

In internal transactions between affiliated companies, there are two opposite directions of wealth-transfer: (1) in the “forward transfer of wealth” (FTW), the wealth-transfer arises from an affiliated company where a controller’s “economic interest” (i.e., “cash-flow right”) is smaller relative to another affiliated company where the controller’s economic interest is larger; (2) in the “reverse transfer of wealth” (RTW), the wealth-transfer arises from an affiliated company where a controller’s economic interest is larger relative to another affiliated company, where the controller’s economic interest is smaller. This Article puts forward a new finding that the extent of internal-transaction tunneling is affected not …

Breaking Bad- The Third Circuit's View In United States V. Lewis Mischaracterizes Uniformity In Federal Sentencing, Noah Swanson

Villanova Law Review (1956 - )

No abstract provided.

Emerging Compliance In The Generative Decentralized Era, Nizan Geslevich Packin

Brooklyn Journal of Corporate, Financial & Commercial Law

Is it the end of compliance as we know it? Emerging technologies such as Artificial Intelligence (“AI”), including Generative AI (“GenAI”), and blockchain are reshaping regulatory compliance in the Web 3.0 era. As machine-generated data becomes the norm, traditional models reliant on human oversight are becoming obsolete, necessitating swift adaptation from regulators and industry stakeholders. Historically, compliance was designed to be managed by humans due to the need for critical thinking, ethical considerations, and nuanced decision-making. Yet, in today’s era, this approach is no longer viable. Addressing this need, Regulatory Technology (“RegTech”) has played a key role in modernizing compliance …

Human Capital Disclosure & Corporate Governance: The New Evidence, George S. Georgiev

Articles

This Article explores the evolution of human capital disclosure-firm-supplied information about various workforce-related matters-as a factor in contemporary corporate governance. Regulatory and nonregulatory developments from recent years have upended longstanding practices and generated extensive new evidence. Most notably, the Securities and Exchange Commission (SEC) adopted a human capital management ("HCM") disclosure mandate in 2020, which, though long overdue, was criticized from the outset for its modest scope and lax design. In the meantime, courts have taken a renewed interest in board of directors' oversight responsibilities in a number of areas, including HCM, while labor's power has unexpectedly increased in some …

Paying For Performance? Attorneys' Fees In Fraud Class Actions, Stephen J. Choi, Jessica M. Erickson, Adam C. Pritchard

Articles

This paper studies whether plaintiffs' lawyers matter in securities class actions. We use inverse propensity score weighting (IPW) to compare the results in cases led by top-tier firms against those brought by lower-tier firms. This technique addresses case selection effects by using all of the cases led by a top-tier firm and then weighting the cases led by lower-tier firms based on how similar these cases are to the cases led by top-tier firms. We do find that top-tier lawyers obtain better outcomes for shareholders in a subset of securities class actions, specifically the cases against the larger (although not …