Securities Law Commons^™

Fraud On Any Market, Gregory Day, John T. Holden, Brian M. Mills

Indiana Law Journal

Claims of securities fraud had historically failed because investors seldom rely on false or misleading statements when transacting securities. To bolster confidence in securities markets, the U.S. Supreme Court adopted a doctrine called “fraud-on-the-market” so that duped investors can show detrimental reliance without ever encountering the fraudulent statements. The doctrine assumes that a stock’s price reflects all material information, meaning that an investor who bought tainted stock has constructively relied on the fraud.

Fraud-on-the-market is not only unavailable in other markets but is also embattled within securities law. The doctrine has endured volleys of criticisms about whether markets actually absorb …

Regulating Dynamic Risk In Changing Market Conditions, Susan Navarro Smelcer, Anne Tucker, Yusen Xia

William & Mary Business Law Review

How successful are the SEC's attempts to regulate dynamic risk in financial markets? Using mutual fund disclosure data from two financial shocks--the Puerto Rican debt crisis and COVID-19--this Article finds evidence that SEC open-ended regulations, like the obligation to disclose changing market conditions, are largely successful in capturing dynamic, future risk. Funds engage in widespread and, often, detailed disclosures for new risks--although these disclosures vary widely in specificity. But not all funds disclose new risks. This creates perverse incentives for funds to opt out of disclosure or downplay threats with boilerplate language when new risks are emerging. This Article recommends …

Disclosure Of Private Climate Transition Risks, Michael P. Vandenbergh

William & Mary Law Review

This Article identifies a gap in the securities disclosure regime for climate change and demonstrates how filling the gap can improve financial disclosures and accelerate climate change mitigation. Private climate initiatives have proliferated in the last decade. Often led by advocacy groups, these private initiatives have used naming and shaming campaigns and other means to induce investors, lenders, insurers, retail customers, supply chain customers, and employees to pressure firms to engage in climate change mitigation. Based on an empirical assessment of the annual reports filed with the Securities and Exchange Commission (SEC) by Fortune 100 firms and the largest firms …

High-End Bargaining Problems, William W. Clayton

Vanderbilt Law Review

Many important areas of the law place great confidence in the ability of contracting parties to bargain effectively. In this Article, I question the wisdom of a formalistic faith in bargaining by identifying flaws in the bargaining process at the high end of the market, where parties are sophisticated and have substantial resources to aid them in bargaining.

My analysis focuses on the private equity fund industry, which is widely regarded as one of the most elite contracting spaces in the market. Because of rigorous investor qualification laws and other distinctive features of private equity funds, this industry enjoys many …

Is Bitcoin Prudent? Is Art Diversified? Offering Alternative Investments To 401(K) Participants, Edward A. Zelinsky

Articles

Whether 401(k) plans’ investment menus should feature “alternative” investments is a fact-driven inquiry applying ERISA’s fiduciary standards of prudence, loyalty, and diversification. Central to this fact-driven inquiry is whether the alternative investment class in question is broadly accepted by investors in general and by professional defined benefit trustees in particular. A similarly salient concern when making this inquiry is the financial unsophistication of many, perhaps most, 401(k) participants. Accounting for these considerations, this Article concludes that REITs, private equity funds, and hedge funds can, with limits, today be offered as investment choices to 401(k) participants, but that cryptocurrencies (including Bitcoin), …

The Sec's Ice-Cold Take On Climate Disclosure: Is The 2010 Interpretive Climate Guidance Working?, Patrick Dunbar

Villanova Environmental Law Journal (1991 - )

No abstract provided.

Lunch Lecture | Matthew Baum '09: Defending Clients From Investor Arbitration Claims, Ronald H. Filler Institute For Financial Services Law

Ronald H. Filler Institute for Financial Services Law

March 8, 2022

More Cowbell: Freeing Insider-Trading Liability For Mere-Thieves From The Supreme Court’S Twentieth-Century Devotion To The Cult Of Common-Law Doctrinal Analysis, Robert Steinbuch

Nevada Law Journal

No abstract provided.

Initial Public Offering And Optimal Corporate Governance, Albert H. Choi

Law & Economics Working Papers

This paper examines the long-standing debate over whether firms have a market-based incentive to adopt optimal governance provisions at their initial public offering (IPO). Various scholars and practitioners have argued that firms that offer stock to the public with suboptimal governance structure will be penalized by the market through a lower IPO price. At the same time, others have documented empirical evidence that many IPO firms have putatively suboptimal governance provisions, such as anti-takeover provisions and dual class structure, and many, especially those with dual-class structure, enjoy a market premium at their IPO. This paper attempts to bridge this gap. …

Lunch Lecture | A Career At The Financial Industry Regulatory Authority (Finra), Ronald H. Filler Institute For Financial Services Law

Ronald H. Filler Institute for Financial Services Law

February 17, 2022

Federally Mandated Online Sales Tax: A Logistical Solution For The Future Of E-Commerce, Daniel O'Connor

DePaul Business & Commercial Law Journal

No abstract provided.

Economic Structural Transformation And Litigation: Evidence From Chinese Provinces, To Economic Change And Restructuring, Doug Bujakowski, Joan Schmit

DePaul Business & Commercial Law Journal

No abstract provided.

The "Business Interruption" Insurance Coverage Conundrum: Covid-19 Presents A Challenge, Paul E. Traynor

DePaul Business & Commercial Law Journal

No abstract provided.

Misalighned Incentives In Markets: Envisioning Finance That Benefits All Of Society, Dr. Ryan Clements

DePaul Business & Commercial Law Journal

No abstract provided.

What’S A Nice Company Like Goldman Sachs Doing In The Supreme Court? How Securities Fraud Class Actions Rip Off Ordinary Investors–And What To Do About It, Richard A. Booth

Villanova Law Review (1956 - )

No abstract provided.

The Evolution Of Doj And Sec Expectations For Corporate Compliance Programs And Staying Ahead Of The Curve, Brian H. Benjet, Jamie Kurtz

Villanova Law Review (1956 - )

No abstract provided.

Section 546(E) Redux—The Proper Framework For The Construction Of The Terms Financial Institution And Financial Participant Contained In The Bankruptcy Code After The U.S. Supreme Court’S Holding In Merit, Peter V. Marchetti

Cardozo Law Review

This Article discusses and analyzes the proper framework for the construction of the terms “financial institution” and “financial participant” as defined in Sections 101(22)(A) and 101(22A) of the Bankruptcy Code (the Code), as they work in tandem with Section 546(e) of the Code. In 2018, the U.S. Supreme Court issued its long awaited decision in Merit, which held that the language regarding transfers “made by or to (or for the benefit of) . . . a financial institution” contained in Section 546(e) does not insulate the ultimate transferee of a constructive fraudulent action (a CFTA) simply because the company being …

Why Comparability Is A Greater Problem Than Greenwashing In Esg Etfs, Ryan Clements

William & Mary Business Law Review

This Article argues that comparability in environmental, social, and governance (ESG) exchange traded funds (ETFs) is a much greater problem than greenwashing. Rising demand for sustainable investment products in recent years has been met with an explosion in ESG ETF varieties, and numerous ESG-themed funds have captured massive capital inflows. There is little evidence, however, that deceptive “greenwashing” is widespread in ETFs. ETF issuers face significant reputational costs from such behavior, and there are effectively no consumer switching costs for hyperliquid, easily accessible ETFs. While nondeceptive practices of asset managers are observable in the zero-sum, highly competitive, asset management game …

Separating Governance Tokens From Securities: How The Utility Token May Fall Short Of The Investment Contract, Kyle Bersani

Cardozo Law Review

No abstract provided.

What’S In The Forecast For The Spac Boom & The Pslra?, Nick Krone

SLU Law Journal Online

Special Purpose Acquisition Companies (SPACs) have exploded in popularity. These so-called “blank check” companies are used as vehicles to take companies public without going through a traditional IPO process. Financial projections in SPACs are currently protected by the safe harbor for forward-looking statements afforded by the Private Securities Litigation Reform Act (PSLRA). In this article, Nick Krone examines whether SPACs should be protected by the PSLRA.

The New Public/Private Equilibrium And The Regulation Of Public Companies, Elisabeth De Fontenay, Gabriel V. Rauterberg

Law & Economics Working Papers

This Symposium Article examines how the public/private divide works today and maps out some of the potential implications for major issues in securities law. Classic debates in securities law were often predicated on the idea that public companies are a coherent class of firms that differ markedly from private companies. For more than fifty years after the adoption of the federal securities laws, this view was justified. During that period, the vast majority of successful and growing private firms eventually accepted the regulatory obligations of being public in order to access a wider and deeper pool of capital, among other …

Monsanto: Creator Of Cancer Liability

DePaul Business & Commercial Law Journal

No abstract provided.

Impact Of Corporate Response To Controversial Presidential Statements Or Policies

DePaul Business & Commercial Law Journal

No abstract provided.

Temporary Securities Regulation, Anita Krug

All Faculty Scholarship

In times of crisis, including the 2020-21 global pandemic, the U.S. Securities and Exchange Commission (SEC) has engaged in a type of securities regulation that few scholars have acknowledged, let alone evaluated. Specifically, during recent market crises, the SEC has adopted rules that are temporary, designed to help the securities markets and its participants—both public companies and public investment funds, such as mutual funds and ETFs—weather the crisis at hand but go no further. Once that goal has been accomplished, these rules usually expire, replaced by the permanent rules that they temporarily supplanted. Although the temporary-rulemaking endeavor is laudable—and arguably …

Regulating Fraud On The Marketplace Of Ideas: Federal Securities Law As A Model For Constitutionally Permissible Social Media Regulation, Michael M. Epstein

Seattle University Law Review

This article begins with an introduction discussing speech falsity and the duty under U.S. law by comparing commercial and noncommercial speech. Part I explores the problem of online disinformation. Part II addresses online disinformation in a non-commercial context. Part III contains three subsections assesses non-transactional commercial speech as a basis for non-commercial disinformation regulation. Part IV advocates for a fiduciary duty to fashion a remedy. Part V of this article concludes by suggesting a possible solution for creating a online disinformation law that could survive the First Amendment.

Private Equity And Venture Capital In Germany: How Europe’S Heartland Is Poised To Become The Next Bay Area, Jake Besanceney

Northwestern Journal of International Law & Business

Abstract

This note examines the current state of private equity and venture capital activity and investment in Germany, and specifically in Berlin, in relation to the state of such activity and investment that existed in the San Francisco Bay Area prior to and following its tech explosion in the late twentieth century. Numerous factors such as political and ethnic diversity, a comparatively lower cost of living, and proximity to higher education institutes are propelling Berlin’s startup and tech scenes, and are eerily reminiscent of similar factors that fueled the Bay Area’s growth and attracted private equity and venture capital activity …

The Sec's Fight To Stop District Courts From Declaring Its Hearings Unconstiutional, Linda Jellum

Articles

Can the Securities and Exchange Commission (SEC) unilaterally deny a United States citizen the right to challenge the constitutionality of the agency's administrative hearings in district court? The SEC thinks so, but it makes no sense for these constitutional challenges to be brought in the very proceeding that allegedly, and likely, violates the U.S. Constitution. The appellate courts mostly agreed with the SEC, until recently when the Fifth Circuit held that the district courts should hear these claims. Given this circuit split, this issue will soon reach the Supreme Court, making this Article extremely timely. The Securities Exchange Act of …

Stewardship Theater, Jeff Schwartz

Utah Law Faculty Scholarship

Large asset managers like BlackRock and Vanguard have amassed staggering equity holdings. The voting rights that accompany these holdings give them enormous power over many of the world’s largest companies. This unprecedented concentration of influence in a small group of financial intermediaries is a pressing policy concern. While law and finance literature on the topic has recently exploded, no one has offered a satisfying theory to explain their voting behavior. Existing work tries to understand their approach to voting in conventional terms—as an attempt to improve the performance of portfolio firms—but this is not why large asset managers vote the …

Item 105 And The Third Circuit’S Crystal Ball Standard: I See Regulatory Risk In Your Future, Cooper D’Anton

American University Business Law Review

Part II of this Comment outlines the current Regulation S-K: Item 105 requirements and the cases establishing the different Item 105 disclosure standards of the Third, Second, and First Circuits, including the Third Circuit’s hindsight 2020 standard requiring the disclosure of unknown risk, the Second Circuit’s uncharged and unadjudicated standard and the First Circuit’s actual knowledge standard. Part III will analyze the appropriate Item 105 standard in light of SEC guidance and Item 105. Specifically, this Comment will argue that M&T complied with SEC guidance and the text of Item 105, which the Third Circuit failed to properly apply in …

Reimagining Corporate Accountability: Moving Beyond Human Rights Due Diligence, Rachel Chambers, Jena Martin

Faculty Articles

The global movement towards the adoption of human rights due diligence laws is gaining momentum. Starting in France, moving to Germany, and now at the European Union level, lawmakers are heeding the call to mandate that companies conduct human rights due diligence throughout their global operations. The situation in the United States is very different: although ESG (environmental, social, and governance) has received increasing national attention, there is currently no law that mandates corporate human rights due diligence.

Recognizing this disparity and acknowledging the specific context for ESG-related issues in the United States, we consider how the United States could …