Securities Law Commons^™

Investor Protection Meets The Federal Arbitration Act, Jill I. Gross

Elisabeth Haub School of Law Faculty Publications

In the past three decades, most recently in AT&T Mobility LLC v. Concepcion, the United States Supreme Court has advanced an aggressive pro-arbitration campaign, transforming the Federal Arbitration Act (FAA) into a powerful source of anti-consumer substantive arbitration law. In the aftermath of AT&T Mobility, which upheld a prohibition on class actions in a consumer contract despite state law that refused to enforce such provisions on unconscionability grounds, efforts have been made to prohibit investors from bringing class actions or joining claims, including claims under the Securities Exchange Act of 1934 (the Exchange Act). In the most egregious example to …

Remedies For Foreign Investors Under U.S. Federal Securities Law, Hannah Buxbaum

Articles by Maurer Faculty

In its 2010 decision in Morrison v. National Australia Bank, the Supreme Court held that the general anti-fraud provision of U.S. securities law applies only to (a) transactions in securities listed on domestic exchanges and (b) domestic transactions in other securities. That decision forecloses the use of the “foreign-cubed” class action, and in general precludes the vast majority of claims that might otherwise have been brought in U.S. court by foreign investors. This article assesses the post-Morrison landscape, addressing the question of remedies in U.S. courts for investors defrauded in foreign transactions. It begins by reviewing the current case law, …

Selective Disclosure By Federal Officials And The Case For An Fgd (Fairer Government Disclosure) Regime, Donna M. Nagy, Richard W. Painter

Articles by Maurer Faculty

This Article addresses a problem at the intersection of securities regulation and government ethics: the selective disclosure of market-moving information, by federal officials in the executive and legislative branches, to securities investors outside the government who use that information for trading. These privileged investors, often aided by political intelligence consultants, can profit substantially from their access to knowledgeable sources inside the government. In most instances, however, neither the disclosure nor the trading violates the antifraud provisions of the federal securities laws (under which the insider trading prohibitions arise). This legally protected favoritism undermines investor confidence in the fairness and integrity …

Like Moths To A Flame - International Securities Litigation After Morrison: Correcting The Supreme Court's Transactional Test, Marco Ventoruzzo

Faculty Scholarship

Because of the broad jurisdiction American courts have asserted in cases arising under the Securities Exchange Act of 1934, they have been called a Shangri-la for “foreign-cubed” class actions with little connection to the United States. Over the past forty years, the standards used by American courts to determine their jurisdiction in international securities disputes have evolved, culminating in the U.S. Supreme Court’s Morrison decision of 2010. The new transactional test promulgated in Morrison replaced all of its predecessor tests, from a test measuring whether the conduct in question took place in the United States to a test measuring whether …

Delaware Court Of Chancery: Change, Continuity – And Competition, John C. Coffee Jr.

Faculty Scholarship

For Delaware, it is the best of times and the worst of times. The institutional prestige of the Delaware Court of Chancery has never been higher. Under the leadership of Chancellors Allen, Chandler and Strine, the court has converted many (and possibly most) of the academics, who once tended to be skeptical of Delaware. Academics and practitioners alike have been impressed by both the depth and thoughtfulness of the court of chancery's decisions and the hardworking style of its vice chancellors (who regularly seem able to turn out lengthy decisions in days that would take many federal circuit courts months …

Facebook, The Jobs Act, And Abolishing Ipos, Adam C. Pritchard

Articles

Initial public offerings (IPOs)-the first sale of private firms' stock to the public-are a bellwether of investor sentiment. Investors must be bullish if they are putting their money into untested start-ups. IPOs are frequently cited in the business press as a key barometer of the health of financial markets. Politicians, too, see a steady flow of IPOs as an indicator that capital is fueling the entrepreneurial initiative that sustains the growth of new businesses. Growing businesses create jobs, so Republicans and Democrats can find common ground on the importance of promoting IPOs. That bipartisan consensus was on display this spring …

An Altered Derivatives Marketplace: Clearing Swaps Under Dodd-Frank, Eduard H. Cadmus

Fordham Journal of Corporate & Financial Law

Though over a year has passed, the impact of the Dodd Frank Act remains unclear. This Note examines the provisions of the Act that relate to swap transactions within the context of pre-reform and postreform markets. In order to reduce the uncertainties inherent in unregulated swap transactions, the Act employs a comprehensive framework, which includes mandatory clearing through derivative clearing organizations, extensive reporting requirements, margin requirements, and position limits. This Note argues that, in doing so, the Dodd Frank Act addresses the fundamental failures of pre-reform derivative markets. However, the importance of the role for derivative clearing organizations under this …

Creatively Financed Legal Education In A Marketized Environment: How Faculty Leveraged Buyouts Can Maximize Law Schools’ Stakeholder Values, David Groshoff

Fordham Journal of Corporate & Financial Law

“This [financial aid] money is not necessarily going to educate more students or to improve education. It’s a scholarship ultimately going into profits.”1

The End Of The Internal Compliance World As We Know It, Or An Enhancement Of The Effectiveness Of Securities Law Enforcement? Bounty Hunting Under The Dodd-Frank Act's Whistleblower Provision, Justin Blount, Spencer Markel

Fordham Journal of Corporate & Financial Law

In the wake of Bernard Madoff’s $65 billion Ponzi scheme and the recent economic crisis stemming largely from loosely regulated subprime lending and mortgage-backed securities, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act on July 21, 2010, signaling loudly and clearly that change is coming to Wall Street. But Wall Street is not the only one receiving a message. Buried deep within the 2,319 pages of the Dodd-Frank Act, companies can find Section 922, the whistleblower provision, which provides a bounty for whistleblowers who report securities violations to the Securities and Exchange Commission.These bounty provisions and …

The New Section 1202 Tax-Free Business Sale: Congress Rewards Small Businesses That Survived The Great Recession, Beckett G. Cantley

Fordham Journal of Corporate & Financial Law

On September 27, 2010, President Barack Obama signed the Creating Small Business Jobs Act of 2010 (“SBJA”) that contains a temporary amendment to Internal Revenue Code (“IRC”) § 1202. The amendment permits original shareholders of eligible corporation stock to sell the stock without being taxed on the sale. The temporary amendment initially only applied to certain stock acquired after the enactment of the SBJA and before January 1, 2011, but the amendment was extended on December 17, 2010 for another year ending January 1, 2012. With the impending sunset of the 15% capital gains rate at the end of 2012, …

Lessons From The Flash Crash For The Regulation Of High-Frequency Traders, Edgar Ortega Barrales

Fordham Journal of Corporate & Financial Law

Are equity markets vulnerable to a sudden collapse if the traders who account for about half of the volume have no regulatory obligations to stabilize prices? After the “Flash Crash” of May 6, 2010, policymakers have resoundingly answered this question in the affirmative. During the worst of the crash, some of the so-called high-frequency trading firms that dominate equity markets stopped trading and prices collapsed, momentarily wiping out almost $1 trillion in market value. In response, the U.S. Securities and Exchange Commission is considering whether high-frequency trading firms should be required to act as the traders of last resort. This …

Burning Down The House Or Simply Rolling The Dice: A Comment On Section 621 Of The Dodd-Frank Act And Recommendation For Its Implementation, Joshua R. Rosenthal

Fordham Journal of Corporate & Financial Law

Section 621 of the Dodd-Frank Wall Street Reform and Consumer Protection Act modifies the Securities Act of 1933 to prohibit the underwriter, placement agent, initial purchaser, or sponsor, or any affiliate or subsidiary of any such entity of an asset-backed financial product from betting against that very product for one year after the product’s initial sale. The rule prohibits anyone who structures or sells an asset-backed security or a product composed of asset-backed securities from going short, in the specified timeframe, on what they have sold, and labels such transactions as presenting material conflicts of interest. This Comment discusses traces …

Regulation A And The Jobs Act: A Failure To Resuscitate, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

Regulation A offers small businesses an exemption from the registration requirements of the Securities Act of 1933. The exemption is generally consistent with the obligation of the Securities and Exchange Commission to fashion exemptions that balance investor protection and capital formation. From the perspective of small businesses, the exemption may appear to provide an efficient access to external capital.

Regulation A, however, has fallen into nearly complete disuse. The millions of small businesses in this country, all of which at some point need external capital to survive and grow, simply do not use Regulation A.

Two reasons account for small …

Fraud Created The Market., Michael J. Kaufman

Faculty Publications & Other Works

As we have shown in a series of prior Articles, and as scholars have accepted since, class actions are vital to protecting investors. Presumptions of reliance facilitate class-wide resolution of securities fraud claims. Without class certification, individual damages may be de minimis, and thus investors would be unlikely to bring a securities fraud suit. This underenforcement allows those who defraud investors to skate liability and impugn the integrity of the marketplace. Under Rule 1Ob-5, for securities fraud the Supreme Court has presumed reliance to facilitate class actions where there is an omission in the face of a duty to disclose …

Messy Mental Markers: Inferring Scienter From Core Operations In Securities Fraud Litigation., Michael J. Kaufman

Faculty Publications & Other Works

No abstract provided.

Redoing The Statutory Scheme By Rule-Making, Charles W. Murdock

Faculty Publications & Other Works

No abstract provided.

The Judicial Access Barriers To Remedies For Securities Fraud., Michael J. Kaufman

Faculty Publications & Other Works

No abstract provided.

In Defense Of The Gses, Steven A. Ramirez

Faculty Publications & Other Works

No abstract provided.

Hybrid Entities: Distributing Profits With A Purpose, Heather Sertial

Fordham Journal of Corporate & Financial Law

This Note elaborates on the introduction of a new legal structure for organizations known as the “hybrid entity.” A hybrid encompasses aspects of both the for-profit model, to generate revenue; as well as the nonprofit model, to distribute funds to a community in need. The objective of this Note is to offer a structural guide to entrepreneurs who are interested in this new model. This Note first examines the limitations of for-profits that would like to contribute to social goals, as well as the limitations of nonprofits that wish to increase their revenues. This Note then discusses two current statutory …

Informational Failures In Structured Finance And Dodd-Frank’S “Improvements To The Regulation Of Credit Rating Agencies”, Steven Mcnamara

Fordham Journal of Corporate & Financial Law

This article analyzes the credit rating agency reform provisions of the Dodd-Frank Act’s “Improvements to the Regulation of Credit Rating Agencies” in light of the massive failures in the ratings of structured finance securities leading up to the 2008 credit crisis. The primary cause of ratings failure was the flawed quantitative ratings models used by the rating agencies; conflicted behavior on the part of the rating agencies was also an important but secondary cause. The key mechanical flaw in the ratings models was the method used to determine correlation, a measure of the likelihood that one borrower would default in …