Securities Law Commons^™

Toward Transatlantic Convergence In Financial Regulation, Hwa-Jin Kim

Law & Economics Working Papers

This Article reviews the historical background of the Glass-Steagall Act of 1933 along with the developments in the markets that led to the Gramm-Leach-Bliley Act of 1999. It analyzes the discussions on the Volcker Rule in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 from a comparative perspective. It shows how the reform in the United States may impact financial institutions and markets in other jurisdictions. Germany and Switzerland, where universal banking is the hallmark of the financial services industry, are the primary jurisdictions of interest. After taking a historical and political look at the regulation of …

Why Governance Might Work In Mutual Funds, Michael C. Schouten

Michigan Law Review First Impressions

The Supreme Court's recent decision in Jones v. Harris Associates L.P. has highlighted the potential for agency conflicts in mutual funds, whose advisors have the de facto power to award themselves high fees. While the surrounding debate has focused on the extent to which market competition replaces the need for fee litigation, there appears to be a growing consensus that fund governance, through the use of voice, is unlikely to be effective. The use of voice is commonly said to be hampered by collective action problems. More recently, scholars have argued that it is further weakened by the easy availability …

A New Breath Of Life For Private Rule 10b-5(B) Litigation After Stoneridge: Sec V. Tambone And Implied Statements By Collateral Actors, David R. Allen

Cardozo Law Review

No abstract provided.

Implementing Dodd-Frank: A Review Of The Cftc‟S Rulemaking Process: Testimony, Michael Greenberger

Congressional Testimony

The Relationship of Unregulated OTC Derivatives to the Meltdown. It is now accepted wisdom that it was the non-transparent, poorly capitalized, and almost wholly unregulated over-the-counter (“OTC”) derivatives market that lit the fuse that exploded the highly vulnerable worldwide economy in the fall of 2008. Because tens of trillions of dollars of these financial products were pegged to the economic performance of an overheated and highly inflated housing market, the sudden collapse of that market triggered under-capitalized or non-capitalized OTC derivative guarantees of the subprime housing investments. Moreover, the many undercapitalized insurers of that collapsing market had other multi-trillion dollar …

False Forward-Looking Statements And The Pslra's Safe Harbor, Ann Morales Olazabal

Indiana Law Journal

Voluntary public disclosure of soft information—corporate projections and predictions and other forward-looking statements—is now the norm, following a brief learning curve after the enactment of the Private Securities Litigation Reform Act’s safe harbor for forward-looking information in 1995. As a consequence, allegations of false forward-looking statements are also quite standard in today’s class action securities fraud pleading. This work addresses an emerging trend, spearheaded by the Seventh Circuit’s decision in Asher v. Baxter International, to introduce a subjective scienter or intent-like inquiry into consideration of the application of the PSLRA’s safe harbor. Numerous district courts have followed Asher’s lead, employing …

United States V. Berger: The Rejection Of Civil Loss Causation Principles In Connection With Criminal Securities Fraud, James A. Jones Ii

Washington Journal of Law, Technology & Arts

In United States v. Berger, a Ninth Circuit panel declined to apply the civil loss causation principles established by the United States Supreme Court in Dura Pharmaceuticals, Inc. v. Broudo in connection with sentencing in a criminal securities fraud prosecution. The Ninth Circuit declined to follow Second and Fifth Circuit decisions endorsing the application of Dura Pharmaceuticals to criminal sentencing, creating a circuit split. This Article examines this split over how to apply the loss causation principles of Dura Pharmaceuticals in connection with sentencing in criminal securities fraud prosecutions. In addition, this Article discusses the implications of each approach …

Citizens United And Forced Speech: Why Protecting The Dissenting Shareholder Necessitates Disclosure Of Corporate Political Expenditures After Citizens United V. Fec, Sabina Bunt Thaler

Washington and Lee Journal of Civil Rights and Social Justice

No abstract provided.

Arbitration As Contract: The Need For A Fully Developed And Comprehensive Set Of Statutory Default Legal Rules, Jack M. Graves

William & Mary Business Law Review

This Article analyzes the United States Federal Arbitration Act, as a statutory framework for effective arbitration of contract disputes. While arbitration under this Act has been subject to ever increasing criticism and calls for reform on a variety of fronts—most often from the perspective of consumer or employment arbitration—this Article focuses specifically on commercial, business-to-business arbitration and critically evaluates the Act as a set of default legal rules governing arbitration as a unique contractual business relationship.

The Article first looks at arbitration from a contractual default rules perspective and then employs this perspective to analyze: (1) the existing federal statutory …

Regulating Financial Innovation: A More Principles-Based Proposal?, Dan Awrey

Cornell Law Faculty Publications

Modem financial markets are characterized by complexity, seemingly perpetual innovation, chronic asymmetries of information and expertise, and pervasive agency costs. Perhaps nowhere are these characteristics-or their attendant regulatory challenges-more pronounced than within OTC derivatives markets. Mounting effective responses to these challenges must be considered amongst the most difficult and important tasks confronting financial regulators. Prescriptive, rules-based approaches toward financial regulation have thus far proven inadequate to this task. Through the utilization of outcome-oriented principles, enhanced dialogic relationships, intensive supervision, and targeted and proportional (yet vigorous) enforcement, "more principles-based" financial regulation (MPBR) manifests the potential to overcome these challenges and, in …

Toward A Just Measure Of Repose: The Statute Of Limitations For Securities Fraud, Michael J. Kaufman, John M. Wunderlich

William & Mary Law Review

Statutes of limitations, a long-standing bulwark of civil litigation, mitigate the risk that evidence of meritorious claims will become stale and relieve defendants who might be exposed to claims from unending uncertainty about whether claims will be brought. But these twin rationales are balanced against allowing plaintiffs sufficient time to discover and file meritorious claims. This balance is manifest in the judicial and congressional effort to fashion a statute of limitations for securities fraud claims. The Supreme Court in Merck & Co. v. Reynolds recently attempted to strike that balance in its interpretation of the statute of limitations for securities …

Derivatives And The Legal Origin Of The 2008 Credit Crisis, Lynn A. Stout

Cornell Law Faculty Publications

Experts still debate what caused the credit crisis of 2008. This Article argues that dubious honor belongs, first and foremost, to a little-known statute called the Commodities Futures Modernization Act of 2000 (CFMA). Put simply, the credit crisis was not primarily due to changes in the markets; it was due to changes in the law. In particular, the crisis was the direct and foreseeable (and in fact foreseen by the author and others) consequence of the CFMA’s sudden and wholesale removal of centuries-old legal constraints on speculative trading in over-the-counter (OTC) derivatives.

Derivative contracts are probabilistic bets on future events. …

New York Stock Exchange Listing Standards And Corporate Social Responsibility, Celia R. Taylor

Sturm College of Law: Faculty Scholarship

Rules and regulations governing the disclosure of corporate social responsibility policies and practices in the US lag behind that of other countries. While countries such as Sweden, France, the UK and others have mandated the disclosure of corporate social responsibility data, efforts in the US are piecemeal and incomplete. To the extent that any CSR disclosure is required, it is often difficult to discern, assemble and interpret.

While many companies formed or operating in the US follow solid CSR practices, in the main they do so voluntarily as there are few, if any, rules that affirmatively require firms to make …

Overseeing Controlling Shareholders: Do Independent Directors Constrain Tunneling In Taiwan?, Yu-Hsin Lin

San Diego International Law Journal

This Article intends to explore the extent to which independent directors constrain tunneling by controlling shareholders in Taiwan. Taiwan serves as an appropriate jurisdiction for research since the private benefits agency problem is prevalent among Taiwanese public companies. A further twist in Taiwan?s case is that independent directors were newly introduced to Taiwan?s corporate boards, which follow dual-board system where the traditional monitoring function is served by statutory supervisors, instead of board committees, which adds to the complexity in analyzing the effectiveness of independent directors in constraining tunneling activities. Part II reviews relevant literature and lays the foundation for this …

Mismatch: The Misuse Of Market Efficiency In Market Manipulation Class Actions, Charles R. Korsmo

William & Mary Law Review

Plaintiffs commonly bring two distinct types of claims under section 10(b) of the Securities Exchange Act of 1934: (1) claims of material misrepresentations or omissions, and (2) claims of tradebased market manipulation. Despite the distinctive features of the two types of claims, courts have tended to treat them identically when applying the “fraud on the market” doctrine. In particular, courts have required both types of plaintiffs to make identical showings that the relevant security was traded in an “efficient market” in order to gain a presumption of reliance. The reasons for requiring such a showing by plaintiffs in a misrepresentation …

Investors And Employees As Relief Defendants In Investment Fraud Receiverships: Promoting Efficiency By Following The Plain Meaning Of "Legitimate Claim Or Ownership Interest", Jared A. Wilkerson

W&M Law Student Publications

Relief defendants are nominal, innocent parties who hold funds traceable to the receivership but have no legitimate claim or ownership interest in them. These nominal parties, as opposed to full or primary defendants, have no cause of action asserted against them, and if they show no legitimate claim to the funds traced to the receivership, the funds are disgorged — generally at summary judgment. This seemingly simple relief defendant tool is used by receivers and regulatory agencies to quickly recover receivership funds for ultimate distribution to creditors. Recently, however, conflict has arisen in federal courts concerning the meaning of “legitimate …

Reflections On The Securities Law Of Jordan , Bashar H. Malkawi, Haitham A. Haloush

American University International Law Review

No abstract provided.

Reflections On The Securities Law Of Jordan , Bashar H. Malkawi, Haitham A. Haloush

American University International Law Review

No abstract provided.

The Howey Test Turns 64: Are The Courts Grading This Test On A Curve?, Miriam R. Albert

William & Mary Business Law Review

Sixty-four years ago, the Supreme Court decided SEC v. W.J. Howey, crafting a definition for one form of security, known as an investment contract. The Supreme Court’s definition of investment contract in Howey is flexible, consistent with the Congressional approach to defining the broader concept of what constitutes a security. This choice of adopting a flexible definition for investment contract is not without cost, and raises the specter of inconsistent interpretation and/or application by the lower courts that threatens to undermine the utility of the Howey test itself as a trigger for investor protection. The intentional breadth and adaptability of …

The Securities And Exchange Commission's 2010 Proxy Access Proposals: A Poison Pill For Corporate Health, Stephen W. Kiefer

William & Mary Business Law Review

The SEC has proposed proxy access rules in the wake of the recent financial crisis. With the stated purpose of removing impediments to the exercise of shareholder voice and increasing director accountability, the proposed rule changes are not without problems. The proposed rules enter a mix in which the corporate governance landscape, shaped by powerful role players, already presents troubling possibilities for activist shareholder abuse. This Article argues that adoption of the proposed rules could be the final piece to a puzzle in which shareholder power is achieved at the expense of long-term corporate health and shareholder value.

Liberalization Of Taiwan’S Securities Markets: The Case Of Cross-Taiwan-Strait Listings, Wen-Yeu Wang, Christopher Chao-Hung Chen

Research Collection Yong Pung How School Of Law

The purpose of this paper is to examine the liberalization of Taiwan’s capital market regarding cross-Taiwan-Strait listing of securities. Taiwan is in an advantageous position to compete with other Asian rivals to attract issuers and capital from China. However, the long political hostility ensures that there is little regulatory cooperation on both sides of the Taiwan Strait. Assuming that the creation of a cross-strait capital market is an unstoppable trend, this paper examines from the perspective of regulatory competition several regimes that may facilitate Taiwan to overcome regulatory obstacles arising from the special Sino-Taiwan relationship. This paper argues that regulatory …