Securities Law Commons^™

A Look Back In Time: Analyzing The Success And Value Of The 2014 Amendments To Rule 2a-7 And Reporting On Form N-Cr In Light Of The March 2020 Market Events, Jocelyn Near

Catholic University Law Review

Money market funds have frequently been a target of regulation by the Securities and Exchange Commission (“SEC”). Perhaps the most expansive regulation came as a response to the 2008 financial crisis, in which the Reserve Primary Fund “broke the buck.” The SEC’s misguided 2014 reforms exacerbated the inherent risks of money market funds, including the risk of runs and first mover advantage, particularly with the implementation of Form N-CR. Form N-CR requires a money market fund to publicly report when various events occur, including when a retail or government money market fund’s current net asset value per share deviates downward …

What's Past Is Prologue: Enforcing The Federal Securities Laws In The Age Of Crypto, Gurbir S. Grewal

William & Mary Business Law Review

No abstract provided.

Materiality In The Long Now: Navigating The Intersection Of Decision-Making, Time, And Strategy, Daniel M. Labovitz, Alexander Kontoleon

Dickinson Law Review (2017-Present)

Existing formulations of materiality in the federal securities laws contain an inherent limitation because they don’t adequately account for how risks and opportunities change over time. This can mislead investors looking to understand how well a company is poised to avoid long-dated risks and take advantage of evolving opportunities because those risks and opportunities don’t neatly fit into the rubric of “likelihood of occurrence times magnitude of harm equals materiality.” This is because the likelihood of any long-dated risk occurring within a short reporting time frame will always approach zero, which means the traditional model of materiality will always classify …

Book Review—Environmental, Social, Governance: The Professional’S Guide To The Law And Practice Of Esg, William J. Donohue

Dickinson Law Review (2017-Present)

No abstract provided.

A Mosaic Approach For Challenging Sec Crypto Regulation: The Major Questions Doctrine And Staff Accounting Bulletin 121, Megan Daye, J.W. Verret

William & Mary Business Law Review

The regulatory scheme for the crypto industry can be described as uncertain, at best. The lack of regulatory clarity and agency overreliance on enforcement actions in the place of proper rulemaking will stifle the industry in U.S. markets. The SEC’s haphazard regulatory approach has created more questions and uncertainty. Staff Accounting Bulletin 121 (“SAB 121”) is a prime example of how the SEC’s desperate grasp for regulatory authority implicates the major questions doctrine and the Administrative Procedures Act. This Article analyzes current crypto litigation alongside SAB 121. It identifies a pattern of circumventing the Administrative Procedures Act and violations of …

Substance And Process In Corporate Law, James An

Suffolk University Law School Faculty Works

The central purpose of corporate law is to facilitate the relationship between the shareholders who provide the corporation’s equity capital and the managers who make the bulk of corporate decisions. Although select aspects of corporate law consider the economic merits of those decisions (“substance”), the bulk of corporate law regulates the procedures by which a corporation’s managers reached those decisions (“process”). Moreover, recent judicial decisions have tended to push corporate law even further toward process-centered considerations. Courts have defended such tendencies on the basis that the courts charged with reviewing disputed corporate decisions are often better at evaluating process than …

Disclosure, Greenwashing, And The Future Of Esg Litigation, Barbara Ballan, Jason J. Czarnezki

Washington and Lee Law Review

The Environmental, Social, and Governance (“ESG”) disclosure movement is expanding both voluntarily, as businesses choose to disclose this information, and mandatorily, as government agencies impose disclosure requirements. As ESG disclosure expands, so do the litigation risks. “Greenwashing” refers to presenting false or misleading environmental or sustainability (i.e., “green”) qualities of products, services, or practices. Businesses may greenwash consumers as well as investors with false and misleading ESG disclosures in advertising, securities filings, or other public statements activating greenwashing litigation from investors and consumers. This Article addresses (1) the laws and regulations that cover consumer and securities greenwashing litigation, (2) how …

Contagion. Ftx, A Sector's Crisis & Crypto's Silent Victims, Lev E. Breydo

Faculty Publications

Late 2022 was crypto’s Minsky moment, characterized by wholesale sector collapse and over a dozen major bankruptcies, including FTX’s implosion. For millions of investors, it was the worst of all worlds, combining the frenetic contagion of 2008 with consumer protections most reminiscent of the Panic of 1907.

While the industry’s challenges are often attributed to the nature of crypto itself, the true root cause reflects a fundamental category error. This Article’s comprehensive market taxonomy identifies as the sector’s nexus of risk entities it terms “Crypto Platforms,” like FTX. Crypto Platforms are essentially financial institutions – a cauldron of externalities subject …

Ask The Professor: How Has The Recent U.S. Supreme Court Opinion In Murray V. Ubs Securities Provided Much Needed Protection To Whistleblowers?, Ronald Filler

Articles & Chapters

No abstract provided.

Beyond Profit Motives, William J. Moon

Michigan Law Review

A review of The Profit Motive: Defending Shareholder Value Maximization By Stephen M. Bainbridge.

Trusting What You Can’T See: Audit Oversight And The Pcaob, J. Robert Brown Jr.

Sturm College of Law: Faculty Scholarship

The paper discusses steps that the PCAOB needs to take to improve audit quality and investor trust in audits. This includes a different approach to standard setting, including a reduction in the use of requirements that are entirely principles based. The approach should also address more explicitly address the conflict between audit quality and commercial interests.

The focus of inspections needs to shift away from a primary emphasis on deficiencies to actual improvements in the quality of financial disclosure. In part this means inspecting audits of issuers that have a higher risk of fraud or GAAP violations and, in selecting …

Emerging Technologies And Perfection Of Security Interests: A Financial University Of Uncertainty, Elizabeth M. Wagenbach

Brooklyn Law Review

Since the founding of Bitcoin in 2009, digital assets, such as cryptocurrency, have exploded in popularity. Cryptocurrency has been associated with stories of immense profit and immense loss. The lucky transactors have been able to capitalize on the price fluctuations of cryptocurrency, while the unlucky transactors became victims of the same volatility, losing tremendous amounts of money. The novelty and ingenuity of cryptocurrency has been coupled with mass confusion to transactors and regulators alike. These early days of cryptocurrency have been characterized by a sort of regulatory tug of war that is a direct result of confusion of what cryptocurrency …

In The Midst Of Bankruptcy: How Cryptocurrency's Classification Affects Creditors Who Were Once Customers, Mia Qu

Washington Law Review

In 2022, Congress proposed the Digital Commodities Consumer Protection Act to amend the Commodity Exchange Act and define a new type of commodity: digital commodity. The definition of digital commodity encompasses cryptocurrency and provides the Commodity Futures Trading Commission with jurisdiction over digital asset transactions. This definition of digital commodity has two important implications. First, it signals the lawmakers’ tendency to generalize cryptocurrency as a commodity. Second, it brings complications into how creditors—especially individual crypto account holders—can recover in the recent bankruptcy cases involving prominent crypto companies. This Comment contains four components. First, it provides a brief explanation of cryptocurrency …

Jarkesy V. Sec: Are Federal Courts Pushing The U.S. Toward The Next Financial Crisis?, Jennifer Hill

Pepperdine Law Review

In the wake of both the Great Depression and the Financial Crisis of 2008, Congress established and expanded the powers of the Securities and Exchange Commission (SEC). As part of this expansion, the SEC in-house administrative proceedings, designed to adjudicate SEC violations before the SEC’s administrative law judges (ALJs), were born. These in-house proceedings have faced multiple constitutional attacks in the past decade. In the most recent iteration of such challenges, Jarkesy v. SEC, the Fifth Circuit held that the SEC’s in-house proceedings were unconstitutional on three grounds: (1) the in-house proceedings deprived petitioners of their constitutional right to jury …

Covid-19 Risk Factors And Boilerplate Disclosure, Stephen J. Choi, Mitu Gulati, Xuan Liu, Adam C. Pritchard

Law & Economics Working Papers

The SEC mandates that public companies assess new information that changes the risks that they face and disclose these if there has been a “material” change. Does that theory work in practice? Or are companies copying and repeating the same generic disclosures? Using the shock of the COVID-19 pandemic, we explore these questions. Overall, we find considerable rote copying of boilerplate disclosures. Further, the factors that correlate with deviations from the boilerplate seem related more to the resources that companies have (large companies change updated disclosures more) and litigation risks (companies vulnerable to shareholder litigation update more) rather than general …

Where You Lead, I Will Follow: Professional Athletes' Ability To Influence Loyal Fans' Cryptocurrency Investments And The Broader Need For Cryptocurrency Regulation, Anna D'Eramo

Jeffrey S. Moorad Sports Law Journal (1994 - )

No abstract provided.

Liu And The New Sec Disgorgement Statute, Andrew N. Vollmer

William & Mary Business Law Review

In early 2021, Congress enacted a new statute for enforcement cases brought by the Securities and Exchange Commission. The new statute resolved important questions about the availability of disgorgement as a remedy in SEC enforcement cases, but it created other questions. The purpose of this Article is to discuss one interpretive issue that is already arising in the federal courts of appeals.

That interpretive issue is whether “disgorgement” as authorized by the new statute must abide by equitable limitations the Supreme Court imposed on disgorgement relief in SEC cases in Liu v. SEC, 140 S. Ct. 1936 (2020). The …

Retail Investors And Corporate Governance: Evidence From Zero-Commission Trading, Dhruv Aggarwal, Albert H. Choi, Yoon-Ho Alex Lee

Law & Economics Working Papers

We examine the effects of the sudden abolition of trading commissions by major online brokerages in 2019, which lowered stock market entry costs for retail investors, on corporate governance. Firms already popular with retail investors experienced positive abnormal returns around the abolition of commissions. Firms with positive abnormal returns in response to commission-free trading subsequently saw a decrease in institutional ownership, a decrease in shareholder voting, and a deterioration in environmental, social, and corporate governance (ESG) metrics. Finally, these firms were more likely to adopt bylaw amendments to reduce the percentage of shares needed for a quorum at shareholder meetings. …

Valuing Esg, Aneil Kovvali, Yair Listokin

BYU Law Review

Corporate environmental, social, and governance (ESG) commitments promise to make capitalism better. Unfortunately, ESG has become a hotbed of hype and controversy. The core problem is that ESG mixes vague environmental and social goals with a profit maximization goal and does not provide a framework for resolving the conflicts that exist between them. The result is confusion that invites deception and cynicism. This Article proposes a mechanism for resolving conflicts between goals by translating them into the common language of money. Once nonpecuniary environmental or social goals are translated into dollar values, they can provide clear and actionable guidance for …

Q&A: A Conversation With Sec Commissioner Hester Peirce, Hester M. Peirce

Arkansas Law Review

A Conversation with SEC Commissioner Hester Peirce