Securities Law Commons^™

The Emergence Of The Actively Managed Etf, Kevin S. Haeberle

Faculty Publications

Since the first exchange-traded fund began trading in 1993, the ETF form has attracted enormous investment flows. However, this triumph of the ETF has been overwhelmingly limited to the world of passive investment. Due to a mix of recent market innovation and regulatory change, this state of affairs is changing today. As I explain in this Article, there is much reason to believe that the actively managed ETF is now set to emerge as a significant feature of the investment landscape. And this emergence has important implications for, among others, the main parties that play key roles in protecting investors …

The Corporate Contract And The Internal Affairs Doctrine, Mohsen Manesh

American University Law Review

In the landmark case Salzberg v. Sciabacucchi, the Delaware Supreme Court upheld the validity of a corporate charter provision restricting the rights of shareholders to bring federal securities law claims. Although rights arising under federal securities law lie beyond the internal affairs doctrine, which has traditionally defined the boundaries of state corporate law, the Salzberg court ruled that such rights may be regulated by the “corporate contract,” created by state corporate law and comprised of a corporation’s charter and bylaws. Embracing contractarian precepts, the Salzberg court rejected the lower Chancery Court’s concession theory of the corporate contract as inextricably bound …

Table Of Contents, Seattle University Law Review

Seattle University Law Review

Table of Contents and Special Thanks.

The Rise Of Decentralized Autonomous Organizations: Opportunities And Challenges, Aaron J. Wright

Articles

The article explores the rise of Decentralized Autonomous Organizations (DAOs), highlighting their potential to transform traditional organizational structures through blockchain technology and smart contracts. DAOs offer operational efficiencies, such as decentralized governance and transparent decision-making, but face significant legal challenges, including lack of recognition, liability concerns, and regulatory uncertainties. The article argues that U.S. business law, with its emphasis on private ordering, could accommodate DAOs, but legal adaptations are necessary to address their unique characteristics and ensure widespread adoption.

Common Ownership: Do Managers Really Compete Less?, Merritt B. Fox, Menesh S. Patel

Faculty Scholarship

This Article addresses an important question in modern antitrust: when large investment funds have holdings across an industry, is competition depressed?

The question of the impact of common ownership on competition has gained much attention as the role of institutional shareholding has grown, with the funds of the three largest management companies holding in aggregate approximately 21% of the shares of a typical S&P 500 firm. It is a source of acute disagreement among scholars and policymakers, with some who believe common ownership does depress competition seeking antitrust law reforms that would significantly constrain how investment funds operate. Neglected in …

Distributed Ledger Technology And The Securities Markets Of The Future: A Stakeholder Survey, Merritt B. Fox, Lawrence R. Glosten, Edward F. Greene, Sue Guan

Faculty Scholarship

This Article evaluates the implications of distributed ledger technology (DLT) for the securities markets of the future and their regulation. DLT is an integral part of the larger revolution in computing, communication and data storage capacity that has transformed securities markets over the last few decades and promises further radical change in the years to come. The potential of DLT, if it can be realized, could improve the functioning of our securities markets while at the same time sharply reducing costs. Based on an interview survey of about 100 persons who play prominent roles in actually making these markets work …

The Human Capital Management Movement In U.S. Corporate Law, George S. Georgiev

Faculty Articles

Corporations cannot exist without workers, yet workers are not part of the formal or informal governance structures established by U.S. corporate law. Commentators and policymakers have bemoaned this state of affairs for decades, to little avail. Since the mid-2010s, however, a concept related to workers, human capital management (HCM), has become an increasingly prominent part of U.S. corporate governance. HCM is premised on the notion that workers can be viewed as “assets” and ought to be managed just as carefully as firms manage physical and capital assets. In practice, HCM is an expansive concept that has been used to refer …

State Securities Enforcement, Andrew K. Jennings

Faculty Articles

Each year, state securities regulators bring over twice the enforcement actions brought by the Securities and Exchange Commission, yet their work is largely missing from the literature. This Article provides an institutional account of state securities enforcement and identifies two key advantages—detection granularity and institutional decentralization—that states enjoy over their federal counterparts in policing localized frauds involving individual, often small-dollar, victims. Although states share enforcement jurisdiction with the SEC and DOJ, their enforcement activity reflects their institutional advantages and constraints and thus largely does not overlap with that of federal authorities. Instead, states serve as the nation’s residual securities enforcers, …

Bending The Investment Advisers Act's Regulatory Arc, Joseph A. Franco

Fordham Journal of Corporate & Financial Law

The Investment Advisers Act of 1940 (“IAA”) and its regulatory purview have changed dramatically over the life of the statute. The statute began as a simple registration scheme with barebones conduct integrity prohibitions for wealth managers and purveyors of investment newsletters. Although the statute’s original minimalist cast was deficient, the IAA’s regulatory scope has undergone a fundamental transformation, both in terms of the expanding class of advisers covered by the statute’s substantive provisions and the statute’s expansive structural integrity requirements. Over a span of decades, the IAA’s focus has been reoriented so that it is directed at least as much, …

The Insider Trading Prohibition Act: A Small Step Towards A Codified Insider Trading Law, Kayla Quigley

Fordham Journal of Corporate & Financial Law

Many have called for reform to insider trading law, as the current judge-made doctrine is ambiguous, complicated, and ultimately permissive of many instances of trading on nonpublic information. Indeed, Congress has attempted several times to pass a uniform insider trading statute. Most recently, in December 2019, the House of Representatives passed the Insider Trading Prohibition Act (“ITPA”). The legislation codifies many current principles of insider trading jurisprudence while also expanding potential insider trading liability. Moreover, it attempts to fix gaps in the law that various cases, such as United States v. Newman, have declined to address.

Among other flaws, …

Move Over Ipos: Unicorn Direct Listings May Be The New Mythical Beasts In Town, Tatum Sornborger

Fordham Journal of Corporate & Financial Law

Most people think of “going public” as an Initial Public Offering (IPO), but as IPOs have boomed and busted over the past decade, the direct listing has emerged as an unconventional but viable way to raise capital. The direct listing approach was uncovered by one rebellious “unicorn,” a term used to describe privately held companies with valuations exceeding one billion dollars. By circumventing the traditional IPO process, Spotify prompted both the SEC and major stock exchanges to examine direct listings and promulgate rules for future offerings. Though these rules are still developing, companies now have a clear path to follow …

Emerging Circuit Split Over Modification Of Mortgages On Multi-Use Real Properties, Michal Zabadal

Fordham Journal of Corporate & Financial Law

For many decades, healthy levels of residential mortgage loans (“RMLs”) and their regulation have been among the major drivers of the economy. Because of the importance of RMLs for the condition of the national financial system and the general well-being of the society, it is essential that lenders are reasonably incentivized to originate these loans. A well-designed promise of higher recovery on RMLs in times of distress can be a compelling motivator. The Bankruptcy Code seeks to deliver on that promise by treating RMLs more favorably. It does that by barring the debtor-in-bankruptcy from modifying a claim secured by a …

The Seventh Circuit Missed The Bullseye In Walleye, Peter Rosenberg

Fordham Journal of Corporate & Financial Law

The structure of agency relationships in a transaction should have no bearing on the outcome when the only difference between two hypothetical transactions is solely the facial structure. In the same vein, investor protection is at the forefront of the securities laws; commonly used limiting language for market announcements should not be enough to absolve a company from fraudulent disclosures, e.g., “preliminary results.”

In Walleye Trading LLC v. AbbVie, Inc., a Seventh Circuit decision, the Court did the opposite and found that, based on pleadings at the motion to dismiss stage, an issuer is not liable for the misstatements …

The Cyan Decision And Its Impact On State-Level Securities Class Actions, B. John Torabi

Fordham Journal of Corporate & Financial Law

The Supreme Court’s decision in Cyan, Inc. v. Beaver County Employees Retirement Fund^† preserved the Securities Act of 1933’s bar on removing securities class actions brought in state court to federal court. The unanimous ruling cut against a nearly quarter-century long trend of pushing securities class action litigation to the federal courts. Cyan was resolved purely through statutory interpretation, leaving many of the underlying policy questions to be resolved by state courts and in future rulings.

This Note examines the intention of the drafters of the Securities Act of 1933 in designing a disclosure-focused regulatory scheme with a private …

The Virus, Risk, And Commercial Mortgage-Backed Securities: Examining Dodd-Frank’S Impact In The Midst Of A Pandemic, Owen Haney

Fordham Journal of Corporate & Financial Law

When lawmakers sought to reshape the financial industry through the passage of the Dodd-Frank Act in 2010, they specifically attacked the “moral hazard” in the asset-backed securities market that they believed was partly responsible for the collapse of global financial markets. Congress identified several practices in asset-backed securitizations that posed a risk to the world economy. In particular, regulators believed that the “originate-to-distribute” model, whereby loan originators—those parties armed with the best knowledge regarding the quality of the loans in the transaction and who consequently set underwriting standards—could sell off the loans without bearing any risk should those borrowers (homeowners …

Fixing Esg: Are Mandatory Esg Disclosures The Solution To Misleading Ratings?, Javier El-Hage

Fordham Journal of Corporate & Financial Law

This Note provides an overview of the debate around the current state of ESG disclosure practices, and the perceived need for the SEC to establish a system of mandatory ESG disclosures. Part I explores the inherent difficulty of defining ESG, the problematic nature of quantifying and measuring ESG factors, and the tools currently being used by market-leading ratings firms and investment vehicles. In particular, this part addresses the inconsistencies of ESG self-reporting, the influence of this practice on the ensuing ratings, and the potential for investors to be misled as a result.

Part II of the Note explores the possible …

Table Of Contents, Seattle University Law Review

Seattle University Law Review

Table of Contents

The Growth Of Vancouver As An Innovation Hub: Challenges And Opportunities, Camden Hutchison, Li-Wen Lin

All Faculty Publications

This article assesses the development of Vancouver as an entrepreneurial region. Using data collected from commercial startup databases, we find that Vancouver produces more startups and receives more venture capital financing per capita than any other major Canadian city. However, we also find that Vancouver lags many U.S. cities on these same metrics. In light of our empirical findings, we explore whether differences in entrepreneurial activity between Canada and the United States are due to differences in the countries’ legal environments. We conclude that legal differences do not explain observed economic disparities, and that differences in entrepreneurial activity are due …

A Lesson In Moral Hazard: Why We Should Thank Bernie Madoff, Walter E. Block, Corey Jones

Touro Law Review

Bernie Madoff is akin to the canary that miners bring to their jobs for safety. He resembles the Distant Early Warning System that was installed to protect the U.S. from attack. He has not been appreciated as such. It is time, it is past time, that he be "credited" with this important role he has played.

Footloose With Green Shoes: Can Underwriters Profit From Ipo Underpricing?, Patrick M. Corrigan

Journal Articles

Why are green shoe options used in initial public offerings (IPOs)? And why do underwriters usually short sell an issuer’s stock in connection with its IPO? Are underwriters permitted to profit from these trading positions?
/="/">
/="/">Scholars have long argued that underwriters use green shoe options together with short sales to facilitate price stabilizing activities, and that U.S. securities laws prohibit underwriters from using green shoe options to profit from IPO underpricing. This Article finds the conventional wisdom lacking. I find that underwriters may permissibly profit from IPO underpricing by pairing purchases under a green shoe option with offshore …