Securities Law Commons^™

An Overview Of Brokercheck And The Central Registration Depository, Christine Lazaro, Albert Copeland

Faculty Publications

(Excerpt)

Securities brokers are governed by a unique regulatory framework, subject to both extensive state and federal statutory and regulatory regimes. The vast bulk of federal regulation and oversight of brokers and brokerage firms has been delegated to the Financial Industry Regulatory Authority (“FINRA”), a self-regulatory organization with the power to govern its members’ conduct. FINRA operates under the oversight of the Securities and Exchange Commission (the “SEC”), a federal agency established by the federal securities laws.

FINRA was created on July 26, 2007 through the consolidation of the National Association of Securities Dealers (“NASD”) and the member regulation, enforcement …

Post-Etherdelta: Clarifying Liabilities For Cryptocurrency Exchanges And Market Participants, Robert Sistoso

Cardozo Arts & Entertainment Law Journal

The rise of cryptocurrencies has led to the development of both centralized and decentralized exchanges, which face significant regulatory challenges under U.S. securities laws. The SEC has applied the Howey test to determine whether tokens qualify as securities, and its enforcement actions, such as against EtherDelta, highlight the need for clarity on the liabilities of developers, operators, and users in decentralized systems. The article advocates for the SEC to refine its regulatory approach to balance investor protection with the promotion of innovation in blockchain technology.

Spoofing And Its Regulation, Merritt B. Fox, Lawrence R. Glosten, Sue S. Guan

Faculty Scholarship

Nearly a century after the United States enacted its first securities laws, urgent questions remain as to the scope of manipulation law: whether manipulation is possible in principle, and if so, how the law should respond in practice. Sharp disagreement among courts, economists, and legal scholars as to whether trading or quoting activity constitutes illegal manipulation has led to a legal framework that lacks precision and cogency. Moreover, the poorly articulated normative basis for court rulings has resulted in enforcement that is both under-inclusive and over-inclusive in ways that do a poor job of discouraging socially harmful transactions and enabling …

The Coming Shift In Shareholder Activism: From "Firm-Specific" To "Systematic Risk" Proxy Campaigns (And How To Enable Them), John C. Coffee Jr.

Faculty Scholarship

This article distinguishes two types of shareholder activism: (1) firm-specific activism, which has a long history and focuses on changes at a specific target company, and (2) systematic risk activism, which seeks to reduce the systematic risk in a portfolio and thereby benefit diversified investors. Typically, such a systematic risk campaign may force a portfolio company to internalize negative externalities to benefit the other companies in the portfolio (such as by reducing carbon emissions or undertaking climate risk reforms). But, systematic risk activism faces an inherent difficulty: the party that leads this campaign and invests in the target company may …

The Future Of Disclosure: Esg, Common Ownership, And Systematic Risk, John C. Coffee Jr.

Faculty Scholarship

The U.S. securities markets have recently undergone (or are undergoing) three fundamental transitions: (1) institutionalization (with the result that institutional investors now dominate both trading and stock ownership); (2) extraordinary ownership concentration (with the consequence that the three largest U.S. institutional investors now hold 20% and vote 25% of the shares in S&P 500 companies); and (3) the introduction of ESG disclosures (which process has been driven in the U.S. by pressure from large institutional investors). In light of these transitions, how should disclosure policy change? Do institutions and retail investors have the same or different disclosure needs? Why are …

Stock Buyback Ability To Enhance Ceo Compensation: Theory, Evidence, And Policy Implications, Nitzan Shilon

Lewis & Clark Law Review

I report that stock buyback ability to enhance CEO compensation has reached a record high amount corresponding to one-third of total pay. Also, I refute the common wisdom that this ability is attributed mainly to buyback impact on per share criteria that determine annual bonuses. Instead, I show that because of recent reforms in executive compensation design, the ability of buybacks to boost the amount of CEO stock-based compensation has become ten times higher than their potential to increase annual bonuses. I argue, first, that the potential of stock buybacks to enhance their compensation provides CEOs with incentives to conduct …

Public Benefit Corporations: There's No Public Benefit To Breaching Fiduciary Duties, Oderah Nwaeze

Emory Business Law Review

During the spring and summer of 2020, in the midst of the COVID-19 pandemic, the United States witnessed large, public protests and activism reminiscent of the 1950s and 60s. Following the death of George Floyd, a Black man, at the hands of Minneapolis police, the American public once again mobilized to fight the ills and inequities of racism and discrimination. A significant number of nonprofit organizations and government departments have been created to resolve the social and political issues that plague Americans. Even Corporate America has been called to act, given that seventy percent of consumers are interested in the …

Posted: No Phising, Lawrence J. Trautman, Mohammed T. Hussein, Emmanuel U. Opara, Mason J. Molesky, Shahedur Rahman

Emory Business Law Review

Any engineering approach to cybersecurity must recognize that many breaches are the result of human behavior, rather than sophisticated malware. Effective cybersecurity defenses require a systematic engineering approach that recognizes the organizational, cultural and psychological barriers to effectively dealing with this problem. The U.S. Securities and Exchange Commission (SEC) defines “phishing” as, “the use of fraudulent emails and copy-cat websites to trick you into revealing valuable personal information—such as account numbers for banking, securities, mortgage, or credit accounts, your social security numbers, and the login IDs and passwords you use when accessing online financial service providers.” Once this information is …

The Doctrine Of Implied Honesty In Contract: Is Neither A Slippery Slope Nor A "New Vista" Of Contract Nullification That Should Concern Businesses Or Franchisors, John J. Jacko Iii

Emory Business Law Review

In the fourteen years since the New York Law Journal published Franchising: LJL Transportation, Contract Nullification by Franchisor, the sky has not fallen nor has the concept of honesty in contract slipped down any slope that threatens contract law generally or franchise systems, specifically. Time has proven the critic, the criticism, and any consternation for the franchise termination opinion in LJL Transportation, Inc. v. Pilot Air Freight Corp. and the implied honesty in contract doctrine to be wrong. One franchise contracts treatise embraces and cites the LJL case for the proposition that “[h]iding revenue from the franchisor in order to …

Electric Vehicle Limbo: The Need For Charging Incentives, Shahil Patel

Emory Business Law Review

A study published by AAA in 2018 shows, “20 percent or 50 million Americans, will likely go electric for their next vehicle purchase.” This means that 1/5 Americans plan on moving on from their previous gasoline car to an electric vehicle. Fast forward to 2021, electric vehicle technology has vastly improved in the battery, range, and charging spheres which further popularizes this movement. It is evident that companies have taken note, as announcements of new electric vehicles coming to the market keeps increasing. There are many reasons for this shift and electric vehicles are set to become the future. However, …

How The Black Lives Matter Movement Enhanced Corporate Governance In 2020, Blair Johnson

Emory Business Law Review

The year 2020 brought the United States’ ongoing issues of racial injustice and police brutality to the forefront. With the deaths of Breonna Taylor, Ahmaud Arbery, George Floyd, and countless other people of color, the Black Lives Matter movement has focused on uprooting and dismantling systemic racism in the United States. During what may be “the largest movement in U.S. history,” individuals and organizations are asking themselves what actions they can take to combat systemic racism in the country. Many corporations have chosen to speak out and use their platform to raise awareness of the issues of racism in the …

Cyber Conflicts In Outer Space: Lessons From Scada Cybersecurity, Roy Balleste

Emory Business Law Review

The story of cybersecurity begins in land. By land, a cyber operations expert would mean the land mass on the surface of the Earth. The great monuments to human achievement surround our daily lives, every hour of every day. These testaments to human ingenuity are not the usual ones known to be appreciated as works of art. The monuments of concern for cybersecurity include, among others, power plants, electrical substations, water dams, water processing plants, auto assembly factories, and satellite ground stations. On January 10, 2014, Australia’s IT News reported that Russian researchers Sergey Gordeychik and Gleb Gritsai discovered vulnerabilities …

M&A Advisor Misconduct: A Wrong Without A Remedy?, Andrew F. Tuch

Scholarship@WashULaw

Merger and acquisition ("M&A") transactions are among the most high profile of corporate transactions. They are also among the most contentious, with around eighty percent of all completed deals litigated in recent years. And yet investment banks—essential advisors on these deals—have generally succeeded spectacularly in avoiding liability, an anomaly considering the routine nature of deal litigation and the frequency with which they face lawsuits in their other activities. This article examines this anomaly, explaining the doctrinal and practical reasons why it arises. In doing so, it puts in context aiding and abetting liability, a recently-successful shareholder strategy to bring M&A …

A General Defense Of Information Fiduciaries, Andrew F. Tuch

Scholarship@WashULaw

Countless high-profile abuses of user data by leading technology companies have raised a basic question: should firms that traffic in user data be held legally responsible to their users as “information fiduciaries”? Privacy legislation to impose fiduciary-like duties of care, confidentiality, and loyalty on data collectors enjoys bipartisan support but faces strong opposition from scholars. First, critics argue that the information fiduciary concept flies in the face of fundamental corporate law principles that require firms to prioritize shareholder interests over those of users. Second, it is said that the overwhelming self-interest of digital companies makes fiduciary loyalty impossible as a …

Managing Management Buyouts: A Us-Uk Comparative Analysis, Andrew F. Tuch

Scholarship@WashULaw

This chapter comparatively assesses U.S. and U.K. law governing management buyouts (MBOs), focusing on the duties of directors and officers in these systems. The analysis casts doubt on persistent but mistaken perceptions about U.S. and U.K. corporate fiduciary duties for self-dealing. The U.K. no-conflict rule is seen as strict, the U.S. fairness rule as flexible and pragmatic. As the analysis for MBOs demonstrates, these fiduciary rules operate similarly, tasking neutral or disinterested directors with policing self-dealing, enabling commercially sensitive responses to conflicts of interest. The analysis also reveals stronger formal private enforcement of corporate law and more robust disclosure rules …

Payment For Order Flow And The Great Missed Opportunity, Joel Seligman

Scholarship@WashULaw

In late January and early February 2021, an astounding story of stock market price volatility captivated the nation. GameStop, a corporation that in recent years had prodigiously lost money – $492 million two years earlier, $296 million the last year for which it reported data – rose from a low of $2.57 to a high of $483. In January 2021 alone, GameStop had risen from a closing price of $17.25 on January 4 to a close of $347.61 on January 27 before falling 44 percent to a close of $193.60 on January 28, rising 68 percent to a close of …

Who, What, Where, And When? Why Courts Should At Least Consider The Third Circuit’S Heightened Ascertainability Requirement As A Prerequisite To Class Certification, Christian Osorno Cortes

FIU Law Review

No abstract provided.

Pension Fiduciaries And Climate Change: A Canadian Perspective, Maziar Peihani

All Faculty Publications

Climate change has emerged as a major issue of financial risk for Canadian pension funds when determining where to place investments. The author argues that while such pension funds recognize climate change as an issue that holds the potential for significant financial risk, the funds’ current approach to climate-related risks faces critical limitations. The author identifies the current practices of the five largest pension funds in Canada when faced with climate-related financial risks, then discusses the key shortcomings in current practices among the pension funds in three main areas.
First, the author examines organizational governance, which seeks to understand investment …

Securities Regulation, Bill Banowsky, Jessica Magee

SMU Annual Texas Survey

This article is a survey of the relevant developments in securities regulation law from December 1, 2019, through November 30, 2020. The article focuses on law likely to be influential to Texas practitioners.

Adverse Domination, Statutes Of Limitations And The In Pari Delicto Defense - Application In Cases Involving Claims Of Accounting Malpractice And Corporate Fraud, Laurence A. Steckman Esq., Adam J. Rader Esq.

Touro Law Review

No abstract provided.