Securities Law Commons^™

Enhancing Efficiency At Nonprofits With Analysis And Disclosure, David M. Schizer

Faculty Scholarship

The U.S. nonprofit sector spends $2.54 trillion each year. If the sector were a country, it would have the eighth largest economy in the world, ahead of Brazil, Italy, Canada, and Russia. The government provides nonprofits with billions in tax subsidies, but instead of evaluating the quality of their work, it leaves this responsibility to nonprofit managers, boards, and donors. The best nonprofits are laboratories of innovation, but unfortunately some are stagnant backwaters, which waste money on out-of-date missions and inefficient programs. To promote more innovation and less stagnation, this Article makes two contributions to the literature.

First, this Article …

Making Sense Of The Arbitrator’S Ruling In Ds 316 Ec And Certain Member States – Measures Affecting Trade In Large Civil Aircraft (Article 22.6-Ec): A Jigsaw Puzzle With (At Least) A Couple Missing Pieces, Petros C. Mavroidis, Kamal Saggi

Faculty Scholarship

“The U.S. won a $7.5 Billion award from the World Trade Organization against the European Union, who has for many years treated the USA very badly on Trade due to Tariffs, Trade Barriers, and more. This case going on for years, a nice victory”, tweeted President Trump’s on October 3, 2019. The United States (US) won not only the highest amount of retaliation ever adjudicated in the history of the WTO but also an ongoing right to retaliate on an annual basis until such time as the EU had complied by either removing the subsidies it granted Airbus or somehow …

Cross-Border Regulation Of Securities Markets In Asean, Wai Yee Wan

Research Collection Yong Pung How School Of Law

How does cross-border regulation of securities markets work in Association of South East Asian Nations (ASEAN)? How closely are the securities markets coordinated within ASEAN from the regulatory perspective? What is the optimal regulatory model of integration of securities markets that balances the economic benefits of integration and yet minimizes the risks of contagion and advances the state’s national goals? The issues posed by these questions are important against the background of strong growth of the Asian economies and Asian capital markets, and how the ASEAN states can take advantage of such growth to facilitate economic growth. According to the …

Embrace The Sec, Usha Rodrigues

Scholarly Works

Securities law traditionally only permits corporations that have registered with the Securities and Exchange Commission (SEC) and completed an initial public offering (IPO) to sell equity to the general public—often a long, expensive process. Initial coin offering (ICOs) emerged in 2013 as a fundraising tool for non-public blockchain-based companies to raise billions of dollars while circumventing the SEC and public offering process altogether. But their early success brought the attention of the SEC, and in 2017 the SEC asserted the right to regulate ICOs. Since then, U.S. ICO promoters have struggled to avoid the SEC’s assertion of jurisdiction, contorting their …

The New Mechanisms Of Market Inefficiency, Kathryn Judge

Faculty Scholarship

Mechanisms of market inefficiency are some of the most important and least understood institutions in financial markets today. A growing body of empirical work reveals a strong and persistent demand for “safe assets,” financial instruments that are sufficiently low risk and opaque that holders readily accept them at face value. The production of such assets, and the willingness of holders to treat them as information insensitive, depends on the existence of mechanisms that promote faith in the value of the underlying assets while simultaneously discouraging information production specific to the value of those assets. Such mechanisms include private arrangements, like …

Stakeholder Preferences And Priorities For The Next Wto Director General, Matteo Fiorini, Bernard Hoekman, Petros C. Mavroidis, Douglas Nelson, Robert Wolfe

Faculty Scholarship

The WTO is looking for a new Director-General (DG). What does the trade community think is needed? This paper reports on the results of an expert survey undertaken as part of a research project on global trade governance at the European University Institute to solicit views on what WTO members and the international trade community consider the most important attributes of candidates for the position, as well as views on the substantive policy and institutional reform priorities confronting the WTO – and thus the new DG. The results suggest strong support for someone with managerial and political experience, and a …

Board Compliance, John Armour, Brandon L. Garrett, Jeffrey N. Gordon, Geeyoung Min

Faculty Scholarship

What role do corporate boards play in compliance? Compliance programs are internal enforcement programs, whereby firms train, monitor and discipline employees with respect to applicable laws and regulations. Corporate enforcement and compliance failures could not be more high-profile, and have placed boards in the position of responding to systemic problems. Both case law on boards’ fiduciary duties and guidance from prosecutors suggest that the board should have a continuing role in overseeing compliance activity. Yet very little is actually known about the role of boards in compliance. This paper offers the first empirical account of public companies’ engagement with compliance …

Federal Forum Provisions And The Internal Affairs Doctrine, Dhruv Aggarwal, Albert H. Choi, Ofer Eldar

Faculty Scholarship

A key question at the intersection of state and federal law is whether corporations can use their charters or bylaws to restrict securities litigation to federal court. In December 2018, the Delaware Chancery Court answered this question in the negative in the landmark decision Sciabacucchi v. Salzberg. The court invalidated “federal forum provisions” (“FFPs”) that allow companies to select federal district courts as the exclusive venue for claims brought under the Securities Act of 1933 (“1933 Act”). The decision held that the internal affairs doctrine, which is the bedrock of U.S. corporate law, does not permit charter and bylaw provisions …

Competing For Votes, Kobi Kastiel, Yaron Nili

Faculty Scholarship

Shareholder voting matters. It can directly shape a corporation’s governance, operational and social policies. But voting by shareholders serves another important function—it produces a marketplace for votes where management and dissidents compete for the votes of the shareholder base. The competition over shareholder votes generates ex ante incentives for management to perform better, to disclose information to shareholders in advance, and to engage with large institutional investors.

Traditional corporate law has looked to a variety of “market forces” as a means of curbing the agency costs of public corporations. Yet, for various reasons, these market forces are, at best, an …

Tepoel Lecture: Bond Trustees And The Rising Challenge Of Activist Investors, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.

Do Founders Control Start-Up Firms That Go Public?, Brian Broughman, Jesse M. Fried

Articles by Maurer Faculty

Black & Gilson (1998) argue that an IPO-welcoming stock market stimulates venture deals by enabling VCs to give founders a valuable "call option on control." We study 18,000 startups to investigate the value of this option. Among firms that reach IPO, 60% of founders are no longer CEO. With little voting power, only half of the others survive three years as CEO. At initial VC financing, the probability of getting real control of a public firm for three years is 0.4%. Our results shed light on control evolution in startups, and cast doubt on the plausibility of the call-option theory …

The European Union Military: A Debate On The Need For A Common Defense Mechanism, Gonzalo Secaira

CMC Senior Theses

In a region affected by death and destruction brought on by two devastating world wars, the European Union has held peace and economic stability as its primary objective. Since its creation, the EU has expanded both in size and scope, becoming on the largest economic global actors in the world. In recent years, the EU has looked towards expanding its competencies to include common security and defense policies. Efforts on behalf of the EU to further integrate EU members have faced mixed reactions and opposition. One of these policies, the funding, and implementation of a European Union military has been …

A Mission Statement For Mutual Funds In Shareholder Litigation, Sean J. Griffith, Dorothy S. Lund

Faculty Scholarship

This Article analyzes the conduct of mutual funds in shareholder litigation. We begin by reviewing the basic forms of shareholder litigation and the benefits such claims might offer mutual fund investors. We then investigate, through an in-depth docket review, whether and how the ten largest mutual funds participate in shareholder litigation. We find that although shareholder suits offer potential benefits, the largest mutual funds have essentially forfeited their use of litigation. This finding is particularly striking given that index funds and other long-term oriented mutual funds generally cannot sell their shares when they are dissatisfied with company performance, leaving them …

Insulating A Wto Investment Facilitation Framework From Isds, George A. Bermann, N. Jansen Calamita, Manjiao Chi, Karl P. Sauvant

Faculty Scholarship

The authors identify several ways in which a WTO investment facilitation framework for development can be insulated from investor-state dispute settlement provisions in international investment agreements, and suggest specific formulations in this respect.

For Coöperation And The Abolition Of Capital, Or, How To Get Beyond Our Extractive Punitive Society And Achieve A Just Society, Bernard E. Harcourt

Faculty Scholarship

In hindsight, the term "capitalism" was always a misnomer, coined paradoxically by its critics in the nineteenth century. The term misleadingly suggests that the existence of capital produces a unique economic system or that capital itself is governed by economic laws. But that's an illusion. In truth, we do not live today in a system in which capital dictates our economic circumstances. Instead, we live under the tyranny of what I would call "tournament dirigisme": a type of state-directed gladiator sport where our political leaders bestow spoils on the wealthy, privileged elite.

We need to displace this tournament dirigisme with …

Compliance Officers: Personal Liability, Protections, And Posture, Jennifer M. Pacella

Brooklyn Journal of Corporate, Financial & Commercial Law

This Symposium Article will explore the evolving nature of the regulatory and enforcement landscape as it pertains to compliance officers, specifically regarding their susceptibility to personal liability. It will examine the posture of compliance officers in three contexts: i) as a possible target for enforcement activity by regulators; ii) as a quasi-professional subject to a current regime of “non-regulation”; and iii) as an employee in need of ample whistleblower protections, each of which create implications for a compliance officer’s risk of personal liability and protections as a constituent of the organization monitored. After considering the current guidance surrounding enforcement activity …

Artificial Intelligence & Artificial Prices: Safeguarding Securities Markets From Manipulation By Non-Human Actors, Daniel W. Slemmer

Brooklyn Journal of Corporate, Financial & Commercial Law

Securities traders are currently competing to use Artificial Intelligence (A.I.) in order to make more profitable decisions in the marketplace. While A.I. provides superior abilities in recognizing market patterns, its complexity can obscure its decision-making process beyond human comprehension. Problematically, the current securities laws prohibiting manipulation of securities prices rest liability for violations on a trader’s intent. In order to prepare for A.I. market participants, both courts and regulators need to accept that human concepts of decision-making will be inadequate in regulating A.I. behavior. However, the wealth of case law in the market manipulation doctrine need not be cast aside. …

A Practice Worth Ending: Eps Guidance Harming Long-Term Growth, Rachel G. Miller

Notre Dame Law Review

This Note focuses on one factor—earnings per share (EPS) guidance—that contributes to myopic behavior and short-termism within public companies. Part I discusses the history of the shareholder primacy norm and the need for management to act in the best interest of its shareholders. Additionally, this Part provides background on EPS guidance and the notion of short-termism. Part II lays out a framework for quarterly reporting and argues that the current disclosure requirements should remain intact. This Part addresses the importance of frequency in quarterly reporting and provides two examples—the United Kingdom and Regulation A—of practices with longer reporting frequencies that …

Aligning Investment Treaties With Sustainable Development Goals, Lise Johnson, Lisa E. Sachs, Nathan Lobel

Columbia Center on Sustainable Investment Staff Publications

Policy makers and other stakeholders are currently asking fundamental questions about whether and to what extent international investment agreements (IIAs) are consistent with and are helping to advance sustainable development objectives at home and abroad.

A 2019 paper from CCSI examines the alignment of IIAs with the 2030 Sustainable Development Agenda, arguing that while FDI will play an important role in advancing development outcomes, existing treaties must be reformed and future IIAs reimagined in order to achieve deep alignment with the sustainable development goals.

The paper proposes that IIAs should be designed and evaluated with respect to their ability to …

Mandatory Disclosure In Primary Markets, Andrew A. Schwartz

Utah Law Review

Mandatory disclosure—the idea that companies must be legally required to disclose certain, specified information to public investors—is the first principle of modern securities law. Despite the high costs it imposes, mandatory disclosure has been well defended by legal scholars on two theoretical grounds: ‘Agency costs’ and ‘information underproduction.’ While these two concepts are a good fit for secondary markets (where investors trade securities with one another), this Article shows that they are largely irrelevant in the context of primary markets (where companies offer securities directly to investors). The surprising result is that primary offerings—such as an IPO—may not require mandatory …