Securities Law Commons^™

Expert Asymmetry: Evidence From Securities Litigation, Adam Callister, Andrew Granato, Belisa Pang

Faculty Publications

Modern litigation often involves two separate, extra-legal features: (1) contingency fee arrangements with the plaintiff-side attorney, and (2) a “battle of the experts” where the outcome of the case rests on conflicting expert witness testimony. We construct a model to illustrate that when these features occur simultaneously, in contexts where plaintiff-side attorneys bear the cost of hiring experts upfront, defendants will spend systematically more than plaintiffs on hiring expert witnesses. Our model is motivated by hand-collected data from a decade of securities class action litigation, where we show that experts polarize into almost entirely plaintiff-side versus defense-side experts, that defense-side …

Trophy Assets, Aneil Kovvali

Articles

Rich people like to own things that make them look cool. When the thing in question is a car, house, or boat, the implications are limited. But sometimes very rich people own assets that are more important. Within media, Elon Musk acquired Twitter, Jeff Bezos ac-quired the Washington Post, and Patrick Soon-Shiong acquired the Los Angeles Times. There has also been a craze for aerospace: Musk with Space X, Bezos with Blue Origin, Richard Branson with Virgin Galactic, and going back further, Howard Hughes with Hughes Aircraft Company. It is often difficult to understand the behavior in purely finan-cial terms, …

Esg Is Not Libertarian: A Response To Jonathan Macey, Allen Mendenhall, Daniel Sutter

Emory Business Law Review

Investing, like any market activity, is voluntary. Investors may invest however they wish, whether to maximize returns, minimize risk, or support what they view as good causes. Is the current Environmental, Social and Governance (ESG) movement a libertarian embrace of socially responsible investing, as Jonathan Macey has argued? We answer with a definite no for several reasons. Government policies impel much ESG investment, most prominently through clean energy transition and financial regulations. Most ESG investment dollars stem not from investor decisions but from potential opportunism by managers of public pensions and sovereign wealth funds. Much investor activism for ESG results …

Clean Hands, Dirty Money, And The Codification Of Sec Disgorgement, Stephanie Palma

Fordham Law Review

Disgorgement is the U.S. Securities and Exchange Commission’s (SEC) most powerful enforcement tool and among its most controversial. For decades, federal courts treated disgorgement in securities enforcement actions as an equitable remedy, a view that the U.S. Supreme Court confirmed in Liu v. SEC. Months after Liu, Congress passed the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, which codified disgorgement in SEC enforcement actions. The codification of disgorgement sparked a circuit split between the U.S. Courts of Appeals for the Fifth and Second Circuits over whether Congress created a new statutory form of …

Owning Trading Opportunities, Kevin Douglas

FIU Law Review

Owning Trading Opportunities identifies the doctrines and policy rationales used to protect property rights in corporate opportunities. It then explores adopting these doctrines and rationales to reform the notions of "fairness," "public interest," "investor protection," "market confidence," and "economic efficiency" driving the regulation of insider trading.

This approach yields several benefits. First, it shows that a policy commitment to equal trading opportunities for all investors is the functional equivalent of a commitment to fostering equal access to information for all investors. The U.S. Supreme Court attempted to reject the latter but failed by embracing the former.

Second, corporate opportunity cases …

Crypto Kleptocracy, W. Robert Thomas, Jeffery Y. Zhang

Michigan Law Review Online

Many Americans are worrying about whether they will soon be living in a postdemocracy autocracy. But in the meantime, they may already be living in a crypto-fueled kleptocracy. Less than one year into his second presidential term, Donald Trump has reportedly taken his wealth to new heights by embracing, both as a businessman and a politician, the crypto industry. Trump’s family businesses are involved in minting Trump-themed meme coins, creating America- themed stablecoins, and mining crypto assets—so successfully that most of Trump’s wealth is likely now from crypto, not real estate. All the while, the Trump Administration is rolling back …

Crypto Litigation And Market Efficiency, Robert E. Bishop, Bradford Levy, Frank Partnoy, Daniel Taylor, Andrew Yeh

Faculty Scholarship

This paper investigates, for the first time in the literature, the factors that should matter to courts in determining whether a crypto  market is “efficient,” meaning that prices are sufficiently responsive to information. Based on new empirical evidence and a series of event studies, we recommend a new judicial framework for assessing market  efficiency in crypto litigation.

Market efficiency tests based on event studies have played an important role in other areas of litigation, particularly securities litigation, where courts frequently rely on what have become known as the “Cammer factors.” Academics have not yet assessed the extent to which market …

Insider Trading & Unconstitutionally Compelled Speech, Steven J. Cleveland

Villanova Law Review (1956 - )

No abstract provided.

Six More Weeks Of Winter: The Third Circuit Rejects The Second Circuit’S Lenient Sec Asset Freeze Test And Champions Tradition In Sec V. Chappell, Elayna Tsiouplis

Villanova Law Review (1956 - )

No abstract provided.

Sec Committee Approves Ai Recommendations Drafted By Indiana Law Faculty Member Alvin Velazquez, Maurer School Of Law - Indiana University

Keep Up With the Latest News from the Law School (blog)

The Securities and Exchange Commission’s Investor Advisory Committee (IAC) Friday (Dec. 5) approved new recommendations urging public companies to provide clearer, more consistent information about how they use artificial intelligence. The recommendations passed with strong support: 14 votes in favor, two abstentions, and two against.

The proposal, drafted by Indiana University Maurer School of Law Professor Alvin Velazquez, responds to the rapid rise of AI across corporate America and widespread investor concern that current disclosures are confusing, inconsistent, or overly promotional.

Greenhat’S Greenlight To The Cftc: The Case For A Jurisdictional Shift Of Financial Transmission Rights From The Federal Energy Regulatory Commission To The Commodity Futures Trading Commission, Timothy K. Shaw Ii

DePaul Business & Commercial Law Journal

Regional Transmission Organizations and Independent System Operators are a relatively new platform to buy and sell wholesale electricity and transmission service of that electricity. These groundbreaking organizations have been around since 1996 after the Federal Energy Regulatory Commission (“FERC”) issued Order 888. FERC regulates the physical electricity wholesale sale and transmission service market managed by a Regional Transmission Organization (“RTO”) or Independent System Operator (“ISO”),through its Federal Power Act mandate. Many RTOs and ISOs offer a product called a Financial Transmission Right (“FTR”). Traditionally, FTRs assist the holder by providing price certainty, or a hedge, in the capacity market. This …

Choosing The Best Entity For Investments Trading After Understanding The Tax Limitations And Restrictions, Ray A. Knight, Joseph Lakatos

DePaul Business & Commercial Law Journal

The trading of various securities is subject to market rules. However, when securities trading is completed within a business entity, the entity is subject to tax limitations and restrictions. The tax benefits cannot be the dominant purpose for the entity structure; economic substance including profit motive and business purpose for each transaction must be able to be shown.

The trading of investment securities must be housed in the right entity to gain the best economic results as well as to minimize the tax burden. The entity selection process must first consider the characteristics and nature of the securities (e.g., currencies, …

Volume 23 - Front Matter

DePaul Business & Commercial Law Journal

No abstract provided.

Red, White-, And Blue-Collar Crime: Federal Sentencing Practices Among White-Collar And Blue-Collar Offenders, Henna Judge

Fordham Law Review

Under the current federal sentencing regime, district courts exercise immense amounts of discretion when sentencing. Though strict adherence to the U.S. Sentencing Commission Guidelines (the “Guidelines”) was once mandatory, courts must now use these Guidelines as an advisory starting point and make a series of fact-specific determinations when sentencing a defendant. Though judicial discretion in this realm aids in preventing undue reliance on Guidelines-range recommendations that can lack nuance, it also invites bias.

In recent years, scholars and courts alike have called attention to a potential disparity in the way blue-collar and white-collar offenders are sentenced. This Note examines relevant …

Federal Courts, Class Actions, And The Jurisdictional Void, Courtney T. Welch

Fordham Law Review

To invoke the jurisdiction of a federal court, a plaintiff must satisfy the requirements of Article III. Among other things, Article III requires a plaintiff to have and maintain personal stake throughout the lifespan of the litigation. Though a simple premise, this constitutional requirement has a complicated history. This is especially true as applied to class action lawsuits, where plaintiffs bring claims both on behalf of themselves and other harmed individuals.

The U.S. Supreme Court has applied flexible rules to some—but not all—of Article III’s requirements in class actions. The breadth of this flexibility, though, is uncertain. Accordingly, so too …

Using Political Privilege To Profit: Insider Trading In The Government And S. 2463'S Alleged Attempt To Stop It, Allison K. Dooling

MC Law Review

Insider trading is generally illegal within the United States. However, members of Congress are notorious for regularly engaging in stock trades based on government information that mirrors insider trading. In 2023, Senators Gillibrand and Hawley proposed a bill, unlike any such proposed before, to put an ultimate ban on government insider trading: the “Ban Stock Trading for Government Officials Act” or S. 2463. On its face, S. 2463 appears to address the criticisms surrounding government insider trading. It not only increases regulation and reporting standards but also bans government officials, their spouses, and their dependents from owning any stock during …

Liening On The Court: Examining Loblolly Properties, Llc V. Le Papillon Homeowner's Association, Inc. And The Future Of Lien Priority In Mississippi, Thomas C. Jones

MC Law Review

The Mississippi Supreme Court in Loblolly Properties, LLC v. Le Papillon Homeowner’s Association, Inc. held that the nonjudicial foreclosure of a deed of trust does not extinguish restrictive covenants to pay HOA fees that were filed after the recording of the deed of trust.  In doing so, the Court blatantly disregarded the fundamental understanding of lien priority in Mississippi, and also failed to explain how the policy behind lien priority would further be upheld in the future. This decision by the Supreme Court is incorrect and places Mississippi in a “super-minority” of jurisdictions on this issue.  The overwhelming majority of …

Why Securities Law, Rather Than Real Property Law, Should Govern Real Estate-Backed Cryptos, John M. Beaman

Richmond Journal of Law & Technology

Currently, it is unclear which area of law applies to real estate- backed cryptocurrencies: real property law or securities law. Depending on which area of law applies, various effects will follow that impact the crypto industry, including property tax administration, virtual real estate rights, digital rights, and regulation. Until legislators or regulators, or possibly both, decide otherwise, it is most advantageous to apply securities law, because regulatory frameworks and infrastructure exist. Surprisingly, very little research has been conducted in this area, especially relating to regulation administration. This paper calls for further research into the specific industry of real estate-backed cryptos …

Torts And Pesticide Drift: Amending Right-To-Farm Acts In The Wake Of Widespread Dicamba Drift By Nicholas Brown** And Matt Roessing*

Journal of Legal Studies in Business

When crops die in a field prior to harvest, a farmer loses a portion of his salary for that year. When the cause of the crop loss is natural, farmers can usually seek compensation through crop insurance and government commodity support programs. When the crops were lost as a result of pesticide drift, these forms of compensation are not usually available to farmers.1 In order to make up for their losses, farmers can seek damages through judicial redress. For many decades, various state and federal laws have combined to complicate and at times prevent farmers adversely affected by pesticide drift …

Cover Page & Table Of Contents - Volume 23

Journal of Legal Studies in Business

JLSB vol. 23 Title Page & Table of Contents