Securities Law Commons^™

The Financial Crisis And Credit Unavailability: Cause Or Effect?, Steven L. Schwarcz

Faculty Scholarship

Although the relationship between credit availability and financial decline leading to the global financial crisis was somewhat interactive, a loss of credit availability appears to have caused the financial crisis more than the reverse. The potential for credit unavailability to cause a financial crisis suggests at least three lessons: (i) because credit availability is dependent on financial markets as well as banks, regulation should protect the viability of both credit sources; (ii) diversifying sources of credit might increase financial stability if each credit source is robust and does not create a liquidity glut or inappropriately weaken central bank control; and …

Sovereign Debt Restructuring And English Governing Law, Steven L. Schwarcz

Faculty Scholarship

The problem of sovereign indebtedness is becoming a worldwide crisis because nations, unlike individuals and corporations, lack access to bankruptcy laws to restructure unsustainable debt. Decades of international efforts to solve this problem through contracting and attempted treaty-making have failed to provide an adequate debt-restructuring framework. A significant amount of outstanding sovereign debt is governed, however, by English law. This Article argues that the U.K. Parliament has the extraordinary power to help solve the problem of unsustainable country debt by changing English law to facilitate fair and consensual debt restructuring. This Article also proposes modifications to English law that Parliament …

How To Restructure Venezuelan Debt (¿Cómo Restructurar La Deuda Venezolana?), Mitu Gulati, Lee C. Buchheit

Faculty Scholarship

English Abstract: There is a growing consensus that Venezuela will not be able to persist for much longer with its policy of full external debt service. The social costs are just too great. This implies a debt restructuring of some kind. Venezuela, principally through its state-owned oil company, Petróleos de Venezuela, S.A. (“PDVSA”), has extensive commercial contacts with the United States. Not since Mexico in the 1980s has an emerging market country with this level of commercial contacts attempted to restructure its New York law-governed sovereign debt. Holdout creditors in a restructuring of Venezuelan sovereign debt will therefore present a …

Brief Of Professors At Law And Business Schools As Amicus Curiae In Support Of Respondents, James D. Cox, J. Robert Brown Jr., Lyman Johnson, Lawrence W. Treece, Joan Macleod Heminway

Faculty Scholarship

This Amicus Brief was filed with the U.S. Supreme Court on behalf of nearly 50 law and business faculty in the United States and Canada who have a common interest in ensuring a proper interpretation of the statutory securities regulation framework put in place by the U.S. Congress. Specifically, all amici agree that Item 303 of the Securities and Exchange Commission's Regulation S-K creates a duty to disclose for purposes of Rule 10b-5(b) under the Securities Exchange Act of 1934.
The Court’s affirmation of a duty to disclose would have little effect on existing practice. Under the current state of …

Deterring Holdout Creditors In A Restructuring Of Pdvsa Bonds And Promissory Notes (¿Cómo Disuadir A Acreedores 'Holdout' En Una Restructuración De Bonos Y Pagarés De Pdvsa?), Lee C. Buchheit, Mitu Gulati

Faculty Scholarship

The prospect of the potential mischief that may be caused by holdout creditors in a Venezuelan sovereign debt restructuring is probably the main reason why the Maduro administration has not attempted such an exercise. The next administration in Venezuela — whenever and however it may arrive — will not want for suggestions about how to minimize or neutralize this holdout creditor threat. This short article is another contribution to that growing literature. Were the Republic of Venezuela to acknowledge that there really is only one public sector credit risk in the country, and that the distinction between Republic bonds and …

Sovereign Debt And The “Contracts Matter” Hypothesis, W. Mark C. Weidemaier, Mitu Gulati

Faculty Scholarship

The academic literature on sovereign debt largely assumes that law has little role to play. Indeed, the primary question addressed by the literature is why sovereigns repay at all given the irrelevance of legal enforcement. But if law, and specifically contract law, does not matter, how to explain the fact that sovereign loans involve detailed contracts, expensive lawyers, and frequent litigation? This Essay makes the case that contract design matters even in a world where sovereign borrowers are hard (but not impossible) to sue. We identify a number of gaps in the research that warrant further investigation.

Investor's Guide To Security Industry Disputes: How To Prevent And Resolve Disputes With Your Broker, Jill Gross, Elissa Germaine

Faculty Publications

(Excerpt)

The Pace Investor Rights Clinic produced this Guide to Securities Industry Disputes for the individual investor who hopes to prevent or may already have a dispute with his or her securities broker. Our goal is for investors to learn more about their legal rights and best practices for responsible investing, before a dispute arises, and to gain an understanding of their options in case a dispute does arise. We hope that informed investors will be better able to prevent disputes with their broker as well as identify and resolve legitimate grievances.

The first section of this Guide covers investors’ …

Piling On? An Empirical Study Of Parallel Derivative Suits, Jessica M. Erickson

Law Faculty Publications

Using a sample of all companies named as defendants in securities class actions between July 1, 2005 and December 31, 2008, we study parallel suits relying on state corporate law arising out of the same allegations as the securities class actions. We test several ways that parallel suits may add value to a securities class action. Most parallel suits target cases involving obvious indicia of wrongdoing. Moreover, we find that although a modest percentage of parallel suits are filed first, over 80 percent are filed after a securities class action (termed “follow-on” parallel suits). We find that parallel suits and, …

Royalty Securitization, Kristelia García

Publications

No abstract provided.

Federalism And Federalization On The Fintech Frontier, Brian Knight

Vanderbilt Journal of Entertainment & Technology Law

The rise of financial technology (fintech) has the potential to provide better-quality financial services to more people. Although these enhanced financial services have arisen in order to meet consumer need, their regulatory status threatens that progress. Many fintech firms are regulated on a state-by-state basis even though their transactions are interstate, and they compete with firms that enjoy more consistent rules through federal preemption. This dynamic can harm efficiency, competitive equity, and political equity. This Article examines developments in marketplace lending, money transmission, and online sales of securities in an attempt to identify situations in which greater federalization of the …

The Limits Of Gatekeeper Liability, Andrew F. Tuch

Scholarship@WashULaw

Gatekeeper liability – the framework under which actors such as law firms, investment banks and accountants face liability for the wrongs committed by their corporate clients – is one of the most widely used strategies for controlling corporate wrongdoing. It nevertheless faces well-recognized flaws: gatekeepers often depend financially on the clients whose conduct they monitor; to carry out their gatekeeping function, gatekeepers rely on individuals – often their employees – whose interests diverge from their own; and major transactions typically involve multiple gatekeepers, each with specific areas of expertise and information, which produces both gaps and overlaps in the gatekeeping …

The Sec's Shift To Administrative Proceedings: An Empirical Assessment, Stephen J. Choi, Adam C. Prichard

Articles

Congress has repeatedly expanded the authority of the SEC to pursue violations of securities laws in proceedings adjudicated by the SEC's own administrative law judges, most recently through the Dodd-Frank Act. We report the results from an empirical study of SEC enforcement actions against non-financial public companies to assess the impact of the Dodd-Frank Act on the balance between civil court and administrative enforcement actions. We show a general decline in the number of court actions and an increase in the number of administrative proceedings post-Dodd-Frank. At the same time, we show an increase in average civil penalties post-Dodd-Frank for …

Frozen Charters, Scott Hirst

Faculty Scholarship

In 2012, the New York Stock Exchange changed its policies to prevent brokers voting shares on corporate governance proposals where they had not received instructions from beneficial owners. Although the change was intended to protect investors and improve corporate governance, it has had the opposite effect: a significant number of U.S. public companies are no longer able to amend important parts of their corporate charters, despite the support of their boards of directors and overwhelming majorities of shareholders. Their charters are frozen.
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/="/">This paper provides the first empirical and policy analysis of the broker voting change and its …

Legal Pathways For A Massive Increase In Utility-Scale Renewable Generation Capacity, Michael Gerrard

Faculty Scholarship

Decarbonizing the U.S. energy system will require a program of building onshore wind, offshore wind, utility-scale solar, and associated transmission that will exceed what has been done before in the United States by many times, every year out to 2050. These facilities, together with rooftop photovoltaics and other distributed generation, are required to replace most fossil fuel generation and to help furnish the added electricity that will be needed as many uses currently employing fossil fuels (especially passenger transportation and space and water heating) are electrified. This Article, excerpted from Michael B. Gerrard & John Dernbach, eds., Legal Pathways to …

Class Actions In The Era Of Trump: Trends And Developments In Class Certification And Related Issues, John C. Coffee Jr., Alexandra D. Lahav

Faculty Scholarship

In this memorandum prepared for the Annual ABA National Institute on Class Actions, Professors Coffee and Lahav review and assess developments in class certification over recent years, and track trends in approaches to certification. Special attention is given to securities litigation, the use of confidential witnesses, ascertainability, attorney's fees, standing, mootness, statutes of repose, and the impact of recent Supreme Court decisions, including Halliburton II and Spokeo.

The Hostile Poison Pill, A. Christine Hurt

Faculty Scholarship

No abstract provided.

The Learned Hand Unformula For Short-Swing Liability, Andrew Chin

Washington Law Review

Section 16(b) of the Securities Exchange Act of 1934 allows for the recovery of short-swing profits realized by certain insiders from trading in a corporation’s stock within a period of less than six months. Three generations of corporate law students have been taught the “lowest-in, highest-out” formula that is intended to maximize the disgorgement of short-swing profits under section 16(b). Arnold Jacobs’s 1987 treatise presented two hypothetical examples where the formula fell short of the intended maximum, but courts, commentators, and practitioners have largely ignored these theoretical challenges to the formula’s validity. This Article identifies Gratz v. Claughton as the …

The Role Of Blue Sky Laws After Nsmia And The Jobs Act, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

State securities laws—in particular, state laws requiring that securities offered by issuers be registered with the states—have been an impediment to the efficient movement of capital to its highest and best use. The pernicious effects of these laws—generally referred to as “blue sky laws”—have been felt most acutely by small businesses, a vital component of our national economy.

It has been difficult to remedy this problem. States and state regulators have been tenacious in protecting their registration authority from federal preemption. The Securities and Exchange Commission, on the other hand, has been reluctant to advocate for preemption and unwilling to …

The U.S. Law Regime Of Sovereign Immunity And The Sovereign Wealth Funds, Victorino J. Tejera

University of Miami Business Law Review

This article is concerned with the applicability of sovereign immunity to the so-called sovereign wealth funds (“SWFs”) within the U.S. legal system. While sovereign immunity has existed for at least two centuries, SWFs and the types of investment activities they conduct on behalf of their parent foreign states are a rather recent phenomenon. As a result, the issue of the applicability of the rules on sovereign immunity to the SWFs poses novel legal challenges and difficulties. In a nutshell, this article is intended to answer the following questions: Are SWFs entitled to invoke sovereign immunity before U.S. courts? If so, …

Beyond Trade Deals: Charting A Post-Brexit Course For Uk Investment Treaties, Lise Johnson, Lorenzo Cotula

Columbia Center on Sustainable Investment Staff Publications

The Brexit referendum has raised questions about the future terms of the United Kingdom’s engagement with the world economy. While a debate over the UK’s future approach to trade deals has already begun, a similar discussion has yet to develop on the treaties that govern foreign investment. As this briefing note by Lorenzo Cotula of the International Institute for Environment and Development, and Lise Johnson of CCSI highlights, the stakes are high: ill-designed treaties could leave the UK excessively exposed to legal claims by foreign companies and could fail to address relevant economic, social and environmental challenges. While meaningful negotiations …