Securities Law Commons^™

Liquidity, Systemic Risk, And The Bankruptcy Treatment Of Financial Contracts, Rizwaan J. Mokal

Brooklyn Journal of Corporate, Financial & Commercial Law

No abstract provided.

Form Vs. Function In Rule 10b-5 Class Actions, Amanda M. Rose

Vanderbilt Law School Faculty Publications

The Supreme Court’s widely anticipated decision last term in Halliburton Co. v. Erica P. John Fund, Inc. did little to change the fundamental landscape of securities fraud litigation in the United States. Rule 10b-5 class actions premised on the “fraud-on-the-market” presumption of reliance may still be brought, although it is now clear that defendants may present evidence of lack of price distortion to rebut that presumption at the class certification stage. Halliburton does, however, raise a variety of new questions that will keep plaintiffs’ lawyers and defense counsel fighting for years to come. Determining the answers to these questions will …

Slouching Towards Monell: The Disappearance Of Vicarious Liability Under Section 10(B), Ann Lipton

Publications

Liability under section 10(b) of the Securities Exchange Act is one of the primary mechanisms for enforcing the federal securities laws. Section 10(b), however, prohibits only intentional or reckless deception, and there has never been consensus as to how to determine whether an organization, rather than a natural person, harbors the relevant mens rea. Traditionally, organizational liability under federal law is determined according to agency principles, and most courts pay lip service to the notion that agency principles govern under section 10(b). As this Article demonstrates, they do not.

Many section 10(b) actions involve "open-market" frauds, whereby the allegedly fraudulent …

Intellectual Property Securitization, Dov Solomon, Miriam Bitton

Cardozo Arts & Entertainment Law Journal

This Article aims to explore the securitization of intellectual property [hereinafter "IP"], introducing the promise of said financing method in the growing field of IP. In recent years, IP has become a major component of developed economics. Raising funds for research, development, and the creation of new inventions and works of authorship has never been an easy task. This Article, therefore, presents a review of securitization in the field of IP and in doing so makes a few major contributions. It offers a thorough discussion of securitization, its benefits, and its prominence over more traditional methods of financing, such as …

Locked In: The Competitive Disadvantage Of Citizen Shareholders, Anne M. Tucker

Scholarly Works

Indirect investors—especially mutual fund investors—are often low-dollar, low-incentive, rationally apathetic investors facing enormous information asymmetries and collective action problems. These traits raise difficult corporate governance questions about how indirect investors exercise or should exercise their right to vote in fund elections, obtain fund-related information, and pursue litigation against the fund. These questions are all the more important in light of how many indirect investors own mutual funds through employer-sponsored defined contribution retirement plans.

John Morley and Quinn Curtis’s 2010 article, Taking Exit Rights Seriously, offers a clear answer to this problem. They assert that the best solution for all mutual …

Government By Contract: Considering A Public Service Ethics To Match The Reality Of The "Blended" Public Work Force, Dan Guttman

Emory Business Law Review

The Iraq War brought to public attention the reality that much of the basic work of government is done by contractors, and that the government's ability to account for its contractors cannot be taken for granted. What, for example, if the rules that protect us against official abuse are not applied to those who, in fact, increasingly do the government's work? What if, for example, the presumption that officials have the capacity to oversee contractors runs against the reality that they do not and, indeed, that the work of contractor management is itself often contracted out? What should we do …

The New York Llc Act At Twenty: Is Piercing Still 'Enveloped In The Midst Of Metaphor'?, Miriam R. Albert

Hofstra Law Faculty Scholarship

Twenty years ago, the New York Limited Liability Company Law was enacted, including § 609(a), which explicitly disclaims liability of members, managers, and agents for the debts and obligations of the LLC. However, New York courts have held that this limitation on liability is not absolute, and certain conduct on the part of the owners can erode the liability shield. The statute provides that the members will not have personal liability for LLC debts solely because of their role as owners in the LLC. The statute does not say that members will never have liability, just that any liability will …

Mandatory Disclosure And Individual Investors: Evidence From The Jobs Act, Colleen Honisberg, Robert J. Jackson Jr., Yu-Ting Forester Wong

Faculty Scholarship

One prominent justification for the mandatory disclosure rules that define modem securities law is that these rules encourage individual investors to participate in stock markets. Mandatory disclosure, the theory goes, gives individual investors access to information that puts them on a more equal playing field with sophisticated institutional shareholders. Although this reasoning has long been cited by regulators and commentators as a basis for mandating disclosure, recent work has questioned its validity. In particular, recent studies contend that individual investors are overwhelmed by the amount of information required to be disclosed under current law, and thus they cannot and do …

The New Stock Market: Sense And Nonsense, Merritt B. Fox, Lawrence R. Glosten, Gabriel Rauterberg

Faculty Scholarship

How stocks are traded in the United States has been totally transformed. Gone are the dealers on NASDAQ and the specialists at the NYSE. Instead, a company’s stock can now be traded on up to sixty competing venues where a computer matches incoming orders. High-frequency traders (HFTs) post the majority of quotes and are the preponderant source of liquidity in the new market.

Many practices associated with the new stock market are highly controversial, as illustrated by the public furor following the publication of Michael Lewis’s book Flash Boys. Critics say that HFTs use their speed in discovering changes in …

Reprofiling Sovereign Debt, Lee C. Buchheit, Mitu Gulati, Ignacio Tirado

Faculty Scholarship

• The IMF staff’s 2013 proposal to reprofile (i.e., stretch out for a short period without haircutting principal or interest) the maturing debt of a country that has lost market access is a sensible policy in cases where the IMF is uncertain whether the country’s debt stock is sustainable.

• The motivation for the policy is to avoid situations, such as occurred during the Eurozone debt crisis, in which Fund resources are used to bail-out commercial creditors in full.

• But a debt reprofiling is a species of debt restructuring and as such is susceptible to holdout creditor behaviour.

• …

The Halfway Point Between Barbary Coast And Shangri-La: Extraterritoriality And The Viability Of The Economic Reality Method Post-Parkcentral Global Hub Ltd. V. Porche Automobile Holdings Se, Kaitlin A. Bruno

American University Law Review

No abstract provided.

Do Conservative Justices Favor Wall Street: Ideology And The Supreme Court's Securities Regulation Decisions, Marco Ventoruzzo, Johannes W. Fedderke

Faculty Scholarship

The appointment of Supreme Court justices is a politically-charged process and the "ideology" (or "judicial philosophy") of the nominees is perceived as playing a potentially relevant role in their future decision-making. It is fairly easy to intuit that ideology somehow enters the analysis with respect to politically divisive issues such as abortion and procreative rights, sexual conduct, freedom of speech, separation of church and state, gun control, procedural protections for the accused in criminal cases, governmental powers. Many studies have tackled the question of the relevance of the ideology of the justices or appellate judges on these issues, often finding …

Shareholder Litigation Without Class Actions, David H. Webber

Faculty Scholarship

In this Article, I imagine a post-class action landscape for shareholder litigation. Assuming, for the sake of this exercise, an environment in which both securities-fraud and transactional class actions are hobbled by procedural or substantive reforms — most likely through the adoption of mandatory-arbitration provisions or fee-shifting provisions — I assess what shareholder litigation would disappear, what would remain, and what a post-class action landscape would look like. I argue that loss of the class action would remove a layer of legal insulation that prevents institutional investors from having to pursue positive value claims against companies. Currently, the class action …

Rethinking Insider Trading Regulation, Caroline Bradley

Articles

No abstract provided.

Correcting Corporate Benefit: How To Fix Shareholder Litigation By Shifting The Doctrine On Fees, Sean J. Griffith

Faculty Scholarship

The current controversy in corporate law concerns whether firms can discourage litigation by shifting its cost to shareholders. But corporate law courts have long engaged in fee-shifting—from shareholder plaintiffs to the corporation—under the “corporate benefit” doctrine. This Article examines fee-shifting in share-holder litigation, arguing that current practices are unsound from the perspective of both doctrine and public policy. Unfortunately, the fee-shifting bylaws recently enacted in response to the problem of excessive shareholder litigation fare no better. The Article therefore offers a different approach to fee-shifting, articulating three specific reforms of the corporate benefit doctrine to quell the current crisis in …

A Model-Law Approach To Restructuring Unsustainable Sovereign Debt, Steven L. Schwarcz

Faculty Scholarship

Unresolved sovereign debt problems are hurting debtor nations, their citizens and their creditors, and also can pose serious systemic threats to the international financial system. The existing contractual restructuring approach is insufficient to make sovereign debt sustainable. Although a more systematic legal resolution framework is needed, a formal multilateral approach, such as a treaty, is not currently politically viable. An informal model-law approach should be legally, politically and economically feasible. This informal approach would not require multilateral acceptance. Because most sovereign debt contracts are governed by either New York or English law, it would be sufficient if one or both …

Brief Of Corporate Law Professors As Amici Curie In Support Of Respondents, John C. Coates, Lucian A. Bebchuk, Bernard S. Black, John C. Coffee, James D. Cox, Ronald J. Gilson, Jeffrey N. Gordon, Lawrence Hamermesh, Henry B. Hansmann, Robert J. Jackson Jr., Marcel Kahan, Vikramaditya S. Khanna, Michael Klausner, Reinier H. Kraakman, Donald C. Langevoort, Brian Jm Quinn, Edward B. Rock, Mark J. Roe, Helen S. Scott

Faculty Scholarship

The Supreme Court has looked to the rights of corporate shareholders in determining the rights of union members and non-members to control political spending, and vice versa. The Court sometimes assumes that if shareholders disapprove of corporate political expression, they can easily sell their shares or exercise control over corporate spending. This assumption is mistaken. Because of how capital is saved and invested, most individual shareholders cannot obtain full information about corporate political activities, even after the fact, nor can they prevent their savings from being used to speak in ways with which they disagree. Individual shareholders have no “opt …

"We're Cool" Statements After Omnicare: Securities Fraud Suits For Failures To Comply With The Law, James D. Cox

Faculty Scholarship

As part of a symposium celebrating the multiple contributions of the late Alan Bromberg, this article examines implications flowing from the Supreme Court’s recent decision in Omnicare Inc. v. Laborers District Council Construction Industry Pension Fund. Because Omnicare lands so squarely on the Court’s earlier opaque opinion in Virginia Bankshares, Inc. v. Sandberg addressing the treatment of the materiality of opinion statements, Omnicare is the new currency in the realm that will have far-reaching implications. In Virginia Bankshares, the Supreme Court quickly concluded shareholders would attach significance to the board of directors’ statement that the cash-out merger …

Evaluating The 2013 Euro Cac Experiment, Elena Carletti, Paolo Colla, Mitu Gulati

Faculty Scholarship

On January 1, 2013, it became mandatory that every new sovereign bond issued by a member of the European Monetary Union include a new contract clause called a Collective Action Clause or CAC. This, we believe, constituted the biggest one-time change to the terms of sovereign debt contracts in history, impacting a market of many trillions of euros. And it was not just that the change was big in terms of the size of the market it impacted; it was big in terms of its impact on the documentation of each individual Euro area sovereign bond contract. To illustrate, prior …

The Relevance Of Law To Sovereign Debt, W. Mark C. Weidemaier, Mitu Gulati

Faculty Scholarship

The literature on sovereign debt treats law as of marginal significance, largely because the doctrine of sovereign immunity leaves creditors few potent legal remedies against sovereign borrowers. Although sovereign debts can indeed by hard to enforce, the goal of this Essay is to demonstrate that law plays a central, and constantly evolving, role in structuring sovereign debt markets. To list just a few examples, legal rules and institutions (i) decide when a borrower is sovereign, (ii) define the consequences of sovereignty by drawing (or refusing to draw) artificial boundaries between the sovereign and other legal entities, (iii) play some role …