284,955 research outputs found

    When No Law is Better than a Good Law

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    This paper argues, both theoretically and empirically, that sometimes no securities law may be better than a good securities law that is not enforced. The first part of the paper formalizes the sufficient conditions under which this happens for any law. The second part of the paper shows that a specific securities law - the law prohibiting insider trading - may satisfy these conditions. The third part of the paper takes this prediction to the data. We find that the cost of equity actually rises when some countries enact an insider trading law, but do not enforce it.insider trading, cost of capital, emerging markets, securities law, enforcement, International Development, G15, G18, K22, K42,

    Sword or Shield? Setting Limits on SLUSA’s Ever-Growing Reach

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    Concerned by the overwhelming presence of vexatious federal securities-fraud class actions, Congress passed the Private Securities Litigation Reform Act of 1995 to increase the procedural burden plaintiffs would face in filing these nonmeritorious suits. Instead of being deterred, plaintiffs simply brought their suits in state court. Congress responded with the Securities Litigation Uniform Standards Act of 1998 (SLUSA), making federal court the exclusive venue for securities-fraud class actions. However, Congress expressly saved from SLUSA\u27s reach claims that were traditionally brought in state court under corporate law through the Delaware carve-out. Though this exemption was meant to protect the historic dual federal-state securities-regulation regime, recent appellate court opinions have stretched SLUSA\u27s reach too far, leaving plaintiffs incapable of bringing many traditional state-law claims essential to the proper policing of corporate law regardless of the forum. This Note addresses the implications of such a broad reading of SLUSA and advocates a two-pronged approach that will simultaneously effectuate SLUSA\u27s purpose while still preserving these important state-law claims. By looking to the heart of a complaint, courts can best effectuate congressional intent both to limit problematic litigation practices and to preserve the important role federalism plays in the securities-law context

    Introduction: The Fifth Annual A.A. Sommer, Jr. Lecture on Corporate, Securities & Financial Law

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    Welcome and Introduction to the Fifth Annual A. A. Sommer, Jr. Lecture on Corporate, Securities & Financial Law, November 9, 2004 at Fordham University School of Law. Fordham Law School, with the support of Morgan, Lewis & Bockius, inaugurated the A. A. Sommer, Jr. Lecture Series in the fall of 2000 with the timely insights of the Securities and Exchange Commission\u27s (the SEC or the Commission ) then-Chair Arthur Leavitt. Since then, the Sommer Lecture has continued to bring to Fordham such heavyweights as Mary Schapiro, President of National Association of Securities Dealers ( NASD ) Regulation, Inc., SEC Commissioner Harvey Goldschmid, and last year William McDonough of the Public Company Accounting Oversight Board

    Federalism and Investor Protection: Constitutional Restraints on Preemption of State Remedies for Securities Fraud

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    Warren discusses the Private Securities Litigation Reform Act and the National Securities Market Improvement Act, among other issues. Predominant federalism postulates foreclose the proposed intrusion into investors\u27 tort remedies traditionally allowed by the states under common law

    The Proposed Federal Securities Code: Time to Recognize That Financial Information Becomes Stale

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    This note addresses the Federal Securities Code ( Code ), developed by the American Law Institute ( ALI ). It specifically focuses on the underlying policy of continuous disclosure implemented by the Code, which requires companies to register once and then continuously disclose to the securities marketplace important developments on their financial position. This note poses a question: At what point does financial information become stale? It focuses on the nature of stale financial information by reviewing the treatment of staleness in common law fraud and bankruptcy cases. It then analyzes the approach taken with regard to stale financial information in existing securities law. Finally, it concludes by proposing that an objective definition of staleness should be incorporated into the Code, placing reasonable limits on the liability created under the Code\u27s continuous disclosure requirements

    Measuring Securities Market Efficiency in the Regulatory Setting

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    In Nov 1998, the SEC proposed a modification to the federal securities law disclosure requirements to facilitate the process of issuing new securities. Thomas and Cotter discuss how to determine when companies should be able to issue simplified disclosure documents

    In Connection With What?: Chadbourne & Parke LLP v. Troice and the Applicability of the Securities Litigation Uniform Standards Act

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    This commentary previews an upcoming Supreme Court case, Chadbourne & Parke LLP v. Troice, in which the Court will clarify whether the Securities Litigation Uniform Standards Act precludes a state law class action alleging a scheme of fraud involving misrepresentations about transactions in covered-securities

    Fiduciaries With Conflicting Obligations

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    This Article examines the dilemma of a fiduciary acting for parties who, as among themselves, have conflicting commercial interests - an inquiry fundamentally different from that of the traditional study of conflicts between fiduciaries and their beneficiaries. Existing legal principles do not fully capture this dilemma because agency law focuses primarily on an agent’s duty to a given principal, not on conflicts among principals; trust law focuses primarily on gratuitous transfers; and commercial law generally addresses arm’s length, not fiduciary, relationships. The dilemma has become critically important, however, as defaults increase in the multitude of conflicting securities (e.g., classes of securities of the same issuer having different priorities or sources of payment) that are typical of modern finance. A fiduciary, such as a trustee, acting for investors in these securities faces the difficult task of trying to understand and balance the respective obligations owed to conflicting classes and the risk of being sued no matter how the balancing is performed

    A Framework for Analyzing Attorney Liability Under Section 10(b) and Rule 10b-5

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    [Excerpt] “Lawyers who make their living representing securities issuers face a myriad of challenges. Securities lawyers must navigate and master an intricate body of statutory, regulatory, and case law at both the state and the federal level and ensure that their clients comply with the law. The compliance requirement, however, is not limited to the issuer clients. Defrauded investors will often seek recovery of their losses from both the issuer of the failed investment securities and from the lawyers who represent the issuer, which only exacerbates the complexity of the securities lawyer’s work. These securities fraud actions against lawyers raise serious questions about the proper scope of liability under the federal securities laws. Just as lawyers strive for clarity, consistency, and predictability in advising their clients on securities compliance issues, lawyers seek the same level of precision regarding their own compliance. … The Court has never directly addressed the issue of attorney liability under section 10(b) of the 34 Act and Rule 10b-5. However, the Court’s recent pronouncements on primary liability of secondary actors under Rule 10b-5 indicate that the standard for such liability is increasingly becoming one that attorneys acting in the traditional role of adviser and draftsperson to securities issuers will not satisfy. This development does not give lawyers unbridled freedom or authority to commit securities fraud without fear of sanction, nor does it undermine the 34 Act’s purpose of insuring fairness and honesty in the securities markets. On the contrary, protecting lawyers who lend their expertise to the issuers and sellers of securities is consistent with insuring such fairness and honesty. Moreover, existing rules and standards governing attorney conduct and the concomitant penalties for violation of those rules provide the appropriate level of regulation for lawyers, and this article does not suggest otherwise. The article argues only that section 10(b) and Rule 10b-5 are inappropriate and, in most cases, inapposite means of redressing attorney misconduct in connection with a fraudulent securities transaction. Part II of this article will provide some background on section 10(b) and Rule 10b-5 and will discuss how section 10(b) and Rule 10b-5 have been applied in the area of liability of outside service providers such as lawyers and other secondary actors. In addition, part II will review the most recent developments of the law in this area and discuss how these developments provide an increased level of protection for securities lawyers. Part III of this article will examine how other areas of federal and state law have addressed the issue of attorney liability and suggest that the concepts can be applied to the section 10(b) and Rule 10b-5 analysis. Part IV will briefly discuss the role of the securities lawyer and the influence of the market for legal services on the manner in which these lawyers sell their services to potential clients. The article will then argue that the potential liability of any person under section 10(b) and Rule 10b-5 must be defined in terms of conduct and not in terms of the person’s role in the particular transaction giving rise to the claim. That framework will permit the securities lawyer to more effectively fulfill his or her role because the standard for attorney liability in a private action under section 10(b) and Rule 10b-5 will be clearer.

    Securities and Financial Regulation in the Second Circuit

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    The Second Circuit has long been the country’s preeminent court in the field of securities and financial regulation. The reputation of the Second Circuit in the realm of securities has been so great that other courts, including the Supreme Court, often mention by name the particular judges that decided a given Second Circuit precedent to justify their reliance on that decision. Many courts have long looked to its jurisprudence for guidance in deciding novel or complex securities law issues. This article tracks the Second Circuit’s significant role in developing civil enforcement mechanisms for federal securities laws and making criminal prosecution for corporate malfeasance a real weapon
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