Understanding Causation in Private Securities Lawsuits: Building on Amgen

With Amgen, the Supreme Court’s majority once again holds that inquiry into the alleged market impact of a misrepresentation is not required to invoke fraud on the market approach to causation so that the class can be certified. Rather than just leaving matters where they have been since the Supreme Court’s muddled encounter with causation in Basic Inc. v. Levinson, the Supreme Court’s most recent decision appears to relax some earlier-held tenets with respect to markets believed sufficiently efficient for fraud on the market to be invoked. This Article not only identifies the central flaw of Basic that has over the decades distorted applications of fraud on the market but also suggests how, building on Amgen, what the future focus should be in considering whether a suit can proceed as a class action based on fraud on the market

Optimal central bank design: benchmarks for the ECB

The paper discusses key elements of optimal central bank design and applies its findings to the Eurosystem. A particular focus is on the size of monetary policy committees, the degree of centralization, and the representation of relative economic size in the voting rights of regional (or sectoral) interests. Broad benchmarks for the optimal design of monetary policy committees are derived, combining relevant theoretical arguments with available empirical evidence. A new indicator compares the mismatch of relative regional economic size and voting rights in the monetary policy committees of the US Fed, the pre-1999 German Bundesbank, and the ECB over time. Based on these benchmarks, there seems to be room to improve the organization of the ECB Governing Board and current plans for reform. --Central bank design,federal central banks,ECB, Eurosystem,ECB reform

Fiduciary Suits Under Rule 10b-5

SEC rule 10b-5 has continually expanded the federal sphere of corporate regulation. The rule\u27s most recent encroachment upon state corporation law involves the derivative suit for breach of fiduciary duties. While the Maytag deception requirement temporarily impeded development in this area, the latest cases demonstrate that it no longer precludes 10b-5 application. This note analyzes the deception requirement under theories of imputed knowledge, reviews the limitations upon 10b-5 use, and posits a developing standard for 10b-5 violation

Addressing Agency Costs through Private Litigation in the U.S: Tensions, Disappointments, and Substitutes

Many scholars argue that over the past seventy years, shareholder representative litigation has acted as an important policing mechanism of managerial abuses at U.S. public companies. Different types of representative litigation have had their moment in the sun – derivative suits early on, followed by federal securities class actions, and most recently merger litigation – often producing benefits for shareholders, but posing difficult challenges as well. In particular, the benefits are qualified by another concern, the litigation agency costs that surround shareholder suits. This form of agency costs arises since the suits are invariably representative with no requirement that the named plaintiffs have a substantial ownership interest in the corporation, so that their prosecution could be easily seen as lawyer-driven. And that perception is further underscored in the U.S. where the “American Rule,” in contrast to the “Loser Pays Rule,” provides no governor on the suit’s initiation and prosecution. In this article, we assess the interactions of shareholder suits and governance mechanisms. Our thesis is straightforward: we claim that the recent rise of some important governance developments is a natural consequence of both the ineffectiveness and inefficiency of private suits to address certain genre of managerial agency costs. That is, just as one part of a balloon expands when another part contracts, we find that governance responses evolve to fill voids caused by the decompression of shareholder monitoring once supplied by private suits. In other words, as representative shareholder litigation comes under increasing attack, greater attention needs to be devoted to governance and market mechanisms as alternative means to address managerial agency costs

Optimal Central Bank Design: Benchmarks for the ECB

The paper discusses key elements of optimal central bank design and applies its findings to the Eurosystem. A particular focus is on the size of monetary policy committees, the degree of centralization, and the representation of relative economic size in the voting rights of regional (or sectoral) interests. Broad benchmarks for the optimal design of monetary policy committees are derived, combining relevant theoretical arguments with available empirical evidence. A new indicator compares the mismatch of relative regional economic size and voting rights in the monetary policy committees of the US Fed, the pre-1999 German Bundesbank, and the ECB over time. Based on these benchmarks, there seems to be room to improve the organization of the ECB Governing Board and current plans for reform.central bank design, federal central banks, ECB, Eurosystem, ECB reform

Plurality versus proportional electoral rule: study of voters' representativeness

Thinking of electoral rules, common wisdom suggests that proportional rule is more fair, since all voters are equally represented: at times, it turns out that this is false. I study the formation of both Parliament and Government; for the composition of the former I consider plurality and proportional rule; for the formation of the latter, I assume that parties play a non-cooperative game à la Rubinstein. I show that, unless parties are impatient to form a Government, proportional electoral rules translate into a more distortive distribution of power among parties than plurality rule; this happens because of the bargaining power of small parties during Government formation.electoral systems, proportional rule, plurality rule, voters¿ representation.

The Complexity of Fully Proportional Representation for Single-Crossing Electorates

We study the complexity of winner determination in single-crossing elections under two classic fully proportional representation rules---Chamberlin--Courant's rule and Monroe's rule. Winner determination for these rules is known to be NP-hard for unrestricted preferences. We show that for single-crossing preferences this problem admits a polynomial-time algorithm for Chamberlin--Courant's rule, but remains NP-hard for Monroe's rule. Our algorithm for Chamberlin--Courant's rule can be modified to work for elections with bounded single-crossing width. To circumvent the hardness result for Monroe's rule, we consider single-crossing elections that satisfy an additional constraint, namely, ones where each candidate is ranked first by at least one voter (such elections are called narcissistic). For single-crossing narcissistic elections, we provide an efficient algorithm for the egalitarian version of Monroe's rule.Comment: 23 page