Global Expansion of National Securities Laws: Extraterritoriality and Jurisdictional Conflicts

[Excerpt] “As securities fraud has grown increasingly transnational, it has become necessary to expand the reach of anti-fraud provisions to persons and entities participating in global securities markets. So far, however, no single antifraud provision exists to govern the entire global marketplace. Although each country strives to combat international securities fraud by using its own regulatory regime, problems can develop when extraterritorial application of national securities laws leads to regulatory overlapping or conflicts. In light of these problems, it is necessary to set forth clear guidelines for determining whether national securities laws can apply extraterritorially and, if so, how far they can extend. The U.S., in particular, has longstanding and extensive experience in seeking extraterritorial application of national securities laws. In doing so, the U.S. has developed several tests to justify extraterritoriality, and has bolstered a statutory basis for extraterritorial application of anti-fraud prohibitions in actions brought by the U.S. Securities and Exchange Commission (SEC) or the U.S. Department of Justice (DOJ).

How do Securities Laws Influence Affect, Happiness, & Trust?

This Article advocates that securities regulators promulgate rules based upon taking into consideration their impacts upon investors\u27 and others\u27 affect, happiness, and trust. Examples of these impacts are consumer optimism, financial stress, anxiety over how thoroughly securities regulators deliberate over proposed rules, investor confidence in securities disclosures, market exuberance, social moods, and subjective well-being. These variables affect and are affected by traditional financial variables, such as consumer debt, expenditures, and wealth; corporate investment; initial public offerings; and securities market demand, liquidity, prices, supply, and volume. This Article proposes that securities regulators can and should evaluate rules based upon measures of affect, happiness, and trust in addition to standard observable financial variables. This Article concludes that the organic statutes of the United States Securities and Exchange Commission are indeterminate despite mandating that federal securities laws consider efficiency among other goals. This Article illustrates analysis of affective impacts of these financial regulatory policies: mandatory securities disclosures; gun-jumping rules for publicly registered offerings; financial education or literacy campaigns; statutory or judicial default rules and menus; and continual reassessment and revision of rules. These regulatory policies impact and are impacted by investors\u27 and other people\u27s affect, happiness, and trust. Thus, securities regulators can and should evaluate such affective impacts to design effective legal policy

Why Didn’t Subprime Investors Demand a (Much Larger) Lemons Premium?

The subprime crisis would never have occurred had investors not been such enthusiastic consumers of subprime securities. The investors now say, somewhat self-servingly (but probably correctly), that they did not understand the securities -- securities for which they were willing to pay very high prices. Investors\u27 willingness to purchase these securities on terms that were favorable to the sellers, and unfavorable to them, presents a considerable puzzle. Investors do not want to miss out on the next big thing

Halliburton II: A Loser\u27s History

The Supreme Court was presented with an opportunity to bring fundamental reform to securities class actions last term in Halliburton Co. v. Erica P John Fund, Inc.. The Court ducked that opportunity, passing the buck to Congress to undo the mess that the Court had created a quarter century prior in Basic Inc. v. Levinson. Congress\u27s history in dealing with securities class actions suggests that reform is unlikely to come from the legislature anytime soon. The Securities and Exchange Commission appears to be satisfied with the status quo as well. With these institutional actors resisting reform, corporations and their shareholders may resort to self-help in dealing with the cost and distraction created by securities class actions. Paradoxically, resistance to reform of securities class actions may result in self-help measures that eliminate securities class actions-and their deterrent value-altogether

The Suitability Rule and Economic Theory

The published rules of both the National Association of Securities Dealers (NASD) and the Securities and Exchange Commission (SEC) provide that a broker or dealer in the securities market may recommend the purchase of a security only when there is a reasonable basis for believing that the security is suitable for the customer

Eligible central bank collateral in times of serious financial distress

On 15 October the ECB massively expanded the set of securities that it accepts as collateral. All securities should be accepted as collateral, given severe enough valuations and haircuts. The ECB should be more transparent in explaining how it values illiquid securities as collateral. The ECB could use a reverse auction to value securities but it should avoid outcomes with fire sale prices. Crisis conditions mean that the Eurosystem could need recapitalisation; an automatic arrangement to provide this should be in place

Securities Arbitration After McMahon

In Shearson/American Express, Inc. v. McMahon, the Supreme Court decided that federal securities claims under the Securities Exchange Act of 1934 (1934 Act or Exchange Act) are arbitrable. Since McMahon, there has been a flurry of activity in, and focus upon, the general area of arbitration of public securities disputes. This activity has generated particular interest in such subjects as: arbitration forums; pre-trial procedures and discovery; remedies and relief; composition of panels; training, background and evaluation of arbitrators; and the rendering of written opinions. In discussing many of these areas, this Article will track the history of securities arbitration before McMahon, analyze the McMahon decision, and explore possible solutions and alternatives which may help forge the pattern of securities arbitration in the future

Target2-securities - a central settlement hub for the euro

TARGET2 – Securities will be a platform for the cross – border and domestic setlement of securities against central bank money. The platform will service the Central Securities Depositories (CSDs). It will be run by the Eurosystem. The TARGET2 – Securities project pursues cost reduction by increasing competition and price transparency. TARGET2 – Securities is on track from 17 July 2008, when the Governing Council of the European Central Bank (ECB) decided to launch the TARGET2 – Securities (T2S) project and to provide resources required until its completion. It also decided to assign the development and operation of T2S to the Deutsche Bundesbank, the Banco de Espana, the Banque de France and the Banca d’Italia.Target2-securities, Eurosystem, cost reduction, securities, price transparency

Internet Securities Fraud: Old Trick, New Medium

Billions of securities are traded every day in public and private markets around the world. This practice is hundreds of years old and as long as securities have been traded, someone has tried to defraud the system to make a quick buck. With the advent of the Internet, new securities fraud schemes have appeared