The Future of Price Distortion in Federal Securities Fraud Litigation

In its recent Halliburton decision, the Supreme Court focused on the role of price distortion in meeting the requirements for class certification in private securities fraud litigation. Accepting the argument that the fraud-on-the-market theory requires fraudulent information to have an effect on stock price, the Court reasoned that defendants should therefore be allowed to introduce evidence of lack of price impact in an effort to defeat class certification. Specifically, the Court suggested that defendants might introduce event studies as direct evidence that could sever the link between the misrepresentation and stock price. This conclusion, however, misapprehends the event study methodology. Specifically, the emphasis on event studies is misguided because the event studies proffered by defendants do not conclusively establish that the fraud did not distort stock price. More broadly, the limitations of existing quantitative methods suggest that they should not be the exclusive way of analyzing price distortion for purposes of class certification. Instead, the importance of price distortion suggests the need for greater consideration of materiality because a finding of materiality is an implicit determination that the information has the capacity to affect stock price

Particle Orbits in a Force-Balanced, Wave-Driven, Rotating Torus

The wave-driven rotating torus (WDRT) is a recently proposed fusion concept where the rotational transform is provided by the E x B drift resulting from a minor radial electric field. This field can be produced, for instance, by the RF-wave-mediated extraction of fusion-born alpha particles. In this paper, we discuss how macroscopic force balance, i.e. balance of the thermal hoop force, can be achieved in such a device. We show that this requires the inclusion of a small plasma current and vertical magnetic field, and identify the desirable reactor regime through free energy considerations. We then analyze particle orbits in this desirable regime, identifying velocity-space anisotropies in trapped (banana) orbits, resulting from the cancellation of rotational transforms due to the radial electric and poloidal magnetic fields. The potential neoclassical effects of these orbits on the perpendicular conductivity, current drive, and transport are discussed.Comment: 13 pages, 7 figure

The Qualified Legal Compliance Committee: Using the Attorney Conduct Rules to Restructure the Board of Directors

The Securities and Exchange Commission introduced a new corporate governance structure, the qualified legal compliance committee, as part of the professional standards of conduct for attorneys mandated by the Sarbanes-Oxley Act of 2002. QLCCs are consistent with the Commission\u27s general approach to improving corporate governance through specialized committees of independent directors. This Article suggests, however, that assessing the benefits and costs of creating QLCCs may be more complex than is initially apparent. Importantly, QLCCs are unlikely to be effective in the absence of incentives for active director monitoring. This Article concludes by considering three ways of increasing these incentives

Anisotropy-driven collisional separation of impurities in magnetized compressing and expanding cylindrical plasmas

When a cylindrically-symmetric magnetized plasma compresses or expands, velocity-space anisotropy is naturally generated as a result of the different adiabatic conservation laws parallel and perpendicular to the magnetic field. When the compression timescale is comparable to the collision timescale, and both are much longer than the gyroperiod, this pressure anisotropy can become significant. We show that this naturally-generated anisotropy can dramatically affect the transport of impurities in the compressing plasma, even in the absence of scalar temperature or density gradients, by modifying the azimuthal frictions that give rise to radial particle transport. Although the impurity transport direction depends only on the sign of the pressure anisotropy, the anisotropy itself depends on the pitch magnitude of the magnetic field and the sign of the radial velocity. Thus, pressure anisotropy effects can drive impurities either towards or away from the plasma core. These anisotropy-dependent terms represent a qualitatively new effect, influencing transport particularly in the sparse edge regions of dynamically-compressing screw pinch plasmas. Such plasmas are used for both X-ray generation and magneto-inertial fusion, applications which are sensitive to impurity concentrations.Comment: 11 pages, 3 figure

Why do retail investors make costly mistakes? An experiment on mutual fund choice

There is mounting evidence that retail investors make predictable, costly investment mistakes, including underinvestment, naïve diversification, and payment of excessive fund fees. Over the past thirty-five years, however, participant-directed 401(k) plans have largely replaced professionally managed pension plans, requiring unsophisticated retail investors to navigate the financial markets themselves. Policy-makers have struggled with regulatory interventions designed to improve the quality of investment decisions without a clear understanding of the reasons for investor mistakes. Absent such an understanding, it is difficult to design effective regulatory responses. This article offers a first step in understanding the investor decision-making process. We use an internet-based experiment to disentangle possible explanations for inefficient investment decisions. The experiment employs a simplified construct of an employee’s allocation among the options in a retirement plan coupled with technology that enables us to collect data on the specific information that investors choose to view. In addition to collecting general information about the process by which investors choose among mutual fund options, we employ an experimental manipulation to test the effect of an instruction on the importance of mutual fund fees. Pairing this instruction with simplified fee disclosure allows us to distinguish between motivation-limits and cognition-limits as explanations for the widespread findings that investors ignore fees in their investment decisions. Our results offer partial but limited grounds for optimism. On the one hand, within our simplified experimental construct, our subjects allocated more money, on average, to higher-value funds. Furthermore, subjects who received the fees instruction paid closer attention to mutual fund fees and allocated their investments into funds with lower fees. On the other hand, the effects of even a blunt fees instruction were limited, and investors were unable to identify and avoid clearly inferior fund options. In addition, our results suggest that excessive, naïve diversification strategies are driving many investment decisions. Although our findings are preliminary, they suggest valuable avenues for future research and important implications for regulation of retail investing