Securities Class Actions as Pragmatic Ex Post Regulation

Securities class actions are on the chopping block-again. Traditional commentators continue to view class actions with suspicion; they see class suits as nonmeritorious byproducts of self-interest and the attorneys who bring them as rent-seekers. Their conventional approach has popularized securities class actions\u27 negative effects. High-profile commissions capitalizing on this rhetoric, such as the Committee on Capital Markets Regulation, have recently recommended eliminating or severely curtailing securities class actions. But this approach misses the point: in the ongoing push and pull of securities regulation, corporations are winning the battle. Thus, understanding the full picture and texture of securities class actions necessitates a positive pragmatic account. This Article provides that account and thus fills a significant gap in the benefit side of academic cost-benefit literature. To do so, however, it self-consciously begins from a controversial assumption: namely, that securities class actions provide a public good. Integrating both public and private actors into ex post enforcement diminishes collective action dilemmas, agency inaction, and private resolution of public law matters through arbitration. Moreover, by supplementing ex post enforcement, securities class actions produce positive externalities, spillover effects that confer public advantages such as: innovation, cost-reduction through information sharing, deterrence, transparent judicial process, and both corporate and enforcement accountability. So, while I harbor no illusion that the securities class action always functions optimally and have a number of lingering doctrinal and jurisprudential concerns about its operation, I also recognize its comparative institutional capability to make transparent an increasingly opaque process, craft decisional rules and interpretations that guide future behavior, cultivate innovation, deter fraud, and hold corporations, exchanges, and the SEC publicly accountable. This piece thus envisions the ramifications of eliminating securities class actions by imagining a world with government-centric securities enforcement. That world, I contend, is one steeped in bureaucracy, one failing to produce behavior-guiding precedent, one filled with closed-door arbitrations, one neglecting nonprioritized misconduct, and one ignoring litigant preference for judicial process. In short, it is a world less preferable than our current system-flawed though it is

Insider Trading Laws and Stock Markets Around the World (Former title: Do Insider Trading Laws Matter? Some Preliminary Comparative Evidence)

The primary goal of this article is to bring empirical evidence to bear on the largely theoretical law and economics debate about insider trading. The article first summarizes various agency cost and market theories of insider trading propounded over the course of this perennial debate. The article then proposes three testable hypotheses regarding the relationship between insider trading laws and several measures of stock market performance. Using international data, the paper finds that more stringent insider trading laws are generally associated with more dispersed equity ownership, greater stock price accuracy and greater stock market liquidity. These results suggest the appropriate locus of academic and policy inquiries about the efficiency implications of insider trading

The Importance of Commercial Law in the Legal Architecture of Post-Conflict New States

In the era of international relations ushered in by the end of the Cold War, nation-building has become all the rage. In a burst of Wilsonian optimism, Western countries have sought to recreate failed states in their own image, fashioning new governmental institutions from the ashes of violent conflict or civil collapse. These projects became possible in a fresh environment of international consensus that has prevailed since the middle of the 1990s. Developing improved legal institutions has been considered a particularly important component of any state-building project and has been a primary focus of almost all such efforts. A new label has been created to describe exercises in developing legal institutions, with the general rubric describing them alternately as “rule of law” or “legal and judicial reform” projects. The aim of these exercises is to fashion the legal system of the target country along principles found in the legal systems of developed Western states, that is, to promote judicial independence, legal transparency, civil rights, and market freedoms. This, it is said, will promote economic development, political stability, and reconciliation. To date, these efforts have been driven by legions of international experts employed by multilateral and bilateral development institutions, from the World Bank and the United States Agency for International Development (USAID) to a myriad array of U.N. agencies and private contractors. When nation-building is conducted in a post-conflict context, it is easier of course to find a willing client state counterpart with whom to cooperate. If the international community decides to intervene in a failed or new state, then its role is inevitably far more comprehensive than for a project in an otherwise developing economy. It may come into the country after a war or after foreign military intervention. As in Iraq or Afghanistan, the country’s new rulers may be hand-picked by the international community. Similarly, compliance with a state-building agenda, including practical application of the lessons of neo-institutional economics, may be a condition of holding office. U.N. agencies may have formal powers in international law (as in Bosnia and Kosovo), and the level of post-war reconstruction funds and tangible foreign military presence might give the international community formidable lobbying powers. These projects have been pursued in the context of peace operations and the construction of new states, and some significant attempts to re-craft commercial law have taken place. In order to discuss the relative merits of past attempts at legal reform in post-conflict “new” states, it is necessary to understand more generally the relationship between economic development and the rule of law. The overarching theme of this Essay is that state-building in general, and development of an effective commercial law in particular, is a science in its infancy and is one about which we know remarkably little. Vastly more needs to be learned and committed in resources. Until that happens, the exercise of trying to create effective commercial law, and thus promote economic development in new states, will be a tricky and elusive goal

Insider Trading Laws and Stock Markets Around the World (Former title: Do Insider Trading Laws Matter? Some Preliminary Comparative Evidence)

The primary goal of this article is to bring empirical evidence to bear on the largely theoretical law and economics debate about insider trading. The article first summarizes various agency cost and market theories of insider trading propounded over the course of this perennial debate. The article then proposes three testable hypotheses regarding the relationship between insider trading laws and several measures of stock market performance. Using international data, the paper finds that more stringent insider trading laws are generally associated with more dispersed equity ownership, greater stock price accuracy and greater stock market liquidity. These results suggest the appropriate locus of academic and policy inquiries about the efficiency implications of insider trading

Rahvusvaheliste lepingutel põhinev omandiõiguste kaitse konstitutsiooniliste piirangutega: kaasaegse Venemaa juhtum

Väitekirja elektrooniline versioon ei sisalda publikatsiooneVäitekirjas hinnatakse rahvusvaheliste lepingute täitmist Venemaa poolt ja Venemaa käsitust rahvusvahelise õiguse vahekorrast oma riigisisese õigusega eelkõige omandiõiguse valguses. Lisaks uuritakse Venemaa ning Euroopa Nõukogu ja teiste rahvusvaheliste organisatsioonide suhteid läbi aastate ning nende rahvusvaheliste organisatsioonide ning rahvusvaheliste lepingutega liitumise mõju sellele, kuidas Venemaa teostab rahvusvahelist õigust. Täpsemalt keskendutakse väitekirjas omandiõigusele Venemaa õiguskorras ning hinnatakse selle kooskõla rahvusvahelise õiguse normidega. Viimastel aastatel on ilmnenud mitmeid põhimõttelisi probleeme seoses rahvusvaheliste lepingute täitmisega Venemaa poolt. Seda küsimust ei saa käsitleda mustvalgelt üksnes selle põhjal, kas Euroopa Inimõiguste Kohtu otsuseid Venemaa õigussüsteemis täidetakse või mitte. Arvesse on vaja võtta suuremat pilti, sealhulgas Venemaa ajalugu ja eriti lähiminevikku pärast Nõukogude Liidu lagunemist. Sellel, miks Venemaa ei täida rahvusvahelisi lepinguid, on palju erinevaid põhjuseid, muuhulgas Nõukogude Liidu järgsel Venemaal omandiõiguse kontseptsiooni väljatöötamisega seotud probleemid ning keeruline erastamise protsess 1990ndatel. Kui inimõiguste mõistet käsitada teatud laadi õigussiirdena, vähemalt eelnenud Nõukogude perioodiga võrreldes, siis on selge, et selle ülevõtmine Venemaa õigussüsteemi ei ole läinud nii ladusalt, kui Venemaa Euroopa inimõiguste konventsiooniga ühinemise ajal eeldati. Kui uurida omandiõiguse kaitset Venemaal, ilmneb selles hulk puudujääke. Nagu käesoleva väitekirja neli artiklit näitasid, on omandiõiguse aluseks eelkõige õigusriigi põhimõte (rule of law), eriti nii riigisiseste kui rahvusvaheliste õigusnormide austamine. Väitekirjast nähtub, et kuna Venemaal õigusnorme ei austata, ei pruugi praegu kehtivad regulatsioonid Venemaal omandiõigust (nii, nagu need on tagatud Euroopa inimõiguste konventsiooniga) piisavalt tõhusalt kaitsta.This thesis assesses Russia's compliance with international treaties and its understanding of the role of international law concerning Russian domestic law with a focus on property rights. Moreover, this dissertation delves into Russia's relationship over the years with the Council of Europe and other international organizations and how Russia's membership in such international organizations or treaties reflects its practice of international law. In particular, the focus of this thesis is on property rights and how these come into line with international law standards. When considering Russia's compliance with international treaties, it becomes clear that recent years have revealed several fundamental issues. Paradoxically, this cannot only be looked at as a black and white matter, which could easily be translated into implementation or non-implementation of decisions of the European Court of Human Rights in the Russian domestic legal system. Here, a broader picture must be drawn, including Russia's history and especially Russia's more recent past after the fall of the Soviet Union. Several factors underlie Russia´s inability to comply with international standards, inter alia the problems related to the development of the concept of property rights in Russia after the fall of the Soviet Union and the difficult privatization process during 1990s. If seen as a legal transplant of sorts, the concept of human rights, at least compared to the earlier Soviet period, is not as easily implemented in the Russian legal system as expected when Russia signed the European Convention of Human Rights (ECHR). An examination of the protection of property rights in Russia uncovers many flaws. As demonstrated by the four articles in this dissertation, substantive property rights need the rule of law and respect for formal legal rules (nationally and internationally) as a basis. This thesis suggests that since laws are not being respected, the current regulations may not be effective enough to protect property rights (as guaranteed in the ECHR) in Russia.https://www.ester.ee/record=b545989

The Puzzling Non-Consequences of Societal Distrust of Courts: Explaining the Use of Russian Courts

Russians\u27 lack of trust in courts as an institution has been repeatedly documented through public opinion polling. Yet the caseload data show a steady increase in the use of courts by both individuals and firms in Russia. But these data cannot explain why Russians choose to use the courts. The Article makes use of two publicly available datasets grounded in representative surveys of Russian citizens and firms to investigate this puzzle. The existing literature assumes that the lack of legitimacy of courts in Russia forestalls use. While confirming the societal disdain for courts, the analysis reveals that this attitude has little effect on behavior. Instead, a complicated mixture of need and capacity drives the use of the courts. Two publicly available datasets were used: the EBRD-World Bank Business Environment and Enterprise Performance Survey and the Russian Longitudinal Monitoring Survey, RLMS-HSE

The Puzzling Non-Consequences of Societal Distrust of Courts: Explaining the Use of Russian Courts

Russians\u27 lack of trust in courts as an institution has been repeatedly documented through public opinion polling. Yet the caseload data show a steady increase in the use of courts by both individuals and firms in Russia. But these data cannot explain why Russians choose to use the courts. The Article makes use of two publicly available datasets grounded in representative surveys of Russian citizens and firms to investigate this puzzle. The existing literature assumes that the lack of legitimacy of courts in Russia forestalls use. While confirming the societal disdain for courts, the analysis reveals that this attitude has little effect on behavior. Instead, a complicated mixture of need and capacity drives the use of the courts. Two publicly available datasets were used: the EBRD-World Bank Business Environment and Enterprise Performance Survey and the Russian Longitudinal Monitoring Survey, RLMS-HSE