Expanding the Investment Company Act: The SEC's Manipulation of the Definition of Security

The Securities and Exchange Commission (SEC) is sometimes accused of using the administrative process to graft new, substantive standards and obligations onto existing statutes or SEC rules. Through the use of the no-action letter process, the SEC staff sometimes creates substantive securities law which is inconsistent with the relevant federal securities statutes and case law. Many of these staff positions go far beyond reasonable and fair explanations of existing statutes or SEC rules. However, in substantive areas lacking definitive case law or rules, these no-action letters assume an extraordinary importance to securities lawyers and regulated entities. For all practical purposes, the SEC position becomes the law, whether or not the position is faithful to the statute. The SEC\u27s interpretation of the term security in the Investment Company Act of 19406 (Investment Company Act or Act) is a particularly egregious example of law-making by SEC administrative fiat The SEC\u27s authority under the Investment Company Act like its authority under the other federal securities statutes, turns on the presence of securities. The Act regulates investment companies, and, to be an investment company, an investment fund or program usually must both issue securities to its investors and invest in securities itself

Expanding the Investment Company Act: The SEC\u27s Manipulation of the Definition of Security

The Securities and Exchange Commission (SEC) is sometimes accused of using the administrative process to graft new, substantive standards and obligations onto existing statutes or SEC rules. Through the use of the no-action letter process, the SEC staff sometimes creates substantive securities law which is inconsistent with the relevant federal securities statutes and case law. Many of these staff positions go far beyond reasonable and fair explanations of existing statutes or SEC rules. However, in substantive areas lacking definitive case law or rules, these no-action letters assume an extraordinary importance to securities lawyers and regulated entities. For all practical purposes, the SEC position becomes the law, whether or not the position is faithful to the statute. The SEC\u27s interpretation of the term security in the Investment Company Act of 19406 (Investment Company Act or Act) is a particularly egregious example of law-making by SEC administrative fiat The SEC\u27s authority under the Investment Company Act like its authority under the other federal securities statutes, turns on the presence of securities. The Act regulates investment companies, and, to be an investment company, an investment fund or program usually must both issue securities to its investors and invest in securities itself

WHAT HAPPENS IF ROE IS OVERRULED? EXTRATERRITORIAL REGULATION OF ABORTION BY THE STATES

Since 1973, states have effectively been prohibited from regulating most abortions. As every lawyer, law student, and almost every other American adult knows, the United States Supreme Court held in Roe v. Wade that a woman has a constitutional right to have an abortion. It is also common knowledge that in recent years the Supreme Court has been slowly restricting, or refusing to extend, that right. The future of Roe v. Wade is uncertain, particularly after the Supreme Court\u27s most recent abortion decision, Planned Parenthood v. Casey. The actual restrictions on abortion upheld in Casey are less important than the positions of the various justices. Four justices in Casey voted to overrule Roe and eliminate entirely the constitutional right to obtain an abortion. Three justices reaffirmed the constitutional interest underlying the right to abortion, but modified the standard for reviewing restrictions on abortion. Their plurality opinion indicated that a state still may not constitutionally prohibit abortion altogether, but adopted an undue burden standard to evaluate restrictions on the abortion of a nonviable fetus. Only two justices completely endorsed Roe

Digital Statutory Supplements for Legal Education: A Cheaper, Better Way

Students should not have to pay so much for statutory supplements. Commercial casebook publishers add little value to the freely available, noncopyrighted material in statutory supplements, and commercial publishers have no real comparative advantage in producing them. With little effort, law professors could produce many statutory supplements required for their courses for free, just as they produce course syllabi and other handouts. And they could provide those materials in a more convenient digital form, not in the bulky print format offered by the commercial casebook publishers. With the example given in this paper of successful creation and distribution of a free digital securities law statute book, the hope is that this may spark a revolution in the way such materials are produced

Online Arbitration as a Remedy for Crowdfunding Fraud

It is now legal to sell securities to the general public in unregistered, crowdfunded offerings. But offerings pursuant to the new federal crowdfunding exemption pose a serious risk of fraud. The buyers will be mostly small, unsophisticated investors, the issuers will be mostly small startups about whom little is known, and crowdfunded offerings lack some of the protections available in registered offerings. Some of the requirements of the exemption may reduce the incidence of fraud, but there will undoubtedly be fraudulent offerings. An effective antifraud remedy is needed to compensate investors and help deter wrongdoers. But because of the small dollar amounts involved, neither individual litigation nor class actions will usually be feasible; the cost of suing will usually exceed the expected recovery. Federal and state securities regulators are also unlikely to focus their limited enforcement resources on small crowdfunding offerings. A more effective remedy is needed. Arbitration is cheaper, but even ordinary arbitration will often be too expensive relative to the small amounts invested in crowdfunding. In this Article, I attempt to design a simplified, cost-effective arbitration remedy to deal with crowdfunding fraud. The arbitration remedy should be unilateral; crowdfunding issuers should be obligated to arbitrate, but not investors. Crowdfunding arbitration should be online, with the parties limited to written submissions. But it should be public, and arbitrators should be required to publish their findings. The arbitrators should be experts on both crowdfunding and securities law, and they should take an active, inquisitorial role in developing the evidence. Finally, all of the investors in an offering should be able to consolidate their claims into an arbitration class action

The effectiveness of traditional instructional methods in an online learning environment

For more than a century, the most predominant form of instruction in higher education has been classroom-based and instructor-led. Today, this traditional approach to learning is being challenged by new technologies such as multimedia, telecommunications, and the Internet. It has been suggested that the effectiveness of traditional pedagogical methods in alternative learning environments may be resolved through the creation of a new domain for educational interaction referred to as online education (Harasim, 1990); There has been much research focused on the advantages of teaching university courses online (Davis, Odell, Abbitt, Amos, 1999; Hiltz, 1994; Harasim, 1990). However, there is little research that has focused on the effectiveness of traditional instructional methods when used in an online learning environment. This study examined the effectiveness of traditional classroom teaching methods used in an online learning environment; Academic outcomes of preservice education students who received online instruction were compared with preservice education students who received traditional teacher-based instruction. In this quasi-experimental, mixed model study, all students participated in both traditional (control) and online (experimental) interventions. Three different traditional methods of instructional delivery were compared: (a) lecture, (b) guided instruction, and (c) collaborative discussion. Interventions were created in which the intact traditional instruction was delivered through an online learning environment created specifically for this study; The results of this study show that overall, there were no significant differences between experimental and control groups. That is, student performance was the same whether instruction was delivered in a traditional classroom or through an online learning environment. Traditional instructional methods, such as those used in this study, produce similar academic outcomes when delivered through online learning environments