Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Friday, November 26, 2010

GM IPO Totals $23.1 Billion

General Motors Company announced today that the underwriters have exercised in full their over-allotment options to purchase an additional 71.7 million shares of common stock from the selling stockholders, for a total of $2.37 billion, and an additional 13 million shares of mandatory convertible junior preferred stock from the company, for a total of $650 million, in connection with the previously announced public offering of common and mandatory convertible junior preferred stock of General Motors.  The exercise of the over-allotment options brings the total offering size to $23.1 billion.


November 26, 2010 in News Stories | Permalink | Comments (0) | TrackBack (0)

Fordham Seeks Teams and Practitioners for Securities Law Moot Court Competition

Fordham Law School is hosting the 2011 Irving R. Kaufman Memorial Securities Law Moot Court Competition, which will take place in NYC March 25-27, 2011.  The Competition offers teams the opportunity to test appellate advocacy skills before leading jurists, securities regulators, academics, and practitioners.  Judge Brett M. Kavanaugh (D.C. Cir.), Judge Paul J. Kelly, Jr. (10th Cir.), Judge Boyce F. Martin, Jr. (6th Cir.), S.E.C. Commissioner Troy A. Paredes, and Judge Richard A. Posner (7th Cir.) have agreed to serve as the final round panel.
Fordham is now seeking a few teams to round out the competition (registration deadline is Dec. 6), and a bevy of practitioners to serve as preliminary round judges and grade competitor briefs.  They need help from anyone interested, with all levels of experience, whether in litigation, transactions, securities, finance, in-house, or public service, and CLE credit is available.  Additional information and online sign-up is at   

November 26, 2010 in Professional Announcements | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 24, 2010

Taxpayers Get $11.7 Billion from GM IPO

The U.S. Department of the Treasury announced that with the delivery of $11.7 billion in proceeds from the initial public offering of General Motors (GM), the total amount of Troubled Asset Relief Program (TARP) funds returned to taxpayers now exceeds $250 billion.

November 24, 2010 in News Stories | Permalink | Comments (0) | TrackBack (0)

SEC Announces Second Hearing on Muni Securities Market

The SEC announced the agenda and speakers for its second field hearing to examine the municipal securities markets at its Headquarters in Washington, D.C., on December 7. Topics will include market stability and liquidity, investor impact, and self-regulation.

This is the second in a series of hearings, which SEC Chairman Mary Schapiro first announced in May, taking place across the country and examining a wide range of issues that affect investors in the municipal securities market. Following the hearings, the Commission will release a staff report addressing information learned, including their recommendations for further action the Commission should pursue, which may include rulemaking, recommendation for changes in industry “best practices,” or legislation.

November 24, 2010 in SEC Action | Permalink | Comments (0) | TrackBack (0)

Feds Arrest Networking Executive in Insider-Trading Probe

The Wall St. Journal reports that federal authorities have made their first arrest in the three-year investigation into insider trading rings.  Don Ching Trang Chu, identified as an Asia expert on the website of Primary Global Research LLC, was arrested today before he was scheduled to leave the country.  According to prosecutors, he arranged for firm's consultants to provide inside information about earnings releases for publicly traded companies.  WSJ, Networking Firm Executive Charged in Insider Trading Case

U.S. Attorney, SDNY Press Release

November 24, 2010 in News Stories | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 23, 2010

Former Comverse CEO Settles SEC Backdating Charges

The SEC today settled civil charges against Jacob “Kobi” Alexander, the co-founder and former Chairman and Chief Executive Officer of Comverse Technology, Inc., arising out of his role in the company’s long-running stock options backdating scheme.  Shortly before the SEC filed its complaint in 2006, Alexander fled to Namibia, where he currently resides and is fighting extradition to the United States to face criminal charges.

Under the terms of the settlement, Alexander will pay $47.6 million in disgorgement and prejudgment interest and a $6 million penalty, which is one of the largest penalties ever imposed in a stock options backdating case.  Alexander will also be permanently enjoined from violating the antifraud and related provisions of the federal securities laws and will be permanently barred from serving as an officer or director of a public company.

Separately, the United States Attorney’s Office for the Eastern District of New York today filed a stipulation of settlement of their civil forfeiture action against certain of Mr. Alexander’s assets   This settlement is subject’s the court’s approval.

November 23, 2010 in SEC Action | Permalink | Comments (0) | TrackBack (0)

Monday, November 22, 2010

FBI Raids Three Hedge Funds in Insider-Trading Probe

For the past few days, the Wall St. Journal has been reporting on a blockbuster federal investigation of insider-trading rings involving hedge funds and independent analysts.  Today it reports that the FBI raided the offices of three hedge funds:  Diamondback Capital Management LLC and Level Global Investors LP (run by former managers of Steven Cohen's SAC Capital Advisors) and Loch Capital Management LLC, based in Boston.  It reports that indictments may be announced by year-end.  WSJ,  FBI Raids Three Hedge Funds Amid Insider-Trading Case.

November 22, 2010 in News Stories | Permalink | Comments (0) | TrackBack (0)

Morris Pleads Guilty in New York's "Pay to Play" Kickback Scheme

New York AG announced a felony guilty plea by Henry “Hank” Morris, the chief political adviser to former Comptroller of the State of New York Alan Hevesi, for his involvement in a pay-to-play kickback scheme at the Office of the New York State Comptroller.  Morris used the pension fund for a pay-to-play scheme in which he personally received approximately $19 million in fees from billions of dollars in pension deals and steered investments to friends and political associates.

Morris pleaded guilty to a felony violation of the Martin Act, a class E felony, and faces up to four years in prison. The sentence will be determined by the judge on February 1, 2011. According to today’s plea agreement, Morris will forfeit $19 million that will go to the state pension fund. He will also be permanently banned from the securities industry in New York State and will be prohibited from soliciting or receiving investments from the State of New York or any governmental entity within the State. In addition, Morris will be prohibited from holding any public position or entering into any contractual relationship with the State of New York or any governmental entity within the State.

Today’s announcement marks the eighth guilty plea in Cuomo’s three-year investigation into corruption involving the Office of the New York State Comptroller and the state pension fund. The charges allege a complex criminal scheme involving numerous individuals operating at the highest political and governmental levels under former Comptroller Alan Hevesi. Through this scheme, Hevesi, Morris, and certain of their political allies and friends reaped tens of millions of dollars in kickbacks, bribes, and sham consulting and finder fees connected to pension fund investments.

November 22, 2010 in Other Regulatory Action | Permalink | Comments (0) | TrackBack (0)

Sunday, November 21, 2010

Jones on the Future of the SEC

Will the SEC Survive Financial Regulatory Reform?, by Renee M. Jones, Boston College - Law School, was recently posted on SSRN.  Here is the abstract:

The Securities and Exchange Commission’s (“SEC”) conspicuous failures during the financial crisis of 2008 have led many to question the agency’s relevance in the modern financial era. Some commentators have called for the creation of new super-agencies to assume a substantial portion of the SEC’s duties. Others highlight enforcement failures and question the agency’s commitment to its investor protection mission. Despite its recent missteps and persistent calls for regulatory overhaul, the SEC’s future seems secure for now as President Obama’s reform proposals (the “Obama Plan”) as currentlyconceived preserve the agency’s independence. Although thus far the Obama Plan protects the SEC’s status as an independent agency, several aspects of the plan threaten the agency’s long-term prospects. The proposal to expand the executive branch’s role in oversight over financial institutions may represent the beginning of an incremental encroachment on SEC authority. Similarly, the proposed Consumer Financial Protection Agency could absorb a portion of the SEC’s traditional investor protection role. In the end, the SEC’s survival depends on whether its leadership takes effective action to restore its credibility andregain the public trust in the years to come.

November 21, 2010 in Law Review Articles | Permalink | Comments (0) | TrackBack (0)

Gibson on Regulating OTC Derivatives Swaps

Clearing and Trade Execution Requirements for OTC Derivatives Swaps Under the Frank-Dodd Wall Street Reform and Consumer Protection Act, by Willa E. Gibson, University of Akron - School of Law, was recently posted on SSRN.  Here is the abstract:

This paper examines Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act entitled the "Wall Street Transparency and Accountability Act of 2010" (the "Act"). The Act provides a comprehensive regulatory framework for swap transactions that designates the Commodities Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) as the primary regulators of the OTC derivatives swap market. The Act provides a very broad definition of swaps to include most OTC derivatives transactions, and it grants the CFTC regulatory jurisdiction over them with the exception of security-based swaps to which the SEC is granted regulatory jurisdiction. The hallmark of the legislation is the clearing, trade execution, and reporting requirements for OTC derivatives contracts modeled after similar regulatory requirements for securities and commodities to protect against systemic loss. Effectively, standardized OTC derivatives swaps contracts will be the only swap transactions subject to the clearing and trade execution requirements. The potential downside of the regulation is that customized contracts are not subject to clearing in light of the individualized nature of the terms of such contracts. Thus, traders of customized contracts are subject to certain margin and capital requirements along with reporting requirements to protect against systemic loss in trading customized contracts. The question is whether the alternative regulatory system for customized contracts can prevent against systemic loss in a manner comparable to the protections that the clearing, payment, settlement, and trade execution systems bring to trading in standardized contracts. Moreover, will the bifurcated regulatory system for swap transactions incentivize traders to customize contracts to avoid the clearing and to avoid the transparency associated with exchange trading? The Act grants broad authority to the CFTC and the SEC to promulgate rules and provide interpretative guidelines to implement the regulatory provisions of the Act. Ultimately, the effectiveness of the Act to prevent systemic loss and to protect the financial system against the type of market crisis experienced in 2008 will depend on the breadth and depth of the rules the agencies promulgate and the diligence with which they oversee and enforce those rules.

November 21, 2010 in Law Review Articles | Permalink | Comments (0) | TrackBack (0)