Securities Law Prof Blog

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

A Member of the Law Professor Blogs Network

Tuesday, March 3, 2015

NASAA Offers Legislative Agenda for 114th Congress

Details available here.

March 3, 2015 | Permalink | Comments (0) | TrackBack (0)

This Week in Securities Litigation

Monday, February 23, 2015

SEC Speaks 2015

At SEC Speaks 2015 on February 20, 2015 in Washington, D.C., Chair Mary Jo WhiteCommissioner Luis A. AguilarCommissioner Daniel M. GallagherCommissioner Michael S. Piwowar, and Commissioner Kara M. Stein delivered remarks.  The texts of their speeches are linked to their names.

February 23, 2015 | Permalink | Comments (0) | TrackBack (0)

New in Print

The following law review articles relating to securities regulation are now available in paper format:

Jesse Scott, Student Article, The JOBS Act: Encouraging Capital Formation,  But Not IPOs, 7 J. Bus. Entrepreneurship & L. 367 (2014).

Sonia A. Steinway, Comment, SEC "Monetary Penalties Speak Very Loudly," But What Do They Say? A Critical Analysis of the SEC's New Enforcement Approach, 124 Yale L.J. 209 (2014).

Sullivan & Cromwell Conference on Challenges in Global Financial Services, Keynote address by Daniel K. Tarullo; articles by Sanjai Bhagat, Brian Bolton, Roberta Romano, Henry T.C. Hu, Thomas J. Brennan, Andrew W. Lo, Jonathan Macey, Stijn Claessens, Edward J. Kane, Frederick Schauer, Gary Gorton and Richard Herring. 31 Yale J. on Reg. 505-881 (2014).

February 23, 2015 | Permalink | Comments (0) | TrackBack (0)

This Week in Securities Litigation

Wednesday, February 18, 2015

Ponsford on Virtual Currencies

Matthew Ponsford has posted A Comparative Analysis of Bitcoin and Other Decentralized Virtual Currencies: Legal Regulation in the People's Republic of China, Canada, and the United States on SSRN with the following abstract:

Bitcoin, also known as a decentralized virtual currency (DVC), is regulated differently in the People’s Republic of China (PRC), Canada, and the United States, and represents a vastly underdeveloped area of the law. No country has currently backed Bitcoin. Launched in 2009, and founded by Satoshi Nakamoto, Bitcoin is a “decentralized peer-to-peer virtual currency.” Other virtual currencies include Litecoin, Namecoin, Auroracoin, Peercoin, and Dogecoin – about 500 varieties in total – but research here primarily focuses on Bitcoin. A comparative analysis helps discern how these respective countries classify Bitcoin (e.g., a virtual object, currency, or potential security), and how these jurisdictions regulate, or intend to regulate, DVCs. Bitcoin is identified as a “currency,” throughout the paper, but the classification is heavily contested. Questions for analyses include: are there appropriate existing legal frameworks to regulate Bitcoin? What securities regulation challenges does Bitcoin pose? What are the consumer and investor protection concerns associated with Bitcoin compared to traditional financial exchanges? What are the cross-jurisdictional challenges of virtual currency transactions that operate over the Internet (e.g., money laundering, or fraudulent activities)? Research incorporates securities commission reports, social and political commentary from secondary sources, and relevant jurisprudence and legislation. Findings help situate the current climate of Bitcoin globally, and assess how its regulation differs relative to technological, economic, social, financial, and political forces.

February 18, 2015 | Permalink | Comments (0) | TrackBack (0)

Hill on Virtual Currencies

Julie Andersen Hill has posted Virtual Currencies & Federal Law on SSRN with the following abstract:

The rise of virtual currencies, like many innovations, poses legal questions. Most existing laws do not contemplate the existence of virtual currencies. Can existing U.S. criminal law, tax law, banking law, securities law, and consumer protection law nevertheless be applied to virtual currencies? This article provides an update on federal regulators' recent attempts to tackle these questions. Because virtual currencies are new, the law is still developing. There are unanswered questions and the current answers are subject to change. Nevertheless, we must start somewhere.

February 18, 2015 | Permalink | Comments (0) | TrackBack (0)

Monday, February 16, 2015

Lazaro & Edwards on the Regulation of Investment Advice

Christine Lazaro and Benjamin P. Edwards have posted The Fragmented Regulation of Investment Advice: A Call for Harmonization on SSRN with the following abstract:

Articles on investment advice have largely focused on two categories of individuals – investment advisers and brokers. Our article takes a unique focus by arguing that harmonizing the regulation of investment advice must necessarily include insurance producers as well. We argue that the regulation of all investment advice given to retail investors must be harmonized, which can only be done by the adoption of a new Investment Advice Act.

To support our argument, we first trace the history of the regulation of investment advisers, brokers and insurance producers and explore the varying standards that apply to the advice each individual gives to retail investors. Next, we focus on one investment product specifically, equity-indexed annuities, which has blurred the lines between securities and insurance. This product highlights the issues inherent in the current fragmented regulatory structure.

Next, we propose a solution in the form of an Investment Advice Act, which would replace the fragmented federal regime governing investment advisers and brokers. It would also create new a level of federal regulation to govern investment advice by insurance producers. We lay out the general parameters of the Act, and discuss the scope of conduct such an Act should regulate.

February 16, 2015 | Permalink | Comments (0) | TrackBack (0)

New in Print

The following law review articles relating to securities regulation are now available in paper format:

Valian A. Afshar, Note, A Blended Approach to Reducing the Costs of Shareholder Litigation, 113 Mich. L. Rev. 315 (2014).

Mehrsa Baradaran, Regulation by Hypothetical, 67 Vand. L. Rev. 1247 (2014).

Amy Coleman, A Plague of Locusts: The JOBS Act as Foe More than Friend, 16 Duq. Bus. L.J. 43 (2013).

Polina Demina, Note, Broker-Dealers and Investment Advisers: A Behavioral-Economics Analysis of Competing Suggestions for Reform, 113 Mich. L. Rev. 429 (2014).

Jamie Hopkins & Katie Hopkins, Not All That Glitters Is Gold - Limitations on Equity Crowdfunding Regulations, 16 Duq. Bus. L.J. 1 (2013).

Steven L. Schwarcz & Ori Sharon, The Bankruptcy-Law Safe Harbor for Derivatives: A Path-Dependence Analysis, 71 Wash. & Lee L. Rev. 1715 (2014). 

Latasha D. Terry, Comment, Revenue Recognition Rules for Bundled Sales in High Technology Undermine the Purpose of Section 10(b) of the Securities and Exchange Act, 48 U.S.F. L. Rev. 585 (2014).

Anne M. Tucker, The Outside Investor: Citizen Shareholders & Corporate Alienation, 11 U. St. Thomas L.J. 99 (2013).

February 16, 2015 | Permalink | Comments (0) | TrackBack (0)

This Week in Securities Litigation

SEC Announces Agenda and Panelists for Proxy Voting Roundtable

Details available here.

February 16, 2015 | Permalink | Comments (0) | TrackBack (0)

Monday, February 2, 2015

New in Print

The following law review articles relating to securities regulation are now available in paper format:

Anita K. Krug, Downstream securities Regulation, 94 B.U. L. Rev. 1589 (2014).

Samuel C. Leifer, Note, Protecting Whistleblower Protections in the Dodd-Frank Act, 113 Mich. L. Rev. 121 (2014).

Michael Ruhl-Wolfe, Student article, Dark Pools: How Regulation Catches Up to Financial Innovation, 7 Nw. Interdisc. L. Rev. 327 (2014).

Steven W. Shuldman, Note, An Officer Walks Into a Bar: Acknowledging the Need for Deterrence in Officer and Director Bars, 83 Fordham L. Rev. 333 (2014).

 

February 2, 2015 | Permalink | Comments (0) | TrackBack (0)

IOSCO Publishes Final Report on Risk Mitigation Standards for Non-Centrally Cleared OTC Derivatives

Details available here.

February 2, 2015 | Permalink | Comments (0) | TrackBack (0)

SEC to Hold Roundtable on Proxy Voting

Details available here.

February 2, 2015 | Permalink | Comments (0) | TrackBack (0)

NASAA Reminds Investors to Discuss Cybersecurity With Their Financial Professionals

Details available here.

February 2, 2015 | Permalink | Comments (0) | TrackBack (0)

This Week in Securities Litigation

Tuesday, January 27, 2015

New in Print

The following law review articles relating to securities regulation are now available in paper format:

Zachary Ahonen, Note, The Recent Financial Crisis and Its Impact on Interest Rate Swaps: A Road to Recovery through the Frustration of Commercial Purpose Doctrine, 24 Ind. Int'l & Comp. L. Rev. (2014).

Corey K. Brady, Comment, Standing on Ceremony: Can Lead Plaintiffs Claim Injury from Securities that They Did Not Purchase?, 81 U. Chi. L. Rev. 1079 (2014).

John C. Coffee, Jr., Extraterritorial Financial Regulation: Why E.T. Can't Come Home, 99 Cornell L. Rev. 1259 (2014).

Elisabeth de Fontenay, Do the Securities Laws Matter? The Rise of the Leveraged Loan Market, 39 J. Corp. L. 725 (2014). 

Michael P. Forrest & J.T. Norris, Bribery and China Go Together Like Yin and Yang, 44 Cumb. L. Rev. 423 (2013-2014).

Cary Martin, One Step Forward for Hedge Fund Investors: The Removal of the Solicitation Ban and the Challenges that Lie Ahead, 16 U. Pa. J. Bus. L. 1143 (2014).

Felix Mormann, Beyond Tax Credits: Smarter Tax Policy for a Cleaner, More Democratic Energy Future, 31 Yale J. on Reg. 303 (2014).

Matthew R. Quetsch, Note, Corporations and Hedging: Distinguishing Forwards from Swaps under the Commodity Exchange Act Post-Dodd Frank, 39 J. Corp. L. 895 (2014). 

Houman B. Shadab, Performance-Sensitive Debt: From Asset-Based Loans to Startup Financing, 16 U. Pa. J. Bus. L. 1077 (2014).

Christine E. Turner, Note, First Rejection, Then Dismissal: Reconsidering American Pipe Tolling for Securities Class Actions, 64 Duke L.J. 99 (2014). 

January 27, 2015 | Permalink | Comments (0) | TrackBack (0)

Park on Bondholders and Securities Class Actions

James J. Park has posted Bondholders and Securities Class Actions on SSRN with the following abstract:

Prior studies of corporate and securities law litigation have focused almost entirely on cases filed by shareholder plaintiffs. Bondholders are thought to play little role in holding corporations accountable for poor governance leading to fraud. This Article challenges this conventional view in light of new evidence that bond investors are increasingly recovering losses through securities class actions. From 1996 through 2000, about 3% of securities class action settlements involved a bondholder recovery. From 2001 through 2005, the percentage of bondholder recoveries increased to about 8% of all securities class action settlements. Bondholders were involved in 4 of the 5 and 19 of the 30 largest securities class action settlements, and tended to recover in frauds associated with a credit downgrade. By 2005, almost half of all securities class actions alleged claims on behalf of all public investors, not just shareholders. The rise in bondholder recoveries is evidence that securities fraud has increased in severity over time, causing harm to a broader range of corporate stakeholders. Certain frauds can be understood as transferring wealth from bondholders to shareholders. In providing a remedy for such transfers, bondholder class actions are an example of the continuing evolution of the securities class action.

January 27, 2015 | Permalink | Comments (0) | TrackBack (0)

Chen, Hope, Li & Wang on International Markets

Feng Chen, Ole-Kristian Hope, Qingyuan Li, and Xin Wang have posted Flight to Quality in International Markets: Political Uncertainty and Investors’ Demand for Financial Reporting Quality on SSRN with the following abstract:

We examine whether international equity investors shift their portfolios toward stocks with higher financial reporting quality during periods of high political uncertainty. Our study is motivated by two primary factors. First, prior research shows evidence of investors’ “flight to quality” (e.g., to less risky securities) during periods of uncertainty. Second, recent theoretical research concludes that stocks with higher financial reporting quality are assessed as less sensitive to systematic risk (such as political uncertainty). We employ national elections as exogenous increases in systematic risk. Elections are accompanied by significantly increased political uncertainty that is largely outside the control of firms and investors. In addition, national elections take place at different points in time across countries, which controls for possible confounding events such as global macro-economic trends. Using a large international sample of mutual funds that focus on local markets, we find that international mutual-fund managers shift their equity holdings to stocks with higher financial reporting quality during election periods when political uncertainty is higher. The flight-to-quality effect is less pronounced for elections with larger expected electoral margins in the pre-election period (i.e., when the incumbent is more likely to win the elections) and for countries with higher transactions costs. In contrast, the effect is more pronounced when governments have greater involvement in the local economy. Our inferences are robust to alternative proxies for political uncertainty and financial reporting quality and to numerous other sensitivity analyses.

January 27, 2015 | Permalink | Comments (0) | TrackBack (0)

Brummer on Disruptive Technology and Securities Regulation

Chris Brummer has posted Disruptive Technology and Securities Regulation on SSRN with the following abstract:

Nowhere has disruptive technology had a more profound impact than in financial services — and yet nowhere more do academics and policymakers lack a coherent theory of the phenomenon, much less a coherent set of regulatory prescriptions. Part of the challenge lies in the varied channels through which innovation upends market practices. Problems also lurk in the popular assumption that securities regulation operates against the backdrop of stable market gatekeepers like exchanges, broker dealers and clearing systems — a fact scenario increasingly out of sync in 21st century capital markets.

This Article explains how technological innovation not only “disrupts” capital markets — but also the exercise of regulatory supervision over securities issuances and trading. It argues that an array of technological innovations in speed, interconnectivity and processing power are facilitating what can be understood as the disintermediation of the traditional gatekeepers that regulatory authorities have relied on (and regulated) since the 1930s for investor protection and market integrity. Effective securities regulation will thus require understanding the new market ecosystem, and 20th century administrative processes will have to be upgraded to account for a computerized (and often virtual) market microstructure that is subject to accelerating change. To provide context, the paper examines two basic categories of disruptive innovation: 1) the automated financial services that are transforming the meaning and operation of market liquidity and 2) the private markets — specifically, the dark pools, ECNs, 144A trading platforms, and crowdfunding websites — that are creating an ever-expanding array of alternatives for both securities issuances and trading.

January 27, 2015 | Permalink | Comments (0) | TrackBack (0)