Securities Law Prof Blog

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

Friday, August 28, 2015

Macey-Dare on English Derivatives Litgation

Rupert Macey-Dare has posted Key Derivatives Cases 2015 on SSRN with the following abstract:

The paper considers key derivatives cases in the English courts from 2015, namely: Wani v Royal Bank of Scotland, Dexia v Commune di Prato, Enasarco v Lehmans, SwissMarine v O.W. Supply, and MHB Bank v Shanpark.

Derivative products covered include: base rate swaps, interest rate swaps, caps, collars and corridors, extendable swaps, constant proportional portfolio insurance (CPPI) funds, fund options, and contracts for difference (CFDs).

Additional cases will be added in due course.

August 28, 2015 | Permalink | Comments (0)

Monday, August 17, 2015

Registration Open for 2015 Central States Law Schools Association Conference

Please note the following Conference announcement:

Registration is now open for the Central States Law Schools Association 2015 Scholarship Conference, on Friday, October 9 and Saturday, October 10 at The University of Toledo College of Law in Toledo, Ohio. CSLSA invites law faculty from across the country to submit proposals to present papers or works in progress.

The deadline for registration is September 8, 2015. To register, please visit: http://cslsa.us/register/

The CSLSA has reserved a block of rooms at the Wingate Hotel in Sylvania, Ohio. To book your room, please call (419)517-2000 and mention the conference. The block will remain open until September 8, 2015. The cost of a standard room is $129.99 per night and the cost of a suite is $149.99 per night. Please note that conference participants are responsible for all of their travel expenses including hotel accommodations.

For more information about CSLSA and the 2015 Annual Conference, visit our website at http://cslsa.us/

We look forward to seeing you at the Conference!

Sincerely,
The 2015 CSLSA Board

 

August 17, 2015 | Permalink | Comments (0)

Faculty Opening: University of Iowa College of Law

I received the following notice that may be of interest to some of this blog's readers:

THE UNIVERSITY OF IOWA COLLEGE OF LAW anticipates hiring several tenured/tenure track faculty members and clinical faculty members (including a director for field placement program) over the coming year. Our goal is to find outstanding scholars and teachers who can extend the law school’s traditional strengths and intellectual breadth. We are interested in all persons of high academic achievement and promise with outstanding credentials. Appointment and rank will be commensurate with qualifications and experience. Candidates should send resumes, references, and descriptions of areas of interest to: Faculty Appointments Committee, College of Law, The University of Iowa, Iowa City, Iowa 52242-1113.

THE UNIVERSITY OF IOWA is an equal opportunity/affirmative action employer. All qualified applicants are encouraged to apply and will receive consideration for employment free from discrimination on the basis of race, creed, color, national origin, age, sex, pregnancy, sexual orientation, gender identity, genetic information, religion, associational preference, status as a qualified individual with a disability, or status as a protected veteran.

August 17, 2015 | Permalink | Comments (0)

Thursday, August 13, 2015

New in Print

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

Carlos Berdejo, Going Public After the JOBS Act, 76 Ohio St. L.J. 1 (2015).

Daniel Chatlos, Note, Grabbing the Bull by the Horns:  The Future of Mortgage Lending and Securitization in the Aftermath of the Financial Crisis, 25 U. Fla. J.L. & Pub. Pol'y 137 (2014).

Alexis A. Geeza, Comment, Put Your Money Where Your Mind Is:  Protecting the Markets in the Age of Post-JOBS Act Rule 506 Offerings, 45 Seton Hall L. Rev. 581 (2015).

Julian J.Z. Polaris, Note, Backstop Ambiguity:  A Proposal for Balancing Specificity and Ambiguity in Financial Regulation, 33 Yale L. & Pol'y Rev. 231 (2014).

Dodd-Frank, the Financial Crisis, and a Christian View of Financial Markets, Articles by Paul J. Foley, Tory L. Lucas and student Joshua C. Dawson; abstract by Rodney Chrisman; note by Kaitlyn E. Evans. 9 Liberty U. L. Rev. 445-595 (2015).

Symposium, Investor-State Disputes, Preface by Michael B. Brown; articles by Matthew D. McGill, Alexander N. Harris, Melissa Stear Gorsline, Maria Pradilla Picas, Henry G. Burnett, Jessica Bees und Chrostin, Ellen Ginsberg Simon, Q. Monty Crawford, Simon Lester, Ryan Mellske, David N. Cinotti, Adriana T. Ingenito and Christina G. Hioureas; note by Jordan Reth. 30 Md. J. Int'l L. 1-167 (2015).

August 13, 2015 | Permalink | Comments (0)

Wednesday, August 5, 2015

Gallagher on Dodd-Frank

On August 4, 2015, Commissioner Daniel M. Gallagher delivered his last formal speech as an SEC commissioner to the U.S. Chamber of Commerce in Washington, D.C.  The speech related to Dodd-Frank, and he stated in part:

Last month marked the fifth anniversary of the Dodd-Frank Act,[1] meaning that my entire tenure as a Commissioner has occurred in the midst of the first Five-Year Plan for our national economy. And, as is always the case with grandiose central plans, Dodd-Frank has backfired, strangling our economy, increasing the fragility of the financial system, and politicizing our independent financial regulators.

August 5, 2015 | Permalink | Comments (0)

NASAA’s Electronic Filing Depository Reaches Milestone

The press release states in part:

The North American Securities Administrators Association (NASAA) today announced that its new Electronic Filing Depository (EFD) has been used to facilitate more than 10,000 notice filings with state securities regulators since its launch less than eight months ago.

Developed by NASAA, EFD is an online system that allows issuers to submit a Form D for a Regulation D, Rule 506 offering to state securities regulators and pay related fees. The EFD website also enables the public to search and view, free of charge, Form D filings made with state securities regulators through EFD, which is available at: https://www.efdnasaa.org.

August 5, 2015 | Permalink | Comments (0)

SEC Adopts Registration Rules for Security-Based Swap Dealers and Major Security-Based Swap Participants

The press release states in part:

The Securities and Exchange Commission today adopted new rules to provide a comprehensive, efficient process for security-based swap dealers and major security-based swap participants to register with the SEC.  The new rules mark a significant milestone in the SEC’s final implementation of Title VII of Dodd-Frank Wall Street Reform and Consumer Protection Act. 

 

August 5, 2015 | Permalink | Comments (0)

SEC Adopts Rule for Pay Ratio Disclosure

The press relates states in part:

The Securities and Exchange Commission today adopted a final rule that requires a public company to disclose the ratio of the compensation of its chief executive officer (CEO) to the median compensation of its employees.  The new rule, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, provides companies with flexibility in calculating this pay ratio, and helps inform shareholders when voting on “say on pay.” 

 

August 5, 2015 | Permalink | Comments (0)

Monday, August 3, 2015

New in Print

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

Wendy Gerwick Couture, Materiality and a Theory of Legal Circularity, 17 U. Pa. J. Bus. L. 453 (2015).

Sandeep Gopalan & Katherine Watson, An Agency Theoretical Approach to Corporate Board Diversity, 52 San Diego L. Rev. 1 (2015).

Kenneth Hsu, Note, The Delaware Carve-Out's Carve:  Examining and Repairing SLUSA's State Law Exception, 11 Hastings Bus. L.J. 385 (2015).

Kevin Laws & Zeb Zankel, Funding Innovation:  Regulating Seed Financing, 31 Santa Clara High Tech. L.J. 1 (2015).

James Naughton & Holger Spamann, Fixing Public Sector Finances:  The Accounting and Reporting Lever, 62 UCLA L. Rev. 572 (2015).

Joshua E. Perry, The People's NIH? Ethical and Legal Concerns in Crowdfunded Biomedical Research, 29 Notre Dame J.L. Ethics & Pub. Pol'y 453 (2015).

Stan Polit, Comment, Friends, Followers, and Fairness: SEC Fair Disclosure Requirements in a Changing Information Marketplace, 17 U. Pa. J. Bus. L. 619 (2015).

August 3, 2015 | Permalink | Comments (0)

Ben-David, Franzoni, Moussawi & Sedunov on Institutional Investors

Itzhak Ben-David, Francesco A. Franzoni, Rabih Moussawi, and John Sedunov III have posted The Granular Nature of Large Institutional Investors on SSRN with the following abstract:

Over last 35 years institutional ownership became concentrated at unprecedented levels; e.g., the stock holdings by the largest ten asset management firms quadrupled from 5.6% to 23.1%. Due to their sheer size, institution-level shocks cannot be diversified away and can spill over to the underlying securities. We document that stock ownership by the largest institutional investors leads to an increase in the volatility of the assets that they hold. Furthermore, stocks held by the largest institutional investors exhibit patterns of price inefficiency. We show that these effects are triggered by institution-level idiosyncratic news and channeled through large trades.

August 3, 2015 | Permalink | Comments (0)

Clapham, Haferkorn & Zimmermann on High-Frequency Trading

Benjamin Clapham, Martin Haferkorn, and Kai Zimmermann have posted Does Speed Matter? The Role of High-Frequency Trading for Order Book Resiliency on SSRN with the following abstract:

This paper explores limit order book resiliency following liquidity shocks in the presence of high-frequency trading firms. Based on a unique data set that enables the identification of orders submitted by algorithmic traders and subscribers of co-location services, we study whether high-frequency traders are involved in the reconstruction of the order book. We analyze order submission and deletion activity before and after a liquidity shock initiated by a large market order. Our results show that exclusively high- frequency traders reduce the spread within the first seconds after the market impact making use of their speed advantage. However, liquidity recovery in terms of order book depth takes significantly longer and is accomplished by human traders' submission activity only.

August 3, 2015 | Permalink | Comments (0)

Clarke, Silva & Thorley on Portfolio Theory

Roger G Clarke, Harindra de Silva, and Steven Thorley have posted Factor Portfolios and Efficient Factor Investing on SSRN with the following abstract:

Even in the absence of security-specific alphas, constructing a total portfolio from factor sub-portfolios is not generally mean-variance efficient. For example, an optimal combination of four fully-invested factor sub-portfolios, Low Beta, Small Size, Value, and Momentum, captures only about 45 percent of the potential improvement over the market Sharpe ratio. In contrast, a long-only portfolio of individual securities, using the same risk model and return forecasts, captures about 90 percent of the potential improvement. In this paper, we adapt general portfolio theory to the concept of factor-based investing, and investigate optimal combinations of factor portfolios using the largest one thousand common stocks in the U.S. equity market from 1968 to 2014.

August 3, 2015 | Permalink | Comments (0)

Israeli, Lee & Sridharan on Exchange Traded Funds

Doron Israeli, Charles M.C. Lee, and Suhas A. Sridharan have posted Is There a Dark Side to Exchange Traded Funds (ETFs)? An Information Perspective on SSRN with the following abstract:

In a noisy rational expectations framework with costly information, some agents expend resources to become informed, and earn a return for their efforts by trading with the uninformed. Applying this insight, we examine the proposition that an increase in ETF ownership is accompanied by a decline in pricing efficiency for the underlying component securities. Our tests show an increase in ETF ownership is associated with: (1) higher trading costs (measured as bid-ask spreads and price impact of trades); (2) an increase in “stock return synchronicity” (measured as the co-movement of firm-level stock returns with general market and related-industry stock returns); (3) a decline in “future earnings response coefficients” (measured as the predictive power of current returns for future earnings), and (4) a decline in the number of analysts covering the firm. Collectively, our findings support the view that increased ETF ownership can lead to higher trading costs and lower benefits from information acquisition, a combination which results in less informative security prices for the component firms.

August 3, 2015 | Permalink | Comments (0)

Saturday, August 1, 2015

Request for Public Comment on Exchange-Traded Products

The SEC is soliciting comments on exchange-traded products and the window for comment is drawing to a close.  This issue has not received the attention that it deserves.  Hopefully, some of this Blog's readers will consider contributing.

The news release reads as follows:

The Securities and Exchange Commission today announced that it is seeking public comment to help inform its review of the listing and trading of new, novel, or complex exchange-traded products (ETPs). The request for comment addresses key issues that arise when exemptions are sought by a market participant to trade a new ETP or when a securities exchange seeks to establish standards for listing new ETPs. Due to the expansion of ETP investment strategies in recent years that has led to a significant increase in the number and complexity of these requests, the Commission determined it would be beneficial to receive public input on these issues.
“Exchange-traded products have become an increasingly important investment vehicle to market participants ranging from individuals to large institutional investors,” said SEC Chair Mary Jo White. “As new products are developed and their complexity grows, it is critical that we have broad public input to inform our evaluation of how they should be listed, traded, and marketed to investors, especially retail investors.”

The request for comment addresses arbitrage mechanisms and market pricing for ETPs, legal exemptions and other regulatory positions related to the trading of ETPs, and securities exchange listing standards for ETPs. In addition, the request invites comment on how market professionals sell ETPs, especially to retail investors, and on investors’ understanding of the nature and use of ETPs.

ETPs constitute a diverse class of financial products that seeks to provide investors with exposure to financial instruments, financial benchmarks, or investment strategies across a wide range of asset classes. ETP trading occurs on national securities exchanges and other secondary markets that are regulated by the Commission under the Securities Exchange Act of 1934.

The public comment period will remain open for 60 days following publication of the comment request in the Federal Register.

August 1, 2015 | Permalink | Comments (0)

Law Professor Survey on the Use of Popular Culture in Law Teaching

Cynthia Bond, a professor at John Marshall Law School, has requested that I post the following survey announcement:

Greetings Law Teacher Colleagues:

I am working on an article this summer on uses of popular culture in the law school classroom.  I am defining popular culture broadly to include mass culture texts like movies, TV shows, popular music, images which circulate on the internet, etc, and also any current events that you may reference in the classroom which are not purely legal in nature (i.e. not simply a recent court decision).

To support this article, I am doing a rather unscientific survey to get a sense of what law professors are doing in this area.  If you are a law professor and you use popular culture in your class, I would be most grateful if you could answer this quick, anonymous survey I have put together:

https://www.surveymonkey.com/s/QH3GBZK

Thanks in advance for your time and have a wonderful rest of summer!

Cynthia Bond
The John Marshall Law School
Chicago, Il

August 1, 2015 | Permalink | Comments (0)

New in Print

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

Bryce Cullinane, Case Note, Assessing Irving Picard's Writ of certiorari in Picard v. JPMorgan Chase: Another Chapter in the Saga of Bernie Madoff and His Impact on the Securities Industry, 8 J. Bus. Entrepreneurship & L. 287 (2014).

Christopher R. Dyess, Credit Rating Agency Review Board:  The Challenges and Implications of Implementing the Franken-Wicker Amendment to Dodd-Frank, 8 J. Bus. Entrepreneurship & L. 79 (2014).

Alex B. Heller, Comment, Corporate Death Penalty:  Prosecutorial Discretion and the Indictment of SAC Capital, 22 Geo. Mason L. Rev. 763 (2015).

Allison Hintz, Comment, Lost in the Dark:  An Analysis of the SEC's Regulatory Response to Dark Pools, 13 DePaul Bus. & Com. L.J. 329 (2015).

Christopher Ippoliti, Governing the Corporate Insiders: Improving Regulation Fair Disclosure with More Robust Guidance and Stronger Penalties for Individual Executives, 8 J. Bus. Entrepreneurship & L. 13 (2014).

James Tyler Kirk, Deranged Disgorgement, 8 J. Bus. Entrepreneurship & L. 131 (2014).

Steven McNamara, Insider Trading and Evolutionary Psychology:  Strong Reciprocity, Cheater Detection, and the Expanding Boundaries of the Law, 22 Va. J. Soc. Pol'y & L. 241 (2015).

Felipe G.C. Prado, Restricted Offerings in the U.S. and in Brazil: A Comparative Analysis, 48 Int'l Law. 33 (2014).

Marc I. Steinberg & Alex Prescott, The Emergence of a New Battleground: Liability for Secondary Market Violations in Ontario, 48 Int'l Law. 17 (2014).

Max Vogel, Note, Crowdfunding Human Capital Contracts, 36 Cardozo L. Rev. 1577 (2015).

Karen E. Woody, Securities Laws as Foreign Policy, 15 Nev. L.J. 297 (2014).

August 1, 2015 | Permalink | Comments (0)

Tuesday, July 14, 2015

New in Print

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

Carlos Gomez-Jara Diez, Honest Services Fraud as a Criminal Breach of Fiduciary Duties:  A Comparative Law Approach for Reform, 18 New Crim. L. Rev. 100 (2015).

Sarah E. Light, The New Insider Trading: Environmental Markets within the Firm, 34 Stan. Envtl. L.J. 3 (2015).

Marc Morris, United in Diversity, Divided by Sovereignty: Hybrid financing, Thin Capitalization, and Tax Coordination in the European Union, 31 Ariz. J. Int'l & Comp. L. 761 (2014). 

July 14, 2015 | Permalink | Comments (0)

Friday, July 10, 2015

This Week in Securities Litigation

New in Print

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

Kabir Ahmed & Dezso Farkas, A Proposal to Encourage Up-the-Ladder Reporting by Insulating In-House Corporate Attorneys from Managerial Power, 39 Del. J. Corp. L. 861 (2015).

Annalisa Leibold, Extraterritorial application of the FCPA under International Law, 51 Willamette L. Rev. 225 (2015).

Thomas J. Manning, Private Equity and the FCPA: Deal-Making as Reform Mechanism, 42 Pepp. L. Rev. 377 (2015).

Stephen Miles, Exploring Unexplored Frontiers:  The Private Right of Action under the Louisiana Securities Law, 75 La. L. Rev. 801 (2015).

Jeff Vogt, Note, Don't Tell Your Boss? Blowing the Whistle on the Fifth Circuit's Elimination of Anti-Retaliation Protection for Internal Whistleblowers under Dodd-Frank, 67 Okla. L. Rev. 353 (2015).

Natalie Wong, Note, NML Capital, Ltd. v. Republic of Argentina and the Changing Roles of the Pari Passu and Collective Action Clauses in Sovereign Debt Agreements, 53 Colum. J. Transnat'l L. 396 (2015).

July 10, 2015 | Permalink | Comments (0)

Vollmer on Primary Liability Under Section 17(a) and Rule 10b-5

Andrew N. Vollmer has posted SEC Revanchism and the Expansion of Primary Liability Under Section 17(a) and Rule 10b-5 on SSRN with the following abstract:

An important issue in many enforcement cases brought by the Securities and Exchange Commission is the scope of primary liability under the two main anti-fraud provisions, Section 17(a) of the Securities Act and Rule 10b-5 of the Exchange Act. In Flannery, which was an administrative enforcement case, a bare majority of SEC Commissioners adopted broad positions on primary liability under Rule 10b-5(a) and (c) and Section 17(a)(1), (2), and (3). The Commission not only advanced expansive legal conclusions, but it also insisted that the courts accept the agency’s legal interpretations as controlling.

This article discusses two issues that Flannery raises, both of them related to the role of administrative agencies in the development, enforcement, and adjudication of federal law. First, the article compares the Commission’s interpretations of the parts of Section 17(a) and Rule 10b-5 with the reasoning and analysis of a series of prominent Supreme Court decisions that imposed meaningful boundaries around aspects of primary liability under Rule 10b-5. That comparison shows that much about Flannery is not consistent with, and is antagonistic to, the Supreme Court’s decisions in Central Bank, Stoneridge, and Janus.

Second, the article evaluates Flannery’s explicit demand for Chevron deference and concludes that a reviewing court would have doctrinal and precedential grounds for refusing to accept the Flannery positions as controlling. The reasons start with the text of the provision of the Administrative Procedure Act governing judicial review of agency actions and also cover the actual practice of the Supreme Court and courts of appeals when they review a legal conclusion in an agency adjudication.

The precedents identify good reasons for not granting Chevron deference to Flannery. Giving controlling effect to the SEC’s decision would allow the agency both to avoid the teachings of leading Supreme Court authorities and to trump the Supreme Court and other federal courts on significant matters of statutory interpretation.

 

July 10, 2015 | Permalink | Comments (0)