Securities Law Prof Blog

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

Saturday, September 9, 2017

Steinberg and Roberts on Control Person Liability

Marc I. Steinberg and Forrest C. Roberts have posted Laxity at the Gates: The SEC's Neglect to Enforce Control Person Liability on SSRN with the following abstract: 

In recent years the SEC has repeatedly stressed the importance of holding gatekeepers accountable in order to promote effective corporate governance. In spite of these assertions, the Commission has failed to use two powerful tools at its disposal to pursue gatekeepers. Section 20(a) of the Securities Exchange Act provides for liability against “control persons.” This Section imposes liability upon any person who controls another liable person to the same extent as such controlled person, unless she can establish that she acted in good faith and did not directly induce the violation. Sections 15(b)(4)(E) and 15(b)(6))A) of the Exchange Act give the Commission power to institute administrative proceedings against broker-dealers and associated persons for their failure to reasonably supervise another person who commits certain enumerated securities law violations. Although these enforcement mechanisms seem ripe for use, the Commission has refused to allege claims against control persons or based upon a failure to supervise in cases against big banks and large publicly regulated companies, such as those responsible for the financial crises and subsequent instances of large-scale misconduct. Instead, the SEC agrees to large monetary settlements with these companies without holding corporate miscreants liable.

The objective of this article is to propose an enforcement regime which holds executives, directors, and other fiduciaries responsible for misconduct occurring at their enterprises when such misconduct can be attributed to their lack of control or failure to supervise their employees. We will show that by using Sections 20(a) and 15(b)(6)(A), the Commission incentivizes those in charge to actively sniff out misconduct or face the sobering reality of being named in an SEC enforcement action. In order to accomplish this task, this article will: 1) discuss the legal authority giving the SEC power to use these provisions, and explain the provisions’ advantages over the SEC’s frequently used enforcement tools; 2) outline recent misconduct resulting in large monetary settlements with such financial institutions as JP Morgan, Goldman Sachs, Merrill Lynch, and Bank of America; 3) showcase the SEC’s refusal to implement these tools against big players; 4) set forth rationales as to why the Commission has cast these provisions aside, and 5) recommend an enforcement policy in this context that seeks to effectuate law compliance and enhanced corporate governance practices.

September 9, 2017 | Permalink | Comments (0)

Ewens and Farre-Mensa on IPOS

Michael Ewens and Joan Farre-Mensa have posted The Evolution of the Private Equity Market and the Decline in IPOs on SSRN with the following abstract: 

Despite the large drop in the number of initial public offerings (IPOs) in the United States, privately-held startups backed by venture capital continue to achieve capital raising, revenue, and employment levels historically available only to their public peers. We show that startups’ ability to finance their late-stage growth while remaining private has been facilitated by a marked increase in the supply of private entrepreneurial capital, both from traditional and non-traditional startup investors. Two factors have contributed to this increase: Technological changes that have lowered investor search costs, and regulatory changes that have decreased the frictions faced by startups and their financiers when raising private capital, among them a major securities law passed in 1996 (NSMIA). Our evidence suggests that the lower IPO volume stems from their founders/managers choosing to remain private, rather than a market failure in the going-public process. Consistent with this interpretation, we show that exogenous increases in founder control increase the likelihood that a firm remains private late in its life.


September 9, 2017 | Permalink | Comments (0)

Edwards on Robo-Advisers

Benjamin P. Edwards has posted The Rise of Automated Investment Advice: Can Robo-Advisers Rescue the Retail Market? on SSRN with the following abstract:

Different types of financial advisers serve the massive and widely dispersed retail investment market. In a market riddled with conflicts of interests, many advisers exploit retail customers by pitching suboptimal products, leading to lower investment returns and lower overall growth — but also to greater profits for the financial advisers collecting kickback-style commissions. New financial technology firms, commonly known as Robo-Advisers, may disrupt this market and these exploitative practices. Still, these potentially disruptive automated investment advice firms face significant regulatory risks.

September 9, 2017 | Permalink | Comments (0)

Verstein on Insider Trading

Andrew Verstein has posted Insider Tainting: Strategic Tipping of Material Non-Public Information on SSRN with the following abstract:

Insider trading law is meant to be a shield, protecting the market and investors from connected traders, but it can also be a sword. Insofar as we penalize trading on the basis of material non-public information, it becomes possible to share information strategically in order to disable or constrain innocent investors. A hostile takeover can be averted, or a bidding war curtailed, because information recipients must then refrain from trading. This Article offers the first general account of “insider tainting,” an increasingly pervasive phenomenon of weaponizing insider trading law.

September 9, 2017 | Permalink | Comments (0)

Ferrell & Morley on Institutional Institutional Intermediaries

Allen Ferrell and John Morley have posted New Special Study of the Securities Markets: Institutional Intermediaries on SSRN with the following abstract:

This essay, written for the Conference on the New Special Study of Securities Markets at Columbia Law School, identifies the key regulatory challenges posed by institutional intermediaries in America’s capital markets. We survey existing legal and economic research and suggest new areas for regulatory reform and scholarly inquiry. We cover registered investment companies (such as mutual funds), private investment funds (such as hedge funds and private equity funds), credit-rating agencies, and broker-dealers.

September 9, 2017 | Permalink | Comments (0)

Tuesday, August 8, 2017

New Securities Law Articles in Print

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

Janet Austin, What Exactly Is Market Integrity? An Analysis of One of the Core Objectives of Securities Regulation, 8 Wm. & Mary Bus. L. Rev. 215 (2017).

John S. Baker Jr., Warning to Corporate Counsel: If State AGs Can do This to ExxonMobil, How Safe Is Your Company?, 15 Geo. J.L. & Pub. Pol'y 313 (2017).

Marco Bodellini, From Systemic Risk to Financial Scandals: The Shortcomings of U.S. Hedge Fund Regulation, 11 Brook. J. Corp. Fin. & Com. L. 417 (2017).

Charles R. Korsmo, The Audience for Corporate Disclosure, 102 Iowa L. Rev. 1581 (2017).

Adair Morse, Wei Wang & Serena Wu, Executive Lawyers: Gatekeepers Or Strategic Officers?, 59 J.L. & Econ. 847 (2016).

John Polise, A Bridge Too Far: A Critical Analysis of the Securities and Exchange Commission's Approach to Equity Market Regulation, 11 Brook. J. Corp. Fin. & Com. L. 285 (2017).

Christopher Saverino, Note, Full Disclosure: Moving Beyond Disclosure Regulations to Affirmative Regulation of Executive Compensation, 11 Brook. J. Corp. Fin. & Com. L. 541 (2017).

Jack Wroldsen, Crowdfunding Investment Contracts, 11 Va. L. & Bus. Rev. 543 (2017).

August 8, 2017 | Permalink | Comments (0)

Tuesday, August 1, 2017

New Securities Law Articles in Print

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

Eric C. Chaffee, A Call for Legislative Reform: Expanding the Extraterritorial Application of the Private Rights Action under Federal Securities Law while Limiting the Scope of Relief Available, 22 Stan. J.L. Bus. & Fin. 1 (2017).

Kathryn Judge, Information Gaps and Shadow Banking, 103 Va. L. Rev. 411 (2017).

Justin Offermann, Case Comment, Gibney v. Evolution Marketing Research, LLC., 61 N.Y.L. Sch. L. Rev. 529 (2016/17).

Fernan Restrepo & Guhan Subramanian, The New Look of Deal Protection, 69 Stan. L. Rev. 1013 (2017).

Bernard S. Sharfman, What Theory and the Empirical Evidence Tell Us About Proxy Access, 13 J.L. Econ. & Pol'y 1 (2017).

Drew Thornley & Justin Blount, SEC In-House Tribunals: A Call for Reform, 62 Vill. L. Rev. 261 (2017).

August 1, 2017 | Permalink | Comments (0)

Saturday, July 22, 2017

Trump to Nominate Former Senate Aide Peirce for SEC Commissioner

Eric Beech (Reuters), Trump to Nominate Former Senate Aide Peirce for SEC Commissioner:

U.S. President Donald Trump intends to nominate former Senate Republican aide Hester Maria Peirce to be a member of the Securities and Exchange Commission, the White House said on Tuesday.

Peirce is a former Senate Banking Committee staff member and currently is the director of the Financial Markets Working Group at George Mason University's Mercatus Center.

She was nominated to the SEC last year by President Barack Obama, but the full Senate never acted on her nomination.

Democrats on the Senate Banking Committee attempted to block her nomination when she declined to fully commit to work as a commissioner on requiring corporations to publicly disclose their political donations.

She ultimately won the committee's blessing but her nomination stalled in the Senate as Republicans dragged their feet on approving names put forward by Obama, a Democrat.

Peirce could face a rocky time again in the chamber. Liberal firebrand Senator Elizabeth Warren is highly critical of Peirce, who is a member of the Federalist Society, an organization of conservative and libertarian lawyers.

Peirce could be instrumental in carrying out Trump's plan to reform regulations imposed after the 2007-09 financial crisis and recession.

She recently edited and contributed to a book published by the right-leaning Mercatus Center that called for totally restructuring the country's financial regulation.

Peirce would fill one of two vacancies on the five-member commission. If Trump follows tradition, he will suggest a Democrat for the other open slot at the top U.S. securities regulator.

Columbia University law professor Robert Jackson is a leading contender to fill the Democratic slot, people familiar with the matter said last month.

July 22, 2017 | Permalink | Comments (0)

Call for Papers: Symposium on Personalized Law

I received the following conference announcement:


Call for Papers: Symposium on Personalized Law
Presented by the University of Chicago Law Review and the Coase-Sandor Institute for Law and Economics

April 27-28, 2018

We are pleased to announce the 2018 University of Chicago Law Review symposium on “Personalized Law.” The event will be co-sponsored by the Coase-Sandor Institute for Law and Economics and aims to explore questions surrounding the potential for personalized law. With the rise of big data, the costs associated with creating and administering personalized legal rules tailored to specific individuals or circumstances have decreased significantly. Rules that currently apply uniformly—rules like standards of care in tort law; default and mandatory rules in contract law; disclosure mandates; sentencing rules; tax laws; and legal procedures—now face the possibility of becoming personalized in nature.

Scholars working in the field are invited to submit their work to the conference and for publication in the Law Review. The symposium will feature several panels representing diverse viewpoints on the value, feasibility, and implementation of personalization of various legal areas. Would such a system be moral or democratic? How would the implementation of personalized law take place? What are the benefits and drawbacks of shifting from uniform to personalized law? How would increased granularity of legal norms affect the legal system as a whole? Would it make the system more efficient, fair, or equal? Or would it serve to undermine the legitimacy of the legal system and infringe on individual privacy?

The University of Chicago Law Review invites authors exploring these and related issues to submit proposals for papers. Selected proposals will be developed into approximately 7,500-word papers for presentation at the Law Review’s annual Symposium, which will be held at the University of Chicago Law School on Friday and Saturday, May 11–12, 2018. Once authors have incorporated feedback from the panels, we plan to publish the final versions in Volume 86 of the Law Review.

We welcome both traditional and interdisciplinary approaches, including insights and methodologies from the social sciences, data sciences, and political philosophy, among others. A proposal may be as short as a two-page précis or as long as a full draft. We recommend that authors of empirical proposals include preliminary results.

Proposals should be submitted to Anagha Sundararajan at no later than September 30, 2017. Submissions must be exclusive, and the organizers’ decisions will be communicated no later than October 31, 2017.

Travel expenses are eligible for reimbursement. Please direct any inquiries to Anagha Sundararajan, Book Review and Symposium Editor ( and Professor Omri Ben-Shahar, Director, Coase-Sandor Institute for Law and Economics (

July 22, 2017 | Permalink | Comments (0)

Monday, July 17, 2017

New Securities Law Articles in Print

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

Jesus Garcia Aparicio, Note, Enhancing Shareholder Rights in Intermediated Securities Holding Structures Across Borders, 13 N.Y.U. J.L. & Bus. 465 (2017).

Erin Bauwens, Note, The Dodd-Frank Act and Government Overreach: How expanded SEC Authority Affects the Investing Public and How to Better Regulate the Financial Industry, 67 Syracuse L. Rev. 741 (2017).

Liza B. Fleming, Comment, Lenity Calling: a Plea to End Chevron Deference for Criminal Insider Trading Law, 89 Temp. L. Rev. 579 (2017).

Austin J. Green, Note, (Beyond) Family Ties: Remote Tippees in a Post-Salman Era, 85 Fordham L. Rev. 2769 (2017).

Jon Jordan, BNY Mellon and Qualcomm: A Recent Focus on Improper Hiring Practices in Violation of the Foreign Corrupt Practices Act, 63 Loy. L. Rev. 1 (2017).

Leonardo Labriola, Note, Paying Too Dearly for a Whistle: Properly Protecting Internal Whistleblowers, 85 Fordham L. Rev. 2839 (2017).

Usha R. Rodrigues, Dictation and Delegation in Securities Regulation, 92 Ind. L.J. 435 (2017).

Hon. Leo E. Strine Jr., Who Bleeds When the Wolves Bite?: A Flesh-and-Blood Perspective on Hedge Fund Activism and Our Strange Corporate Governance System, 126 Yale L.J. 1870 (2017).

July 17, 2017 | Permalink | Comments (0)

Thursday, July 13, 2017

Chairman Clayton's Remarks at the Economic Club of New York

His remarks are available here, and they provide an overview of his plans for the future of the SEC.

July 13, 2017 | Permalink | Comments (0)

Job Posting: Business Law Clinic Faculty Position

Clinical Faculty Position
The Ohio State University, Michael E. Moritz College of Law

Description: The Moritz College of Law invites applications for the position of Assistant Clinical Professor of Law in its Entrepreneurial Business Law Clinic (EBLC), to start in January 2018. The EBLC professor has primary responsibility for directing and teaching the Entrepreneurial Business Law Clinic, which provides third-year law students with the opportunity to learn lawyering skills by representing entrepreneurs and their start-up businesses. EBLC students typically work with clients on all phases of starting a business, including client intake, entity formation, legal business planning, and contract drafting (including employment and independent contractor contracts). When relevant for the client, students also learn how to protect the intellectual property of a business. The EBLC’s clinical professor will have several areas of responsibility, including 1) supervising law students who represent clients under the Ohio Supreme Court's student practice rule 2) classroom teaching of lawyering skills, 3) engaging with the local and regional entrepreneurial community, and 4) participating in the life and governance of the College of Law.

We will consider all applicants; however, we prefer candidates with significant experience in representing entrepreneurs and early-stage companies. Candidates also should have an excellent academic record that demonstrates potential for clinical teaching and preparation of clinical educational materials. Candidates should be admitted to the Ohio Bar or eligible for admission in Ohio. The starting salary range will be $78,000 - $81,000 for a 12-month contract; full University fringe benefits are provided as well. The ideal starting date will be November 15, or as soon thereafter as possible. The successful candidate will begin teaching in January 2017.

Application Instructions: A resume, references, and cover letter should be submitted to Professor Paul Rose, Associate Dean for Academic Affairs, The Ohio State University Moritz College of Law, 55 West 12th Avenue, Columbus, Ohio 43210. Send e-mail applications to Applications will be reviewed immediately and will be accepted until the position is filled; preference will be given to applications received before September 1st.

The Ohio State University is committed to establishing a culturally and intellectually diverse environment, encouraging all members of our learning community to reach their full potential. The Ohio State University is an equal opportunity employer. All qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability status, or protected veteran status.

About Columbus: The Ohio State University campus is located in Columbus, the capital city of Ohio. Columbus is the center of a rapidly growing and diverse metropolitan area with a population of over 1.5 million. The area offers a wide range of very affordable housing, many cultural and recreational opportunities, excellent schools, and a strong economy based on government as well as service, transportation, and technology industries (see Columbus and its many suburbs have consistently been rated as one of the Top U.S. places for quality of life. Additional information about the Columbus area is available at

July 13, 2017 | Permalink | Comments (0)

Tuesday, July 11, 2017

Call for Papers: Central States Law School Association (CSLSA) Annual Scholarship Conference

I received the following conference announcement today:
Registration is Open for the CSLSA 2017 Conference
Registration is now open for the Central States Law Schools Association 2017 Scholarship Conference, which will be held on Friday, October 6 and Saturday, October 7 at Southern Illinois University School of Law in Carbondale, Illinois. We invite law faculty from across the country to submit proposals to present papers or works in progress.

CSLSA is an organization of law schools dedicated to providing a forum for conversation and collaboration among law school academics. The CSLSA Annual Conference is an opportunity for legal scholars, especially more junior scholars, to present working papers or finished articles on any law-related topic in a relaxed and supportive setting where junior and senior scholars from various disciplines are available to comment. More mature scholars have an opportunity to test new ideas in a less formal setting than is generally available for their work. Scholars from member and nonmember schools are invited to attend. 

Please click here to register. The deadline for registration is September 2, 2017.  

Hotel rooms are now available for pre-booking.  The conference hotel is the Holiday Inn Conference Center in Carbondale.  To reserve a room, call 618-549-2600 and ask for the SIU School of Law rate ($109/night) or book online and use block code SOL.  SIU School of Law will provide shuttle service to and from the Holiday Inn & Conference Center for conference events.  Other hotel options (without shuttle service) are listed on our website.  Please note that conference participants are responsible for all of their own travel expenses including hotel accommodations.

For more information about CSLSA and the 2017 Annual Conference please subscribe to our blog.

July 11, 2017 | Permalink | Comments (0)

Monday, July 10, 2017

Call for Papers: 2017 Junior Scholars #FutureLaw Workshop 2.0 at Duquesne

Conference Announcement and Call for Papers
2017 Junior Scholars #FutureLaw Workshop 2.0 at Duquesne

The conference is organized by Seth Oranburg, Assistant Professor, Duquesne University School of Law. Funding is provided in part by the Federalist Society. All papers are selected based on scholarly merit, with an emphasis on scholarly impact, topical relevance, and viewpoint diversity.

September 7-8, 2017
by invitation only

OVERVIEW: The conference aims to foster legal and economic research on “FutureLaw” (as defined below) topics particularly by junior and emerging scholars by bringing together a diverse group of academics early in their career focusing on cutting-edge issues.

TOPICS: The conference organizers encourage the submission of papers about all aspects of FutureLaw, which includes open-data policy, machine learning, computational law, legal informatics, smart contracts, crypto-currency, block-chain technology, big data, algorithmic research, LegalTech, FinTech, MedTech, eCommerce, eGovernment, electronic discovery, computers & the law, teaching innovations, and related subjects. FutureLaw is an inter-disciplinary field with cross-opportunities in crowd science, behavioral economics, computer science, mathematics, statistics, learning theory, and related fields. Papers may be theoretical, archival or experimental in nature. Topics of interest include, but are not limited to:

- Innovation in legal instruments (e.g., new securities, new corporate forms, new litigation procedures, etc.)

- Innovation in legal technology (e.g., new law firm governance, legal automatic, democratizing access to legal services, legal chatbots, etc.)
- Innovation in legal teaching (e.g., new classroom techniques, distance learning studies, experiential learning, transactional clinics, etc.)

Papers regarding the effect of these innovations (e.g., diversity, inclusion, equity, equality, fairness, return on investment, productivity, security, etc.) are also welcome.

DUAL SUBMISSION PROCESS: For the 2017 conference, the FutureLaw Workshop and the Duquesne Law Review (DLR) announce a new, non-exclusive, combined submission process. At your discretion, a paper submitted to the 2017 FutureLaw Workshop 2.0 may also be considered for publication by DLR free of charge. The rules for this dual submission process are as follows:

(1) You must apply online at Submitted papers will be considered for publication by the DLR free of charge. A reply to your submission in acceptance to the Workshop or invitation to publish in the DLR is your option, not your obligation.

(2) If you do not wish to be considered by the DLR while submitting for the FutureLaw Workshop, please indicate this in the comments field provided.

(3) Papers submitted for dual consideration must not already be accepted by another journal.

(4) While under consideration as a dual submission for the 2017 FutureLaw Workshop and invitation by the DLR, a paper may be submitted to another journal (or JAR).

PAPER SUBMISSION PROCEDURE: Please upload a PDF version of your working paper, by August 4, 2017 via the online submission form at When you select the radio button for “Attendance Category: Participant,” you will see an option to upload a paper.

The FutureLaw Workshop may reimburse presenters and discussants reasonable travel expenses and accommodations. Please let us know if your academic institution does not provide you with travel and accommodation expenses.

CONFERENCE ATTENDANCE: Attendance is free and by invitation only. Academics interested in receiving an invitation to attend but who do not wish to submit a paper may apply online as “observers” at

July 10, 2017 | Permalink | Comments (0)

New in Print

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

Vincenzo Bavoso, Filling the Accountability Gap in Structured Finance Transactions: The Case for a Broader Fiduciary Obligation, 23 Colum. J. Eur. L. 369 (2017).

Tyler Johnson, Note, Nobody's Stock Compares to Your Own: How Treasury Can Revive Stock Compensation in Cost-Sharing Agreements, 111 Nw. U. L. Rev. 793 (2017).

Thomas Murphy, Note, Playing to a New Crowd: How Congress Could Break the Startup Status Quo by Raising the Cap on the JOBS Act's Crowdfunding Exemption, 58 B.C. L. Rev. 775 (2017).

Eric A. Posner, What Legal Authority Does the Fed Need During a Financial Crisis?, 101 Minn. L. Rev. 1529-1578 (2017).

Cary Martin Shelby, Closing the Hedge Fund Loophole: The SEC as the Primary Regulator of Systemic Risk, 58 B.C. L. Rev. 639 (2017).

Urska Velikonja, Are the SEC's Administrative Law Judges Biased? An Empirical Investigation, 92 Wash. L. Rev. 315 (2017).

July 10, 2017 | Permalink | Comments (0)

Monday, July 3, 2017

New in Print

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

Joanna Howard, Note, Reforming SEC ALJ Proceedings, 50 U. Mich. J.L. Reform 795 (2017).

Mike Koehler, Foreign Corrupt Practices Act Statistics, Theories, Policies, and Beyond, 65 Clev. St. L. Rev. 157 (2017).

Lisa Newman, Note, Are SEC Administrative Proceedings the New [Unconstitutional] Normal?, 36 Rev. Litig. 193 (2017).

Kevin M. Talbot, Comment, What Does "Green" Really Mean?: How Increased Transparency and Standardization Can Grow the Green Bond Market, 28 Vill. Envtl. L.J. 127 (2017).

July 3, 2017 | Permalink | Comments (0)

Tuesday, June 27, 2017

Certiorari Granted in Cyan

The Supreme Court has greated certiorari in Cyan Inc. v. Beaver County Employees Retirement Fund.  At issue in the case is whether the Securities Litigation Uniform Standards Act prohibits a state court from exercising jurisdiction over lawsuits that only allege violations of the Securities Act of 1933.  As my recent article discuses, the Roberts Court's interest in securities litigation procedure runs deep.

June 27, 2017 | Permalink | Comments (0)

Remarks of NASAA President Mike Rothman at NASAA’s 2017 Cybersecurity Roundtable

The remarks are available here.

June 27, 2017 | Permalink | Comments (0)

California Public Employees’ Retirement System v. ANZ Securities, Inc.

In California Public Employees’ Retirement System v. ANZ Securities, Inc., the Supreme Court of the United States has held that the three year limitation period applicable to Securities Act Section 11 claims cannot be extended or tolled based upon the language of Section 13.  Justice Kennedy wrote the opinion for the Court in a 5 to 4 decision.  

As with all securities regulation cases involving the Roberts Court, Chief Justice was in the majority.  The case continues the Court's recent focus on procedural issues in securities regulation cases.  For commentary on the Roberts Court and securities law, see my recent article here.

June 27, 2017 | Permalink | Comments (0)

Testimony on the Fiscal Year 2018 Budget Request

Chairman Clayton's testimony is available here.

June 27, 2017 | Permalink | Comments (0)