Securities Law Prof Blog

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

A Member of the Law Professor Blogs Network

Thursday, September 25, 2014

Groshoff, Urien & Nguyen on Crowdfunding

David Groshoff, Kurtis R. Urien, and Alex Nguyen have posted Crowdfunding 6.0: Does the SEC's FinTechLaw Failure Reveal the Agency’s True Mission to Protect — Solely Accredited — Investors? on SSRN with the following abstract:

This Article builds on our prior research employing case studies — either singly or globally — to serve as the analytic to newly trending matters in law and entrepreneurship. Specifically, this Article serves as the third installment of our trilogy in FinTech law, analyzing potential consequences of the Equity Crowdfunding portion of the JOBS Act, including the Securities and Exchange Commission’s (SEC’s) proposed regulations regarding equity crowdfunding for non-accredited investors.

This manuscript identifies that the current statutory and regulatory regime governing FinTech crowdfunding platforms is inequitable to the vast majority of the U.S. population. The manuscript then employs two case studies — one real and one hypothetical — to illustrate that the SEC’s deliberate indifference to, or astounding technological incompetence regarding, applying legal regimes to emerging technology and economic growth. These case studies evidence pain points faced by both potential investors and investees and in both the equity and debt portion of an enterprise’s capital structure.

Our thesis concludes that either the SEC is woefully classist in favor of the proverbial “Top 1%,” or the agency is sadly incompetent in understanding the needs of entrepreneurs, people with small amounts of investment capital, and congressional mandates imposed on the SEC. The manuscript proposes interpretive, administrative, and congressional alternatives that we believe better comport with the intent of the JOBS Act. Despite President Obama’s August 2014 pronouncement that the business community complains about regulation, this manuscript turns the president’s logic on its head and demonstrates that the business community and the U.S. economy have suffered because of the lack of congressionally mandated regulation by the SEC.

September 25, 2014 | Permalink | Comments (0) | TrackBack (0)

Rodrigues on Corruption

Usha Rodrigues has posted The Price of Corruption on SSRN with the following abstract:

The Supreme Court recently held that campaign contributions under $5200 do not create a “cognizable risk of corruption.” It was wrong. This Essay describes a nexus of timely contributions and special-interest legislation. In the most noteworthy case, a CEO made a first-time $1000 donation to a member of Congress. The next day that representative introduced a securities bill tailored to the interests of the CEO’s firm.

Armed with this real-world account of how small-dollar campaign contributions coincided with favorable legislative action, the Essay reads McCutcheon v. Federal Election Commission with a critical eye. In McCutcheon the Supreme Court assumed that small-dollar donations do not pose a risk of corruption, and accordingly struck down aggregate contribution limits on the theory that the base limit of $5200 provides enough of a bulwark against corruption. This Essay suggests otherwise. The fact that the price of corruption is lower than commonly understood has fundamental repercussions for campaign finance law.

September 25, 2014 | Permalink | Comments (0) | TrackBack (0)

New in Print

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

Joan MacLeod Heminway, Investor and Market Protection in the Crowdfunding Era: Disclosing to and for the "Crowd", 38 Vt. L. Rev. 827 (2014).

J. Ryan Lamare & David B. Lipsky, Employment Arbitration in the Securities Industry: Lessons Drawn from Recent Empirical Research, 35 Berkeley J. Emp. & Lab. L. 113 (2014).

Sean P. McGonigle, Note, Gabelli v. SEC: Evaluating the Discovery Rule in Financial Fraud Cases, 4 Wake Forest J.L. & Pol'y 397 (2014).

Steven McNamara, Financial Markets Uncertainty and the Rawlsian Argument for Central Counterparty Clearing of OTC Derivatives, 28 Notre Dame J.L. Ethics & Pub. Pol'y 209 (2014).

Wen, Tian. Comment. You can't sell your firm and own it too: disallowing dual-class stock companies from listing on the securities exchanges. 162 U. Pa. L. Rev. 1495-1516 (2014).

September 25, 2014 | Permalink | Comments (0) | TrackBack (0)

Monday, September 22, 2014

NASAA Appoints Advisory Council to Work With Regulators on Committee on Senior Issues and Diminished Capacity

Details available here.

September 22, 2014 | Permalink | Comments (0) | TrackBack (0)

IOSCO Seeks Comment on Proposed Statement on Non-GAAP Financial Measures

Details are available here.

September 22, 2014 | Permalink | Comments (0) | TrackBack (0)

Chair White on Women on Boards of Directors

On September 16, 2014, Chair Mary Jo White develivered remarks on Completing the Journey: Women as Directors of Public Companies.  As part of the remarks, she stated, "Looking at the markers along this century-long journey to gender diversity in the boardrooms of U.S. corporations, it is clear that we have made important, measurable progress.  But it is equally clear that we still have a long way to go."

September 22, 2014 | Permalink | Comments (0) | TrackBack (0)

William Beatty to Lead NASAA

The North American Securities Administrators Association (NASAA) has selected Washington Securities Director William Beatty to serve a one-year term as president of the organization.  The press release is available here.

September 22, 2014 | Permalink | Comments (0) | TrackBack (0)

This Week in Securities Litigation

SEC Announces Arrival of New Administrative Law Judge

Details available here.

September 22, 2014 | Permalink | Comments (0) | TrackBack (0)

New in Print

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

G. Robert Blakey & Michael Gerardi, Eliminating Overlap, or Creating a Gap? Judicial Interpretation of the Private Securities Litigation Reform Act of 1995 and RICO, 28 Notre Dame J.L. Ethics & Pub. Pol'y 435 (2014).

Wendy Gerwick Couture, The Collision Between the First Amendment and Securities Fraud, 65 Ala. L. Rev. 903 (2014).

Gregory D. Deschler, Comment, Wisdom of the Intermediary Crowd: What the Proposed Rules Mean for Ambitious Crowdfunding Intermediaries, 58 St. Louis U. L.J. 1145 (2014).

Amy Factor, Note, Dodd-Frank's Specialized Disclosure Provisions 1502 and 1504: Small Business, Big Impact, 9 Entrepren. Bus. L.J. 89 (2014).

Adam Sulkowski & Sandra Waddock, Beyond Sustainability Reporting:  Integrated Reporting Is Practiced, Required and More Would Be Better, 10 U. St. Thomas L.J. 1060 (2013).

Jacob True, Note, What Counts as a Domestic Transaction Anymore: The Second Circuit and Other Lower Courts' Struggles in Interpreting the Supreme Court's Intent in Morrison v. National Australia Bank When Dealing with Derivative Securities Transactions, 10 Hastings Bus. L.J. 513 (2014).

Manuel A. Utset, Rational Financial Meltdowns, 10 Hastings Bus. L.J. 407 (2014).

September 22, 2014 | Permalink | Comments (0) | TrackBack (0)

Monday, September 15, 2014

New in Print

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

Naseem Faqihi, Note, Choosing Which Rule to Break First:  An In-House Attorney Whistleblower's Choices after Discovering a Possible Federal Securities Law Violation, 82 Fordham L. Rev. 3341 (2014).

Matthew F. Ferraro, Student Article, "Groundbreaking" or Broken? An Analysis of SEC Cybersecurity Disclosure Guidance, Its Effectiveness, and Implications, 77 Alb. L. Rev. 297 (2013-2014).

Adam J. Levitin, The Politics of Financial Regulation and the Regulation of Financial Politics:  A Review Essay, 127 Harv. L. Rev. 1991 (2014).

Leo Mensah, Note, Missed Ppportunity:  Excluding Carbon Emissions Markets from Comprehensive Oversight, 38 Wm. & Mary Envtl. L. & Pol'y Rev. 795 (2014).

Matthew W. Muma, Note, Toward Greater Guidance: Reforming the Definitions of the Foreign Corrupt Practices Act, 112 Mich. L. Rev. 1337 (2014).

Thomas L. Short, Note, Friend This:  Why Those Damaged During the Facebook IPO Will Recover (Almost) Nothing from NASDAQ, 71 Wash. & Lee L. Rev. 1519 (2014).

Scott Squires, Note, Going Long on Shorts, 68 U. Miami L. Rev. 821 (2014).

Bryan Vega, Note,  A Bite from the Poisonous Apple:  How the Supreme Court Missed a Chance to Settle the Existing Tension Between the PSLRA and Rule 15(a), 68 U. Miami L. Rev. 793 (2014).

September 15, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, September 12, 2014

IOSCO Updates Survey on Commodity Derivatives Markets Supervisory Principles

The press release is available here, and the Update is available here.

September 12, 2014 | Permalink | Comments (0) | TrackBack (0)

NASAA Working Group Formed to Develop Improved Fee Disclosure

The North American Securities Administrators Association (NASAA) has announced the creation of a working group to focus on improved broker-dealer fee disclosure.  The press release is available here.

September 12, 2014 | Permalink | Comments (0) | TrackBack (0)

SEC Announces the Creation of the Office of Risk Assessment

The SEC has announced the creation of the Office of Risk Assessment within its Division of Economic and Risk Analysis.  The press release in part states:

Since its creation in 2009, DERA has collaborated with market experts throughout the SEC to develop risk assessment tools. One example, the Aberrational Performance Inquiry, launched in 2009 to proactively identify atypical hedge fund performance, led to eight enforcement actions and is one of the tools used by the Division of Enforcement to assess private funds. Similarly, DERA developed a broker-dealer risk assessment tool that helps SEC examiners allocate resources by assessing a broker-dealer’s comparative riskiness relative to its peer group. It also is working closely with the Enforcement Division’s Financial Reporting and Audit Task Force and the Division of Corporation Finance on developing a tool to assist in identifying financial reporting irregularities that may indicate financial fraud and help assess corporate issuer risk.

“The Office of Risk Assessment will build on the existing expertise of DERA’s staff, which includes economists, accountants, analysts, and attorneys, to provide sophisticated assessments of market risks. The establishment of this new office reflects the Commission’s ongoing focus on deploying data-driven analytics to assist in routing scarce resources to areas of the greatest risks to the market,” said DERA Deputy Director Scott W. Bauguess, who oversees the division’s risk assessment activities.

Initial staffing of the new Office of Risk Assessment will be drawn from across DERA and the division will seek a new assistant director to head the office. The office will continue to develop and use predictive analytics to support supervisory, surveillance, and investigative programs involving corporate issuers, broker-dealers, investment advisers, exchanges, and trading platforms. In addition, the office will support the SEC’s ongoing work related to the Financial Stability Oversight Council.

September 12, 2014 | Permalink | Comments (0) | TrackBack (0)

This Week in Securities Litigation

Wednesday, September 10, 2014

Testimony on “Wall Street Reform: Assessing and Enhancing the Financial Regulatory System”

On Sept. 9, 2014, Chair Mary Jo White testified before the United States Senate Committee on Banking, Housing, and Urban Affairs.  The testimony addressed a wide variety of issues, including credit ratings, asset-backed securities, municipal securities, private fund adviser registration and reporting, over-the-counter derivatives, clearing agencies, the Volcker Rule, corporate governance and executive compensation, broker-dealer audit requirements, the whistleblower program, investment advisers and broker-dealers’ standards of conduct, specialized disclosure provisions, exempt offerings, the Office of Minority and Women Inclusion, consumer data protection, and SEC resources.

September 10, 2014 | Permalink | Comments (0) | TrackBack (0)

NASAA Survey Finds Investment Advisers Report Few Cybersecurity Breaches

Details available here.

September 10, 2014 | Permalink | Comments (0) | TrackBack (0)

Sunday, September 7, 2014

New in Print

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

Todd Barnet, The Door Is Still Ajar:  Analysis and Shortcomings of the CFTC's Final Rule on Mandated Clearing of Certain Derivatives, 12 DePaul Bus. & Com. L.J. 147 (2014).

Sahil Chaudry, The Impact of the JOBS Act on Independent Film Finance, 12 DePaul Bus. & Com. L.J. 215 (2014).

Jerry Ellig & Hester Peirce, SEC Regulatory Analysis: "A Long Way to Go and a Short Time to Get There", 8 Brook. J. Corp. Fin. & Com. L. 361 (2014).

Peter R. Flynn, Note, Admission of Wrongdoing:  Increasing Public Accountability in SEC Settlements, 8 Brook. J. Corp. Fin. & Com. L. 538 (2014). 

Kristen J. Kenley, Can We keep this Dirty Money?:  Ponzi Scheme Transfers and the Fourth Circuit's Vague But Workable Standard in In re Derivium Capital, LLC., 92 N.C. L. Rev. 1370 (2014).

Alexandros Seretakis, Hedge Fund Activism Coming to Europe:  Lessons from the American Experience, 8 Brook. J. Corp. Fin. & Com. L. 438 (2014).

Richard Squire, Clearinghouses as Liquidity Partitioning, 99 Cornell L. Rev. 857 (2014).

Matthew P. Thomas, Comment, MLSMK Investment Co.:  Civil RICO Liability after the Private Securities Litigation Reform Act and Central Bank, 12 DePaul Bus. & Com. L.J. 235 (2014).

Ruoke Yang, When is BitCoin a Security under U.S. Securities Law?, 18 J. Tech. L. & Pol'y 99 (2013).

September 7, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, September 5, 2014

This Week in Securities Litigation

Tracey L. McNeil Named as SEC’s First Ombudsman

Tracey L. McNeil has been named the SEC's first ombudsman.  The press release states in part:

The Securities and Exchange Commission today announced that Tracey L. McNeil has been selected as the first ombudsman for the agency. . . .

In her new role, Ms. McNeil will report to Rick Fleming, the first head of the SEC’s Office of the Investor Advocate. The Dodd-Frank Act called for the creation of the office and requires the Investor Advocate to appoint an ombudsman who will act as a liaison in resolving problems that retail investors may have with the Commission or self-regulatory organizations. The ombudsman also will establish safeguards to maintain the confidentiality of communications with investors.

September 5, 2014 | Permalink | Comments (0) | TrackBack (0)