Securities Law Prof Blog

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

A Member of the Law Professor Blogs Network

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)

Friday, January 23, 2015

New in Print

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

David K. Brown & Derek B. Swanson, Securities Regulation, 65 Mercer L. Rev. 1087 (2014).

Winthrop N. Brown, With This ring, I Thee Fence: How Europe's Ringfencing Proposal Compares with U.S. Ringfencing Measures, 45 Geo. J. Int'l L. 1029 (2014).

Stanislav Dolgopolov, The Maker-Taker Pricing Model and Its Impact on the Securities Market Structure: A Can of Worms for Securities Fraud?, 8 Va. L. & Bus. Rev. 231 2 (2014).

William O. Fisher, Predicting a Heart Attack: The Fundamental Opacity of Extreme Liquidity Risk, 86 Temp. L. Rev. 465 (2014).

Jaclyn Freeman, Note, Limiting SRO Immunity to Mitigate Risky Behavior, 12 J. on Telecomm. & High Tech. L. 193 (2014).

Stacy Goto Grant, Note, International Financial Regulation through the G20: The Proprietary Trading Case Study. 45 Geo. J. Int'l L. 1217 (2014).

Michael L. Hartzmark &H. Nejat Seyhun, Understanding the Efficiency of the Market for Preferred Stock, 8 Va. L. & Bus. Rev. 149 (2014).

Stephanie Ryder, Note, How to Prevent Future Flash Crashes and Restore the Ordinary Investors' Confidence in the Financial Market: The Implementation of Circuit Breakers and Speed Limits to Help Enforce the Market Access Rule, 12 J. on Telecomm. & High Tech. L. 265 (2014).

Gregory Scopino, Regulating Fairness: The Dodd-Frank Act's Fair Dealing Requirement for Swap Dealers and Major Swap Participants, 93 Neb. L. Rev. 31 (2014).

Robert D. "Bodie" Stewart, Note, Missing the Mark on Mark-to-Market: The Arguments Against the Camp Plan to Require Mark-to-Market Accounting for Non-Traded Speculative Derivatives, 45 Geo. J. Int'l L. 1323 (2014).

Andrew F. Tuch, Financial Conglomerates and Information Barriers, 39 J. Corp. L. 563 (2014).

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

Jackson, Jiang & Mitts on Information Dissemination

Robert J. Jackson Jr., Wei Jiang, and Joshua Mitts have posted How Quickly Do Markets Learn? Private Information Dissemination in a Natural Experiment on SSRN with the following abstract:

Using data from a unique episode in which the SEC disseminated securities filings to a small group of private investors before releasing them to the public, we provide a direct test of the process through which private information is impounded into stock prices. Because the delay between the time when the filings were privately distributed and when the filings were made public was randomly distributed, our setting provides a rare natural experiment for examining how markets process new private information. We find that it takes minutes — not seconds — for informed traders to incorporate fundamental information into stock prices. We also show that the private investors who had early access to fundamental information profited more, and convey more information into stock prices, when the delay before the filings are released to the public is longer. More importantly, the rate at which information is impounded into stock prices is more correlated with the length of the predicted delay before public release than the actual delay, suggesting that informed investors trade strategically. Our study serves as the modern counterpart to Koudijs’s (2014a) study on insider trading on eighteenth-century stock exchanges — except, in our case, week-long sailing voyages have been replaced by modern electronic transmission as the conduit for information flows.

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

Heese on SEC Enforcement

Jonas Heese has posted Government Preferences and SEC Enforcement on SSRN with the following abstract:

I examine whether political pressure by the government as a response to voters’ general interest in protecting employment is reflected in the enforcement actions by the Securities and Exchange Commission (SEC). Using labor intensity as a measure for a firm’s contribution to employment, I find that labor-intensive firms are less likely to be subject to an SEC enforcement action. Next, I show that labor-intensive firms are less likely to face an SEC enforcement action in presidential election years if they are located in politically important states. I also find evidence of a lower likelihood of SEC enforcement for labor-intensive firms that are headquartered in districts of senior congressmen that serve on committees that oversee the SEC. All of these results hold after controlling for firms’ accounting quality and two alternative explanations for firms’ favorable treatment by the SEC, i.e., firms’ location and political contributions. These findings suggest that voters’ interests drive political pressure on SEC enforcement — independent of firms’ lobbying for their special interests.

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

This Week in Securities Litigation

Thursday, January 8, 2015

New in Print

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

Stephen J. Choi & Kevin E. Davis, Foreign Affairs and Enforcement of the Foreign Corrupt Practices Act, 11 J. Empirical Legal Stud. 409 (2014).

James T. Farris, Note, What You Do Not Know Can Hurt You: How the FINRA Expungement Process Is Endangering Future Investors Through a Lack of Information, 42 Hofstra L. Rev. 1227 (2014). 

Anneka Huntley, Note, RICO's Extraterritoriality After Morrison: Where Should We Go From Here?, 65 Hastings L.J. 1691 (2014).

Andrew A. Schwartz, Arbitration and the Contract Exchange, 29 Ohio St. J. on Disp. Resol. 299 (2014).

Michael P. Vandenbergh, Kaitlin Toner Raimi & Jonathan M. Gilligan, Energy and Climate Change: A climate Prediction Market, 61 UCLA L. Rev. 1962-2017 (2014).

Twenty-Seventh Annual Corporate Law Symposium: Crowdfunding Regulations and Their Implications, Articles by Adam S. Zimmerman, Geoffrey Christopher Rapp, Renee M. Jones, Jennifer J. Johnson, J.W. Verret, Samuel W. Buell, Douglas M. Branson & Verity Winship. 82 U. Cin. L. Rev. 381 (2013).

January 8, 2015 | Permalink | Comments (0) | TrackBack (0)

Sunday, December 7, 2014

Request for Submissions: National Business Law Scholars Conference

National Business Law Scholars Conference

Thursday & Friday, June 4-5, 2015
Seton Hall University School of Law, Newark, NJ

This is the sixth annual meeting of the NBLSC, a conference which annually draws together legal scholars from across the United States and around the world. We welcome all scholarly submissions relating to business law. Presentations should focus on research appropriate for publication in academic journals, law reviews, and should make a contribution to the existing scholarly literature. We will attempt to provide the opportunity for everyone to actively participate. Junior scholars and those considering entering the legal academy are especially encouraged to participate. For additional information, please email Professor Eric C. Chaffee at

Call for Papers

To submit a presentation, email Professor Eric C. Chaffee at with an abstract or paper by February 13, 2015. Please title the email “NBLSC Submission – {Name}”. If you would like to attend, but not present, email Professor Chaffee with an email entitled “NBLSC Attendance.” Please specify in your email whether you are willing to serve as a commentator or moderator. A conference schedule will be circulated in late April.

Conference Organizers:

Barbara Black (The University of Cincinnati College of Law, Retired)
Eric C. Chaffee (The University of Toledo College of Law)
Steven M. Davidoff Solomon (The University of California Berkeley Law School)
Kristin N. Johnson (Seton Hall University School of Law)
Elizabeth Pollman (Loyola Law School, Los Angeles)
Margaret V. Sachs (University of Georgia Law)

 More information is available here.

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

Request for Submissions: Yale/Stanford/Harvard Junior Faculty Forum

Professor Adriaan Lani forwarded me the following announcement about the Yale/Stanford/Harvard Junior Faculty Forum, which offers an exciting venue for junior scholars to present their work:

Yale, Stanford, and Harvard Law Schools announce the 16th session of the Yale/Stanford/Yale Junior Faculty Forum to be held at Harvard Law School on June 16-17, 2015 and seek submissions for its meeting.

The Forum’s objective is to encourage the work of scholars recently appointed to a tenure-track position by providing experience in the pursuit of scholarship and the nature of the scholarly exchange. Meetings are held each spring, rotating at Yale, Stanford, and Harvard. Twelve to twenty scholars (with one to seven years in teaching) will be chosen on a blind basis from among those submitting papers to present. One or more senior scholars, not necessarily from Yale, Stanford, or Harvard, will comment on each paper. The audience will include the participating junior faculty, faculty from the host institutions, and invited guests. The goal is discourse on both the merits of particular papers and on appropriate methodologies for doing work in that genre. We hope that comment and discussion will communicate what counts as good work among successful senior scholars and will also challenge and improve the standards that now obtain. The Forum also hopes to increase the sense of community among American legal scholars generally, particularly among new and veteran professors.

TOPICS: Each year the Forum invites submissions on selected topics in public and private law, legal theory, and law and humanities topics, alternating loosely between public law and humanities subjects in one year, and private law and dispute resolution in the next. For the upcoming 2015 meeting, the topics will cover these areas of the law:

- Antitrust
- Bankruptcy
- Civil Litigation and Dispute Resolution
-Contracts and Commercial Law
- Corporate and Securities Law
- Intellectual Property
- International Business Law
- Private Law Theory and Comparative Private Law
- Property, Estates, and Unjust Enrichment
- Taxation
- Torts

A jury of accomplished scholars, again not necessarily from Yale, Stanford or Harvard, with expertise in the particular topic, will choose the papers to be presented. There is no publication commitment, nor is published work eligible. Yale, Stanford, or Harvard will pay presenters’ and commentators’ travel expenses, though international flights may be only partially reimbursed.

QUALIFICATIONS: There is no limit on the number of submissions by any individual author. To be eligible, an author must be teaching at a U.S. law school in a tenured or tenure-track position and must not have been teaching at either of those ranks for a total of more than 7 years. American citizens teaching abroad are also eligible provided that they have held a faculty position or the equivalent, including positions comparable to junior faculty positions in research institutions, for less than seven years, and that they earned their last degree after 2005. International scholars are not eligible for this forum, but are invited to submit to the Stanford International Junior Faculty Forum. We accept co-authored submissions, but each of the coauthors must be individually eligible to participate in the JFF. Papers that will be published prior to the forum in June are not eligible.


Electronic submissions should be sent to Jennifer Minnich ( jminnich at, with the subject line “Junior Faculty Forum.” The deadline for submissions is March 1, 2015. Remove all references to the author(s) in the paper. Please include in the text of the email and also as a separate attachment a cover letter listing your name, the title of your paper, your contact email and address through June 2015, and which topic your paper falls under. Each paper may only be considered under one topic. Any questions about the submission procedure should be directed both to Adriaan Lanni ( adlanni at and her assistant, Jennifer Minnich ( jminnich at

FURTHER INFORMATION: Inquiries concerning the Forum should be sent to Gabby Blum (gblum at or Adriaan Lanni (adlanni at at Harvard Law School, Richard Ford (rford at at Stanford Law School, or Christine Jolls (christine.jolls at or Yair Listokin (yair.listokin at at Yale Law School.

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