Thursday, May 29, 2014
Joan MacLeod Heminway has posted Investor and Market Protection in the Crowdfunding Era: Disclosing to and for the 'Crowd' on SSRN with the following abstract:
This article focuses on disclosure regulation in a specific context: securities crowdfunding (also known as crowdfund investing or investment crowdfunding). The intended primary audience for disclosures made in the crowdfund investing setting is the “crowd,” an ill-defined group of potential and actual investors in securities offered and sold through crowdfunding. Securities crowdfunding, for purposes of this article, refers to an offering of securities made over the Internet to a broad-based, unstructured group of investors who are not qualified by geography, financial wherewithal, access to information, investment experience or acumen, or any other criterion.
To assess disclosure to and for the crowd, this short symposium piece proceeds in three principal parts before concluding. First, the article briefly describes securities crowdfunding and the related disclosure and regulatory environments. Next, the article summarizes basic principles from scholarly literature on the nature of investment crowds. This literature outlines two principal ways in which the behavioral psychology of crowds interacts with securities markets. On the one hand, crowds can be “mad” — irrational, foolish, and even stupid. On the other hand, crowds can be “wise” — rational, sensible, and intelligent. After outlining these two strains in the literature on the behavioral attributes of crowds, the article assesses the possible implications of that body of literature for the regulation of disclosure in the securities-crowdfunding setting. The work concludes by asserting that, when considering and designing disclosure to and for the securities-crowdfunding crowd, the insights from this behavioral literature should be taken into account.
Tuesday, May 27, 2014
The following law review articles relating to securities regulation are now available in paper format:
Lucian A. Bebchuk et al., Pre-Disclosure Accumulations by Activist Investors: Evidence and Policy, 39 J. Corp. L. 1 (2013).
Lucy Chang, Note, The Truth-on-the-Market Defense and its Relevance in SEC Enforcement Actions, 76 Law & Contemp. Probs. 341 (2013).
Reagan R. Demas, Biting the Hands that Feed: Corporate Charity and the U.S. Foreign Corrupt Practices Act, 29 Am. U. Int'l L. Rev. 335 (2014).
Jeffrey R. Favitta, Note, The Exception that Ate the Rule: Why QRM Should Not Equal QM, 18 N.C. Bank. Inst. 363 (2014).
Kevin W. Humphries, Note, Not Your Older Brother's Bonds: The Use and Regulation of Social-Impact Bonds in the United States, 76 Law & Contemp. Probs. 433 (2013).
S. Austin King, Note, Proffering the Right Evidence: Proving Loss Causation and Damages under SEC Rule 10b-5, 18 N.C. Bank. Inst. 431 (2014).
Michelle Lichtor, Note, How "Suitable" Is the Language of Suitability in the Modern Era?, 39 J. Corp. L. 201 (2013).
Tom C.W. Lin, The New Financial Industry, 65 Ala. L. Rev. 567 (2014).
Junsun Park, Enforcement of Securities Law in the Global Marketplace: Cross-Border Cooperation in the Prosecution of Transnational Hedge Fund Fraud, 39 Brook. J. Int'l L. 231 (2014).
Steven L. Schwarcz, Securitization, Structured Finance, and Covered Bonds, 39 J. Corp. L. 129 (2013).
Mark V. Vlasic & Peter Atlee, Myanmar and the Dodd-Frank Whistleblower "Bounty": The U.S. Foreign Corrupt Practices Act and Curbing Grand Corruption through Innovative Action, 29 Am. U. Int'l L. Rev. 441 (2014).
Berle V: Capital Markets, the Corporation, and the Asian Century: Governance, Accountability, and the Future of Corporate Law,The Fifth Annual Symposium of the Adolf A. Berle, Jr. Center on Corporations, Law & Society, Articles by Ross P. Buckley, Douglas W. Arner, Michael Panton, Colin Scott, Justin O'Brien, Frank Partnoy, Rachel E. Barkow, Olivia Dixon, Jeremy R. Cooper, Greg Golding, Adam D. Dixon, George Gilligan, Megan Bowman, Teemu Ruskola, Nicholas Calcina Howson, Takaya Seki, Thomas Clarke, Kent Greenfield and Roberta S. Karmel, 37 Seattle U. L. Rev. 307-811 (2014).
Friday, May 23, 2014
The SEC Actions Blog has compiled This Week In Securities Litigation (Week ending May 23, 2014).
Wednesday, May 21, 2014
On May 20, 2014 in Washington, D.C., Chair Mary Jo White offered Remarks at the Financial Accounting Foundation Trustees Dinner. Chair White concluded her remarks by noting the following:
Because accounting standards adopted by the FASB are the core of the financial reporting required by the federal securities laws, a strong relationship between the SEC and FASB is vital. Continuing development of robust and effective accounting standards that are enforceable and result in good financial reporting is our common bedrock. Investors benefit tremendously from our collaborative relationship, and I look forward to continuing and enhancing that relationship in the future.
On May 19, 2014 at the NYC Bar Association’s Third Annual White Collar Crime Institute in New York, NY, Chair Mary Jo White delivered remarks on Three Key Pressure Points in the Current Enforcement Environment. Chair White's remarks addressed "(1) the pressure of multiple regulators in the same or overlapping investigations; (2) the decision to charge individuals, entities, or both; and (3) the range of remedies and ultimate resolutions" as they impact the current enforcement environment.
On May 19, 2014 in Washington, D.C., Commissioner Kara M. Stein delivered a Keynote Address at Compliance Week 2014. In summation, Commissioner Stein offered the following two thoughts:
First, compliance is a bedrock of good markets. Second, we need your help to make compliance as strong as possible. The American public and our financial markets are counting on us.
On May 16, 2014 in Washington, D.C., Commissioner Michael S. Piwowar delivered Remarks to the First Annual Conference on the Regulation of Financial Markets. Notably, Commissioner Piwowar stated the following:
Academic research is critically important to the SEC’s mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation. Other financial regulators have long benefitted from holding academic research conferences on issues of importance to their agencies and it is high time for the Commission to do likewise.
Saturday, May 17, 2014
The following law review article relating to securities regulation is now available in paper format:
Jill E. Fisch, and Tess Wilkinson-Ryan, Why Do Retail Investors Make Costly Mistakes? An Experiment on Mutual Fund Choice, 162 U. Pa. L. Rev. 605 (2014).
Friday, May 16, 2014
NASAA’s Streamlined Multi-State Coordinated Review Program Now Accepting Applications for Regulation A Offerings
Chair White's Testimony before the Subcommittee on Financial Services and General Government Committee on Appropriations
The SEC Actions Blog has compiled This Week In Securities Litigation (Week ending May 16, 2014).
Monday, May 12, 2014
Mike Koehler has posted A Foreign Corrupt Practices Act Narrative on SSRN with the following abstract:
This article, part of an annual series, weaves together Foreign Corrupt Practices Act and related developments from 2013 into a coherent narrative of value to anyone who seeks an informed base of knowledge regarding the FCPA, its enforcement, and related legal and policy issues. Specifically, this article uses FCPA enforcement action data to highlight perennial issues associated with this new era of FCPA enforcement and otherwise discusses top FCPA or related developments from 2013. Although this article focuses on one statute and its enforcement, reference is made throughout to other significant developments in 2013 relevant to the FCPA as such references best facilitate an appreciation for many of the controversial aspects of FCPA enforcement.
Part I of this article highlights various FCPA enforcement statistics from 2013 and places the statistics in a proper and historical perspective.
Part II of this article uses certain statistics to highlight perennial issues associated with this new era of FCPA enforcement. The following issues will be discussed: (i) the prominent role non-prosecution, deferred prosecution agreements, and administrative settlements have in corporate FCPA enforcement and how criticism of these resolution vehicles continues to mount; (ii) the wide gap between corporate and individual FCPA enforcement actions and a relevant data point that helps explain the gap; and (iii) how the financial consequences of corporate FCPA scrutiny and FCPA enforcement continue to rise, how FCPA settlement amounts have come a long way in a short amount of time, and how certain excesses have come to define FCPA scrutiny.
Part III of this article highlights other top FCPA or related developments from 2013 and uses these developments to spotlight the following issues: (i) certain alarming enforcement actions and why anyone who values the rule of law should be concerned by these actions; (ii) actual judicial scrutiny of FCPA enforcement agency theories as well as how non-FCPA legal developments should cause pause as to certain FCPA enforcement theories; (iii) FCPA enforcement agency speeches and policy positions; and (iv) certain uncomfortable truths and double standards regarding the U.S. fight against bribery and corruption.
The following law review articles relating to securities regulation are now available in paper format:
Seth Chertok, The Rise of the Dodd-Frank Act: How Dodd-Frank Will Likely Impact Private Equity Real Estate, 16 U. Pa. J. Bus. L. 97 (2013).
Stanislav Dolgopolov, Linking the Securities Market Structure and Capital Formation: Incentives for Market Makers?, 16 U. Pa. J. Bus. L. 1 (2013).
Lloyd L. Drury, III, Publicly-Held Private Equity Firms and the Rejection of Law as a Governance Device, 16 U. Pa. J. Bus. L. 57 (2013).
Zachary J. Gubler, Experimental Rules, 55 B.C. L. Rev. 129 (2014).
Amanda R. Huff, Student Article, The Volcker Rule: The Prohibitions, Compliance and the Cost on the Small Bank, 41 W. St. U. L. Rev. 81 (2013).
Danielle Beth Rosenthal, Navigating the Stormy Skies: Blue Sky Statutes & Conflict of Laws, 2 Stanford J. Complex Litig. 97 (2014).
Jamie L. Yarbrough, Note, Mind the GAAP: Moving Beyond the Accountant-Attorney Treaty, 92 Tex. L. Rev. 749 (2014).
Symposium: Reducing Corporate Criminality: Evaluating Department of Justice Policy on the Prosecution of Business Organizations and Options for Reform, 51 Am. Crim. L. Rev. 1-326 (2014).
Friday, May 9, 2014
Gregory Scopino has posted The (Questionable) Legality of High-Speed 'Pinging' and 'Front Running' in the Futures Markets on SSRN with the following abstract:
Institutional investors contend that high-frequency trading (HFT) firms engage in high-speed “pinging” and “front running” of their large orders for trades. By sending out lightning fast “ping” orders for trades that operate much like sonar in the ocean, HFT firms can detect when institutional investors will make large trades in futures contracts. Once a large trade has been detected, an HFT firm rapidly jumps in front of the institutional investor, buying up the liquidity in the contract and selling it back at higher or lower prices (depending on if it was a buy or a sell order).
None other than Warren Buffett’s right-hand man, Charles Munger, has called the HFT practice “evil” and “legalized front running.” While many criticize these HFT tactics, they accept their legality at face value. But what if that understanding is incorrect?
This Article posits that at least some high-speed pinging tactics arguably violate at least four provisions of the Commodity Exchange Act – the statute governing the futures and derivatives markets – and one of the regulations promulgated thereunder. The better approach is not to view high-speed pinging as a form of front running or insider trading, but as analogous to disruptive, manipulative or deceptive trading practices, such as banging the close (submitting a high number of trades in the closing period to influence the price of a contract), spoofing (submitting an order for a trade with the intent to immediately cancel it), or wash trading (self-dealing, or taking both sides of a trade), all of which are illegal.
James P. Naughton, Tjomme O. Rusticus, Clare Wang, and Ira Yeung have posted Private Litigation Costs and Voluntary Disclosure: Evidence from Foreign Cross-Listed Firms on SSRN with the following abstract:
We use a natural experiment, the Supreme Court Ruling in Morrison v. National Australia Bank and the subsequent Dodd-Frank Act, to examine whether and how expected private litigation costs affect voluntary disclosure behavior. The Morrison decision applied a presumption against extraterritoriality for all securities actions. Congress quickly responded by exempting SEC actions through the Dodd-Frank Act, with the result that Morrison eliminates only private securities actions for shares purchased on non-US exchanges. These events lowered the expected private litigation costs for foreign firms cross-listed on US exchanges. We find a deterioration in our proxies for voluntary disclosure for these firms relative to a matched sample of US firms. The effects we document are stronger for firms with weaker home country institutions and for firms that experienced a larger decline in expected private litigation costs following Morrison. The evidence is consistent with firms responding to a reduction in expected private litigation costs by reducing voluntary disclosure.