Securities Law Prof Blog

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

Monday, February 6, 2017

New in Print

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

S. Burcu Avci, Cindy A. Schipani & H. Nejat Seyhun, Manipulative Games of Gifts by Corporate Executives, 18 U. Pa. J. Bus. L. 1131 (2016).

Zach DeLoy, Note, Whistle While You Work: Whistle-Blower Protection under Dodd-Frank, 62 Wayne L. Rev. 107 (2016). 

Maggie Di Vito, Student Article, Regulation Fair Disclosure and Social Media: Why Companies Must Be Careful Not to Tweet Their Ways to SEC Investigations, 18 Duq. Bus. L.J. 161 (2016).

William M. Gentry, Capital Gains Taxation and Entrepreneurship, 69 Tax L. Rev. 321 (2016).

Thomas Lair, Note, The Battle of Disclosure Versus Privacy: Corporate Executives' Personal, Private Facts, 27 U. Fla. J.L. & Pub. Pol'y 257 (2016).

Lide E. Paterno, Irresponsible Corporate-Responsibility Rules, 77 U. Pitt. L. Rev. 499 (2016).

Jeff Schwartz & Alexandrea Nelson, Cost-Benefit Analysis and the Conflict Minerals Rule, 68 Admin. L. Rev. 287 (2016).

Symposium: The Promise and Perils of Convergence in Financial Regulation and Consumer Protection, Articles by Christopher L. Peterson, Hilary J. Allen, Erik F. Gerding, Arthur B. Laby, Kenneth M. Rosen, Alan M. White and Arthur E. Wilmarth, Jr. 90 Tul. L. Rev. 1057-1329 (2016).

 

 

February 6, 2017 | Permalink | Comments (0)

Tuesday, January 17, 2017

Anderson on Insider Trading

John P. Anderson has posted When Does Corporate Criminal Liability for Insider Trading Make Sense? on SSRN with the following abstract:

Corporations are subject to broad criminal liability for the insider trading of their employees. Critics have noted that this results in a harsh irony. “After all,” Professor Jonathan Macey argues, “it is generally the employer who is harmed by the insider trading.” In the same vein, former chairman of the Securities and Exchange Commission (SEC) Harvey L. Pitt and Karen L. Shapiro point out that, “[f]ar from being responsible for their employees’ violations of the law…most of the employers who have had the unfortunate experience of employing [insider traders] are in fact the only true victims, in an otherwise victimless crime.”

It is clear that not all insider trading is victimless, and not all employers of insider traders are innocent. But I am convinced that these critics are correct to point out that the current enforcement regime is absurdly overbroad in that it affords no principled guarantee to corporate victims of insider trading that they will not be indicted for the crimes perpetrated against them.

The law should be reformed to insure that corporations are only held criminally liable where they are guilty of some wrongdoing. Section I of this Article outlines current law in the United States concerning corporate criminal liability in general. Section II then looks at corporate liability for insider trading under the current regime. Section III explains why the current regime is absurdly overbroad and in dire need of reform. Section IV then points the way to some reforms that would render corporate criminal liability for insider trading more rational, efficient, and just.

January 17, 2017 | Permalink | Comments (0)

Wednesday, January 4, 2017

President-Elect Nominates Jay Clayton as SEC Chair

Details available here.

January 4, 2017 | Permalink | Comments (0)

Tuesday, January 3, 2017

New in Print

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

John Armour & Brian Cheffins, Stock Market Prices and the Market for Corporate Control, 2016 U. Ill. L. Rev. 761.

Rutheford B. Campbell Jr, The SEC's Regulation A+: Small Business Goes under the Bus Again, 104 Ky. L.J. 325 (2015-2016).

Doron Narotzki, Dark Pools, High-Frequency Trading and the Financial Transaction Tax: A solution or Complication?, 64 Drake L. Rev. 797 (2016).

Brooke Sgambati, Note, Using the Martin Act to Bring Fraudulent Practices in Dark Pool Promotion to Light: An Analysis of the Martin Act’s Applicability to Misrepresentations Regarding the Operation of Dark Pools, 49 Colum. J.L. & Soc. Probs. 585 (2016).

January 3, 2017 | Permalink | Comments (0)

Wednesday, December 21, 2016

SEC Issues Annual Staff Reports on Credit Rating Agencies

Details available here.

December 21, 2016 | Permalink | Comments (0)

G. Jeffrey Boujoukos Named Director of Philadelphia Regional Office

Details available here.

December 21, 2016 | Permalink | Comments (0)

Sharon Binger, Director of Philadelphia Regional Office, to Leave SEC

Details available here.

December 21, 2016 | Permalink | Comments (0)

New in Print

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

Jeffrey M. Colon, Foreign Investors in U.S. Mutual Funds: The Trouble with Treaties, 35 Va. Tax Rev. 483 (2016).

Katherine Drummonds, Note, Resuscitating Dirks: How the Salman "Gift Theory" of Tipper-Tippee Personal Benefit Would Improve Insider Trading Law, 53 Am. Crim. L. Rev. 833 (2016).

Eithan Y. Kidron, Systemic Forum Selection Ambiguity in Financial Regulation Enforcement, 53 Am. Crim. L. Rev. 693 (2016).

December 21, 2016 | Permalink | Comments (0)

Tuesday, December 13, 2016

Enforcement Director Andrew J. Ceresney to Leave SEC

Details available here.

December 13, 2016 | Permalink | Comments (0)

SEC Names Dr. Narahari Phatak Associate Director for Policy in the Division of Economic and Risk Analysis

Details available here.

December 13, 2016 | Permalink | Comments (0)

New in Print

The following law review article relating to securities regulation is now available in paper format:

John P. Anderson, Anticipating a Sea Change for Insider Trading Law: From Trading Plan Crisis to Rational Reform, 2015 Utah L. Rev. 339.

December 13, 2016 | Permalink | Comments (0)

Wednesday, December 7, 2016

Division of Corporation Finance Director Keith Higgins to Leave SEC

Details available here.

December 7, 2016 | Permalink | Comments (0)

NASAA Request for Public Comment Regarding a Proposed Model Statute, a Proposed Model Rule, and a Proposed Solicitation of Interest Form to Permit Testing The Waters in Regulation A Tier 1 Offerings

Details available here.

December 7, 2016 | Permalink | Comments (0)

Podgor on Salman

Ellen Podgor from the White Collar Crime Prof Blog also has an interesting post about Salman.  She offers her thoughts about the rule of lenity concerns that may be created in other cases by the limited analysis offered by the Court in the Salman opinion.

December 7, 2016 | Permalink | Comments (0)

Tuesday, December 6, 2016

Heminway on Salman

Joan MacLeod Heminway has some nice analysis of Salman over at the Business Law Prof Blog.  Her post is worth checking out.

December 6, 2016 | Permalink | Comments (0)

Salman v. United States: A Few Observations

In Salman v. United States, the Supreme Court revisits the question of tippee liability for insider trading, a topic which the Court has not addressed since Dirks v. SEC, 463 U. S. 646 (1983).  Salman was convicted of insider trading based upon receiving material, non-public information as a gift through his brother-in-law who had received the information as a gift from his own brother.  Continuing the tradition of the Roberts Court when hearing issues of securities regulation, the unanimous majority in a opinion authored by Justice Alito ruled to maintain the status quo.  The Dirks test is noted on page 2 of the slip opinion: "The tippee acquires the tipper’s duty to disclose or abstain from trading if the tippee knows the information was disclosed in breach of the tipper’s duty."  To determine the existence of a breach of fiduciary duty, "the disclosure of confidential information without personal benefit is not enough."   To establish the existence of a "personal benefit," the Court held that the tipper receives a personal benefit either when the tipper receives a financial benefit or when giving a gift of information to a trading relative or friend because "giving a gift of trading information is the same thing as trading by the tipper followed by a gift of the proceeds."  As Justice Alito writes on page 11 of the opinion, "Salman’s conduct is in the heartland of Dirks’s rule concerning gifts."  As a result, Salman's conviction was affirmed.

Beyond standing as a reaffirmation of Dirks with minor clarification, Salman also stands for the proposition that if securities regulation is to evolve, such evolution will have to come from Congressional action, rather than from the Court.  Because the opinion was unanimous, the confirmation of Judge Merrick Garland to the Court would have made little difference in the case, and it is unlikely that Donald Trump will appoint an activist justice in this area.  As a result, we will likely be left with stale remakes of previous opinions for the foreseeable future, unless Congress decides to refresh and reinvent the existing regulation.

December 6, 2016 | Permalink | Comments (0)

SCOTUS Issues Salman

The opinion is available here.

December 6, 2016 | Permalink | Comments (0)

Monday, December 5, 2016

Macey on Insider Trading

Jonathan R. Macey has posted Beyond the Personal Benefit Test: The Economics of Tipping by Insiders on SSRN with the following abstract:

Recent insider trading cases reveal a stark conceptual divided between the federal courts and the Securities and Exchange Commission (SEC) regarding liability for securities fraud in cases in which an insider (a "tipper") gives material non-public information to a market professional or close friend or other potential trader (a "tippee"). Following a landmark Supreme Court case called Dirks v. SEC, the federal courts do not impose liability on tippers or tippees unless there the tipper receives a consequential personal benefit or is a close friend or relative of the tippee. The SEC abjures this "personal benefit" requirement, and would define the concept of personal benefit so broadly as to remove it as an impediment to insider trading prosecutions. This Article explains the economic function of the personal benefit test as establishing the criterion upon which legitimate trading on the basis of material nonpublic information can be distinguished from venal or corrupt trading. The Article shows that the personal benefit test, while a valuable innovation to insider trading jurisprudence, is severely limited because it does not capture all of the various motivations that cause insiders to convey material nonpublic information to traders. This Article fills that gap by providing a complete taxonomy of tipping and trading, and explaining what the legal consequences of all of the various forms of insider trading.

December 5, 2016 | Permalink | Comments (0)

Chief Economist and Division of Economic and Risk Analysis Director Mark Flannery to Leave SEC

Details available here.

December 5, 2016 | Permalink | Comments (0)

Sunday, December 4, 2016

SEC Advisory Committee on Small and Emerging Companies to Hold Conference Call Meeting on December 7

Details available here.

December 4, 2016 | Permalink | Comments (0)