Securities Law Prof Blog

New in Print

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

J.H. Dalhuisen, Globalization and the Transnationalization of Commercial and Financial Law, 67 Rutgers U. L. Rev. 19 (2015).

Martin Gelter & Zehra G. Kavame Eroglu, Whose Trojan Horse?: The Dynamics of Resistance Against IFRS, 36 U. Pa. J. Int'l L. 89 (2014).

David Groshoff, Alex Nguyen & Kurtis Urien, Crowdfunding 6.0: Does the SEC's FinTech Law Failure Reveal the Agency's True Mission to Protect--Solely Accredited--Investors?, 9 Entrepren. Bus. L.J. 277 (2015).

Joseph Hogan, Comment, Like Oil and Water: Equity Crowdfunding and Securities Regulation, 18 Lewis & Clark L. Rev. 1091 (2014).

Hayden C. Holliman, Note, The Consolidated Audit Trail: An Overreaction to the Danger of Flash Crashes from High Frequency Trading, 19 N.C. Bank. Inst. 135 (2015).

Jonathan R. Hornok, The Alternative Investment Market: Helping Small Enterprises Grow Public, 9 Entrepren. Bus. L.J. 323 (2015).

Caroline E. Keen, Note, Clarifying What Is "Clear": Reconsidering Whistleblower Protections under Dodd-Frank, 19 N.C. Bank. Inst. 215 (2015).

J. Tyler Kirk, Superior Supererogation: Why Credit Default Swaps Are Securities under the Investment Advisers Act of 1940, 6 Wm. & Mary Bus. L. Rev. 237 (2015).

Charles R. Korsmo, Market Efficiency and Fraud on the Market: The Danger of Halliburton, 18 Lewis & Clark L. Rev. 827 (2014).

Nathan Lee, The Extraterritorial Reach of United States Securities actions after Morrison v. National Australian Bank, 13 Rich. J. Global L. & Bus. 623 (2015).

Tom C.W. Lin, Reasonable Investor(s), 95 B.U. L. Rev. 461 (2015).

Brian M. McCall, Gambling on our Financial Future: How the Federal Government Fiddles While State Common Law Is a Safer Bet to Prevent Another Financial Collapse, 46 Ariz. St. L.J. 1347 (2014).

Richard Moberly, Jordan A. Thomas & Jason Zuckerman, De Facto Gag Clauses: The Legality of Employment Agreements that Undermine Dodd-Frank's Whistleblower Provisions, 30 A.B.A. J. Lab. & Emp. L. 87 (2014).

Tyler H. Morris, Note, Too Big to Jail: The Lack of Suitable Culpability Elements in the Criminal Liability of Principals, 9 Brook. J. Corp. Fin. & Com. L. 335 (2014).

Charles W. Murdock, Halliburton, Basic, and Fraud on the Market: The Need for a New Paradigm, 60 Vill. L. Rev. 203 (2015).

Hossein Nabilou & Alessio M. Paccesm, The Hedge Fund Regulation Dilemma: Direct vs. Indirect Regulation, 6 Wm. & Mary Bus. L. Rev. 183 (2015).

Adi Osovsky, The Curious Case of the Secondary Market with Respect to Investor Protection, 82 Tenn. L. Rev. 83 (2014).

Po-Ting Peng, Note, Deciding the Applicable Law in Private Antifraud Claims Arising from Cross-Border Security-Based Swaps, 24 Minn. J. Int'l L. 131 (2015).

Taylor J. Phillips, The Federal Common Law of Successor Liability and the Foreign Corrupt Practices Act, 6 Wm. & Mary Bus. L. Rev. 89 (2015).

Carlton B .Price, Note, What Money Market Mutual Fund Reform Means for Banks and Money Market Deposit Accounts, 19 N.C. Bank. Inst. 243 (2015).

Gregory Scopino, Do Automated Trading Systems Dream of Manipulating the Price of Futures Contracts? Policing Markets for Improper Trading Practices by Algorithmic Robots, 67 Fla. L. Rev. 221 (2015).

Brian J. Shea, Note, Better Go It Alone: An Extension of Fiduciary Duties for Investment Fund Managers in Securities Class Action Opt-Outs, 6 Wm. & Mary Bus. L. Rev. 255 (2015).

Gregory H. Shill, Boilerplate Shock: Sovereign Debt Contracts as Incubators of Systemic Risk, 89 Tul. L. Rev. 751 (2015).

William Shotzbarger, Note, Business and Friendship Don't Mix: The Government's Expansion of Insider Trading Liability under SEC Rule 10b5-2, 65 Syracuse L. Rev. 579 (2015).

Steven Davidoff Solomon & David Zaring, After the Deal: Fannie, Freddie, and the Financial Crisis Aftermath, 95 B.U. L. Rev. 371 (2015).

Andrew F. Tuch, The Self-Regulation of Investment Bankers, 83 Geo. Wash. L. Rev. 101 (2014).

Markus Wagner, Regulatory Space in International Trade Law and International Investment Law, 36 U. Pa. J. Int'l L. 1 (2014).

Daniel P. Willey, Note, Misplaced Reliance: Rethinking Rule 10b-5 and the Causal Connection, 95 B.U. L. Rev. 651 (2015).

New in Print

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

Norah C. Avellan, Note, The Securities and Exchange Commission and the Growing Need for Cybersecurity in Modern Corporate America, 54 Washburn L.J. 193 (2014).

Eric C. Chaffee, An Oak Is an Oak Is an Oak Is an Oak: The Disappointing Entrenchment in Halliburton Co. v. Erica P. John Fund of the Implied Private Right of Action under Section 10(b) and Rule 10b-5, 9 N.Y.U. J.L. & Liberty 92 (2015).

Harry S. Gerla, Confidentiality Agreements and the Misappropriation Theory of Insider Trading: Avoiding the Fiduciary Duty Fetish, 39 U. Dayton L. Rev. 331 (2015).

Jamie Heine, The Whittling Away of the Private Right of Action under Rule 10b-5: The PSLRA, Janus, and the Financial Crisis, 48 Creighton L. Rev. 23 (2014).

Michael J. Kaufman & John M. Wunderlich, Leave Time for Trouble: The Limitations Periods under the Securities Laws, 40 J. Corp. L. 143 (2014).

Robert Quigley, The Impulse Towards Individual Criminal Punishment after the Financial Crisis, 22 Va. J. Soc. Pol'y & L. 103 (2015).

Jennifer Rose Roeske, Note, Broader Is Better: How Courts Should Determine Whether or Not an Allegation of Fraud Falls under the Preemption Provision of the Securities Litigation Uniform Standards Act, 88 St. John's L. Rev. 433 (2014).

Mauricio Salazar, Comment, Swapping More than Regulations: Reexamining the Goals of the Dodd-Frank Act and the European Market Infrastructure Regulation on Over-the-Counter Derivative Markets, 21 Sw. J. Int'l L. 217 (2014).

Raxit Shah, Note, Staying the Course with Broker-Dealer Registration: The SEC's Impending Regulation of Crowdfunding Portals under the JOBS Act, 40 J. Corp. L. 275 (2014).

Urska Velikonja, Public Compensation for Private Harm: Evidence from the SEC's Fair Fund Distributions, 67 Stan. L. Rev. 331 (2015).

Justin D. Weitz, A Necessary Supplement: Reinvigorating Civil RICO's Securities Fraud Predicate, 21 Widener L. Rev. 27 (2015).

Cheffins, Bank & Wells on Shareholder Protection

Brian R. Cheffins, Steven A. Bank, and Harwell Wells have posted Shareholder Protection Across Time on SSRN with the following abstract:

This Article offers the first systematic attempt to measure the development of shareholder protection in the United States across time. Using three indices developed to measure the relative strength of shareholder protection across nations, we evaluate numerically the protections corporate and securities law have offered shareholders from the beginning of the twentieth century to the present day. We do so by tracking the rights accorded to shareholders across time under three important sources of corporate law, Delaware and Illinois and the Model Business Corporation Act.

Our novel study yields novel results. First, we find that the protections afforded to shareholders by state corporation law have decreased since 1900 but only modestly so. This implies that, contrary to the assumptions of many scholars, state competition in corporate law has not significantly eroded shareholder rights. Second, when we add in measures that count protections provided by federal as well as state law, we find that shareholder protection improved across time. This implies that federal intervention has played a crucial and perhaps underappreciated role in shaping U.S. corporate law. Beyond its specific findings, this study illustrates how empirical analysis of legal trends provides scholars with a new means for analyzing and resolving fundamental questions in corporate law.

Baker, Perino & Silver on Securities Class Actions

Lynn A. Baker, Michael A. Perino, and Charles Silver have posted Is the Price Right? An Empirical Study of Fee-Setting in Securities Class Actions on SSRN with the following abstract:

Every year, fee awards enable millions of people to obtain access to justice and strengthen the deterrent effect of the law by motivating lawyers to handle class actions. But the process by which judges decide how much to pay lawyers remains a black box. Settlements go in one side; fee awards come out the other. The inputs and outputs have been studied, but the actual operation of the fee-setting mechanism has not. Consequently, it is difficult to know why judges award the amounts they do or whether they size fee awards correctly.

Both numerically and in terms of dollars recovered, securities cases dominate the federal courts’ class action docket. We therefore undertook to peer into the fee-setting black box by studying in detail all of the 434 securities class actions that settled in federal district courts from 2007 through 2012. We examined the actual court filings in each case to create an original, comprehensive dataset of information on all points at which federal judges are likely to consider issues relating to fees. These data enable us to paint a picture of the fee-setting process that is unusually detailed and nuanced and that falsifies many common beliefs. 

Among our major findings are that: (1) federal judges often deviate from the path Congress laid out in the Private Securities Litigation Reform Act (PSLRA), which requires lead plaintiffs to set the terms of class counsel’s retention and federal judges to serve as backstops against abuses; (2) fees tend to be lower in federal districts that see a high volume of securities class actions than in districts that handle these cases less often; (3) fee cuts are significantly more likely among judges that see a high volume of securities class actions than among low volume judges; (4) the well-known “decrease-increase” rule, according to which fee percentages decline as settlements become larger, operates mainly in high-volume districts; and (5) judges appear to cut fees randomly, that is, on the basis of their own predilections rather than the merits of fee requests. Finally, we learn that so-called “lodestar cross-checks,” which require judges to consider the “time and labor expended by counsel” and other factors to ensure against excessive fees, accomplish nothing. Actual fee awards reflect something closer to a pure “percentage of the fund” approach.

In sum, we found little evidence that the actions currently taken by the courts in securities class actions move class counsel’s fees closer to the “right price.” We therefore propose a set of procedural reforms which courts could easily adopt that would make fee-setting in securities class actions more transparent, more compatible with the normative goals of the PSLRA, and more predictable. The reforms would encourage lawyers to invest optimally in class actions, with salutary effects for investors seeking compensation and the integrity of the financial markets.

Dombalagian on Information in Capital Markets

Onnig H. Dombalagian has published a new book, Chasing the Tape: Information Law and Policy in Capital Markets.  The website for the book offers the following overview:

Financial information is a both a public resource and a commodity that market participants produce and distribute in connection with other financial products and services. Legislators, regulators, and other policy makers must therefore balance the goal of making information transparent, accessible, and useful for the collective benefit of society against the need to maintain appropriate incentives for information originators and intermediaries. In Chasing the Tape, Onnig Dombalagian examines the policy objectives and regulatory tools that shape the information production chain in capital markets in the United States, the European Union, and other jurisdictions. His analysis offers a unique cross section of capital market infrastructure, spanning different countries, regulated entities, and financial instruments.

Dombalagian uses four key categories of information—issuer information, market information, information used in credit analysis, and benchmarks—to survey the market forces and regulatory regimes that govern the flow of information in capital markets. He considers the similarities and differences in regulatory aims and strategies across categories, and discusses alternative approaches proposed or adopted by scholars and policy makers. Dombalagian argues that the long-term regulatory challenges raised by economic globalization and advanced information technology will require policy makers to decouple information policy in capital markets from increasingly arbitrary historical classifications and jurisdictional boundaries.

New in Print

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

Todd Haugh, The Most Senior Wall Street Official: Evaluating the State of Financial Crisis Prosecutions, 9 Va. L. & Bus. Rev. 153 (2015).

Paul B. Maslo, Immunocompromised: A Call for Courts to Redefine the Boundaries of the Absolute Immunity Doctrine's Application to National Securities Exchanges, 11 N.Y.U. J.L. & Bus. 333 (2014). 

Alisha Patterson, Case Comment, Securities Law--Section 10(b) Liability Not Applicable to Domestic Securities-Based Swap Agreements on Foreign Securities--Parkcentral Global Hub Ltd. v. Porsche Auto. Holdings SE, 763 F.3d 198 (2d Cir. 2014). 38 Suffolk Transnat'l L. Rev. 233 (2015).

MaryJane Richardson, Comment, The Disguise of Municipal Bonds: How a Safe Bet in Investing Can Become an Unexpected Uncertainty During Municipal Bankruptcy, 37 Campbell L. Rev. 187 (2015).