Excerpt:
"The Securities and Exchange Commission faces a “crisis of confidence” over its in-house court, a former top agency official on Wednesday told a congressional panel examining legislation to reform the tribunal. Joseph Grundfest, a former SEC commissioner who is now a law professor at Stanford University, said there were “fundamental issues of fairness” raised by the agency’s increasing use of its five administrative law judges, including for serious cases. Mr. Grundfest was giving evidence to the House Financial Services subcommittee on capital markets. A bill introduced in October by the panel’s chairman, Scott Garrett (R., N.J), would give defendants the right to choose a trial by a federal judge or jury, rather than before one of the SEC’s in-house judges. The SEC is under pressure from critics, who worry the agency is seeking to exploit a home-court advantage by sending more of its serious cases to its own tribunal, where defendants lack some important protections offered in a trial by a federal judge or jury. When he introduced his bill, Mr. Garrett cited analysis by The Wall Street Journal showing the SEC has in the five years since October 2010 won significantly more often before its own judges than in federal court. He told the hearing Wednesday the SEC’s “extraordinarily high” win rate before its own judges came at a cost, in terms of a lack of adequate protection for defendants. Representatives of the SEC didn’t immediately respond to requests for comment. SEC officials have repeatedly defended their in-house court as being completely fair, as well as faster and more efficient than federal court."
Summary:
This Article argues the strong presumption against extraterritorial application of federal securities laws, as articulated in Morrison v. National Australia Bank, has significant implications for liability under Section 11 of the Securities Act. Morrison restricts federal securities law liability to purchases or sales "listed on domestic exchanges and domestic transactions in other securities." The Article finds that this limitation could, in some instances, dilute the incentive to engage in due diligence and have other consequences that the SEC could view as contrary to the public interest.
Summary:
This Article provides a general methodology to measure the market efficiency percentile for a stock for any relevant period, and calculates arbitrage risk for each U.S. exchange-listed common stock for every calendar year from 1988 to 2010. The Article finds that market efficiency is significantly affected by turnover (negatively), the number of market makers for Nasdaq stocks (negatively), and serial correlation in the market model of the stock (positively).
Summary:
This Article argues that the scope of recovery under the implied Section 10(b) private right should be no greater than the recovery available under the most analogous express remedy, Section 18(a), thus Section 10(b) plaintiffs must either demonstrate actual reliance as a precondition to recovery of damages, or the Supreme Court should revisit Basic, and overturn Basic's rebuttable presumption of reliance.
Summary:
This Article provides a general methodology to measure the market efficiency percentile for a stock for any relevant period, and calculates arbitrage risk for each U.S. exchange-listed common stock for every calendar year from 1988 to 2010. The Article finds that market efficiency is significantly affected by turnover (negatively), the number of market makers for Nasdaq stocks (negatively), and serial correlation in the market model of the stock (positively).
Summary:
This Article discusses the appeal (to be argued in October 2013) in which the Supreme Court will consider whether the Securities Litigation Uniform Standards Act of 1998 ("SLUSA") precludes investors' state law class actions against third-party actors, where the complaints alleged a scheme of fraudulent misrepresentation about transactions in connection with SLUSA covered securities. The defendants seek reversal of a Fifth Circuit decision that declined to apply SLUSA's preclusion provision, which essentially permitted the litigation against the defendants to proceed in federal court.
Summary:
This Article examines which independent directors are held accountable when investors sue firms for financial and disclosure related fraud, and finds that shareholders use litigation along with director elections and director retention to hold some independent directors more accountable than others when firms experience financial fraud.
Summary:
This Article identifies the central flaw of Basic that has over the decades distorted applications of fraud on the market but also suggests, building on Amgen, what the future focus should be in considering whether a suit can proceed as a class action based on fraud on the market.
Summary:
This Article examines who pays when a company settles, and finds that D&O insurance is quite protective and that individual officers rarely contribute to settlements, even in cases in which the SEC has imposed a serious penalty on the same individuals for the same misconduct.
Summary:
This Article provides commentary and analysis of the Supreme Court's February and March 2013, decisions in three major class action appeals: Amgen Inc. v. Connecticut Retirement Plan and Trust Funds (February 27, 2103); Standard Fire Ins. Co. v. Knowles (March 19, 2013), and Comcast Corp. v. Behrends (March 27, 2013).
Summary:
This Article provides some basic statistics on the timing of dismissals and settlements in securities class actions.
Summary:
This Article seeks to reconcile two seemingly conflicting definitions of a material fact: first, as one that would be important to a reasonable investor in deciding how to act in that it would change the total mix of information - although it need not necessarily change the ultimate decision of the investor as to how to vote or whether to trade, and second, as one that would affect market price - which clearly implies that it must have changed the decisions of some investors.
Summary:
This Article reviews the empirical literature evaluating the lead plaintiff provision of the Private Securities Litigation Reform Act, and concludes that, overall, the provision has markedly improved the conduct of these cases.
Summary:
Predicting Securities Fraud Settlements and Amounts: A Hierarchical Bayesian Model of Federal Securities Class Action Lawsuits
Summary:
This Article focuses on how courts have treated two types of carve-outs from federal jurisdiction under the Class Action Fairness Act of 2005 (CAFA): a mandatory carve-out, dealing with securities litigation, and a permissive carve-out, dealing with repetitive, duplicative class litigation.