The Disclosure Regimen of the Federal Securities Laws

2021 ◽  
pp. 13-50
Author(s):  
Marc I. Steinberg
Keyword(s):  
Market Efficiency ◽  
Investor Protection ◽  
Securities Markets ◽  
Mandatory Disclosure ◽  
Securities Exchanges ◽  
Material Information ◽  
Securities Laws ◽  
Disclosure Obligations

This chapter focuses on the disclosure framework of the federal securities laws. It explores the benefits as well as drawbacks of the current regimen and recommends measures that should be implemented to enhance its efficacy. Subjects addressed in this chapter include the focus of the securities laws on adequate disclosure rather than substantive fairness, the concept of materiality, the mandatory disclosure framework, the integrated disclosure system, the SEC’s dismantling of the mandatory disclosure framework in certain contexts, and the disclosure obligations placed upon publicly-held companies by the national securities exchanges. Upon analysis, significant gaps and drawbacks exist in this framework that should be remedied. The chapter thereupon proffers adaptable solutions that should meaningfully improve the disclosure regimen. Implementing these measures, including the requirement that companies (absent a meritorious business justification) promptly and adequately disclose all material information to the securities markets and investors, should enhance both market efficiency and investor protection.

Investor protection, corporate governance and private information-based trading

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chun-Teck Lye ◽  
Chee-Wooi Hooy
Keyword(s):  
Corporate Governance ◽  
Emerging Markets ◽  
Private Information ◽  
Market Competition ◽  
Investor Protection ◽  
Civil Law ◽  
Securities Market ◽  
Market Manipulation ◽  
Content Type ◽  
Securities Laws

Purpose This study aims to examine the effects of investor protection (PROT), internal and external corporate governance (CG) on private information-based trading (PIBT). Design/methodology/approach This study uses a sample of 3,438 firms from 42 countries for the period 2002–2015 to examine the effects of the broad and specific measures of PROT, internal CG and external CG (product market competition and block ownership [BOWN]) on a more accurate measure of PIBT using regression analysis. Findings The results show that PROT and BOWN are effective in reducing PIBT. However, the specific measure of PROT (strength of PROT) is not significant in emerging markets and civil law countries. The internal CG is also significant but has a positive effect on PIBT. Research limitations/implications The results suggest that PROT law matters in the efforts to prevent PIBT. Policymakers and securities market regulators, particularly in emerging markets and civil law countries, should focus more on refining existing securities laws and enacting detailed securities rules that explicitly prevent specific market manipulation and PIBT. Originality/value This study provides evidence for the importance of specific and detailed securities rules in different market and legal environments. Furthermore, this study uses the segregated private information-based speculative trading component to accurately measure the PIBT.

Exemptions from Securities Act Registration

2021 ◽  
pp. 51-92
Author(s):  
Marc I. Steinberg
Keyword(s):  
Investor Protection ◽  
Capital Formation ◽  
Best Interests ◽  
Securities Markets ◽  
The Past

This chapter addresses the convoluted SEC exemption framework and offers measures for effective reform. During the past four decades, Congress and the SEC have engaged in piecemeal alterations to the exemption framework. As a consequence, the exemption framework lacks clarity and unduly favors capital formation at the expense of investor protection. The chapter accordingly focuses on the exemption framework for both primary offerings and resales of securities. Its objectives are to explain why the current regimen is incompatible with the best interests of investors and the securities markets as well as to recommend the implementation of a revised framework that effectuates a more sound exemption framework. Hence, as set forth herein, the SEC’s exemption framework should be restructured so that the exemptions are tailored in a balanced manner that satisfies both issuer and investor needs.

The Public Auditor as an Explicit Insurer of Client Restatements: A Proposal to Promote Market Efficiency

2007 ◽  
Vol 22 (3) ◽  
pp. 511-526 ◽  
Author(s):  
Joshua Ronen ◽  
Kenneth A. Sagat
Keyword(s):  
Structural Change ◽  
Market Efficiency ◽  
Transition Period ◽  
Financial Information ◽  
Securities Markets ◽  
Audit Process ◽  
Audit Risk ◽  
The Public ◽  
Client Relationship ◽  
The Cost

This paper presents a proposal for reform of the public auditor—client relationship. We suggest the creation of incentives to permit public auditors to form, as an optional matter, audit risk insurers (ARIs) to assume the risk of a deficient public audit. We discuss the following in turn: (1) the need for this radical structural change, (2) why the change will produce benefits justifying the cost and dislocation resulting from implementing it, (3) how it will work, (4) the incentives necessary to bring it about, including limitations on liability, (5) the need for a transition period, and (6) the resulting benefit to not only the audit process but also the promotion of efficiency in the securities markets. An increasingly complex financial world demands better and more transparent signaling to investors. In our view, the ARI, powered by its risk assumption attributes, will function as a more efficient intermediary for transmitting financial information to investors.

scholarly journals The Deregulation of the Private Equity Markets and the Decline in IPOs

2020 ◽  
Vol 33 (12) ◽  
pp. 5463-5509 ◽  
Author(s):  
Michael Ewens ◽  
Joan Farre-Mensa
Keyword(s):  
Initial Public Offering ◽  
Bargaining Power ◽  
Private Equity ◽  
Market Failure ◽  
Securities Markets ◽  
Private Capital ◽  
Going Public ◽  
Number Of Factors ◽  
Public Offering ◽  
Securities Laws

Abstract The deregulation of securities laws—in particular the National Securities Markets Improvement Act (NSMIA) of 1996—has increased the supply of private capital to late-stage private startups, which are now able to grow to a size that few private firms used to reach. NSMIA is one of a number of factors that have changed the going-public versus staying-private trade-off, helping bring about a new equilibrium where fewer startups go public, and those that do are older. This new equilibrium does not reflect an initial public offering (IPO) market failure. Rather, founders are using their increased bargaining power vis-à-vis investors to stay private longer.

Private Securities Litigation

2021 ◽  
pp. 163-210
Author(s):  
Marc I. Steinberg
Keyword(s):  
United States ◽  
The United States ◽  
Federal Courts ◽  
Federal Legislation ◽  
Securities Markets ◽  
Securities Litigation ◽  
Disparate Treatment ◽  
Degree Of Certainty ◽  
Judicial Actions ◽  
Securities Laws

This chapter focuses on the erratic and unacceptable private securities litigation framework that prevails in the United States. The litigation structure contained in the federal securities acts was based on a different era and is not suitable for today’s securities markets. Although federal legislation has been enacted to address perceived shortcomings on an episodic basis, significant gaps and inconsistencies exist. Likewise, the federal courts, faced with a fractured statutory regimen, frequently have construed the remedial provisions in a wooden and unduly restrictive manner. The consequence of these congressional and judicial actions is a disparate liability framework that lacks sound logic, consistency, and even-handed treatment for plaintiffs and defendants alike. This chapter provides several examples of the inconsistencies and disparate treatment that prevail under the federal securities laws. Thereafter, recommendations for corrective measures are proffered. These proposals, if adopted and effectively implemented, should instill a substantially greater degree of certainty, uniformity, and equity than currently exists.

The future of SEC enforcement under the Biden administration

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
John J. Carney ◽  
Jonathan R. Barr ◽  
Teresa Goody Guillén ◽  
Jimmy Fokas ◽  
Kevin R. Edgar ◽  
...  
Keyword(s):  
Climate Change ◽  
Design Methodology ◽  
Investor Protection ◽  
Content Type ◽  
Blockchain Technology ◽  
Compliance Programs ◽  
Practical Guidance ◽  
Securities Laws ◽  
Practical Implications ◽  
Current Emphasis

Purpose To examine what to expect from Chair Gary Gensler’s SEC and the new Biden presidential administration following Chair Gensler’s U.S. Senate confirmation on April 14, 2021. Design/methodology/approach Reviews past SEC Chair Jay Clayton’s legacy and Chair Gensler’s prior regulatory actions and focus, and outlines Chair Gensler’s expected initiatives, including a heightened focus on cryptocurrency regulation, investigation of COVID-19-related fraud, and ESG and climate change disclosure. Findings This change will bring forth a Democratic majority at the SEC which, in turn, suggests that the Commission will change its current emphasis on capital formation to focus more on investor protection, rules required by the Dodd-Frank Act, inspections, examinations, and enforcement Practical implications Firms should examine their compliance programs in anticipation of heightened advocacy for investor protection; an increased focus on cryptocurrency and blockchain technology, as well as ESG disclosures with an emphasis on climate change; and an increase in inspections and examinations which will drive more enforcement in the fund industry, as well as increases in initiatives regarding transparency, additional disclosures, and investor protection. Organizations will also benefit by reexamining their existing compliance programs with the advice of counsel as a mechanism to mitigate the risk of potential securities laws violations. Originality/value Practical guidance from experienced securities enforcement and litigation lawyers.

Market efficiency across securities exchanges

1982 ◽  
Vol 34 (2) ◽  
pp. 101-109 ◽  
Author(s):  
Ronald C. Lease ◽  
Wilbur G. Lewellen
Keyword(s):  
Market Efficiency ◽  
Securities Exchanges

Securities and Exchange Commission announces enforcement initiative directed at reporting violations by public company insiders

2015 ◽  
Vol 16 (1) ◽  
pp. 19-24 ◽  
Author(s):  
Richard J. Parrino ◽  
Peter Romeo ◽  
Alan Dye
Keyword(s):  
Securities And Exchange Commission ◽  
Timely Manner ◽  
Public Companies ◽  
Content Type ◽  
The Past ◽  
Public Company ◽  
The Us ◽  
Securities Laws ◽  
Enforcement Activity ◽  
Disclosure Obligations

Purpose – The purpose of this paper is to review the enforcement initiative announced by the US Securities and Exchange Commission (SEC) in September 2014 directed at reporting violations of the Securities Exchange Act of 1934 (Exchange Act) by public company officers, directors and significant stockholders. The paper considers the notable features of the first round of SEC enforcement actions pursuant to that initiative and proposes measures public companies and their insiders can adopt to enhance compliance with their reporting and related disclosure obligations under the Exchange Act. Design/methodology/approach – The paper examines the SEC’s enforcement initiative against the backdrop of the agency’s enforcement activity since 1990 for violations by public company insiders of the reporting provisions of Sections 13 and 16 of the Exchange Act. The paper summarizes the features of the reporting violations that attracted SEC enforcement interest in the recent proceedings and identifies the factors apparently weighed by the SEC in determining the amount of the penalties sought against those charged with the violations. Findings – The SEC’s latest enforcement actions are unprecedented for insider reporting violations. The new enforcement initiative represents an abandonment by the SEC of its largely passive approach of the past dozen years in which it charged insider reporting violations only when they related to fraud or other major violations of the securities laws. If reporting violations are flagrant, the SEC now promises to target the offenders for enforcement on a stand-alone basis without regard to other possible wrongdoing. The SEC also cautions that, as it did in some of the recent enforcement actions, it may charge companies that promise to assist their insiders in the preparation and filing of their reports, but do not to make the filings in a timely manner, with contributing to the filing failures. Originality/value – The paper provides expert guidance from experienced securities lawyers.

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