Classic Securities Regulation

7/23/2019 Classic Securities Regulation

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CLASSIC SECURITIES REGULATIONBy

Harry Case Stansbury*

Chapter 1

SECURITIES INDUSTRY REGULATION

The industrial revolution started in the United States during the 19th century.1 Privatelyowned corporations organized by authority of state law.2 As a result, competition soon developedamong some states to have corporation laws that were very favorable to the formation and operation

of a corporation.3 A state such as Delaware became popular for corporations because of a lawgiving broad discretion to management.4

Laws did not initially exist in the United States to regulate the issuance of securities andtrading in the securities markets.5 The first such laws enacted were on the state level and not on thefederal level.6

Kansas enacted the first securities law in the United States in 1911.7 A number of states,especially in the Midwest, then began to enact similar laws.8 The purpose of these state securitieslaws, or Blue Sky Laws, was to regulate the Eastern promoters who were selling Midwesternerssecurities of companies with very dubious assets.9 Constitutional challenges to these laws wereunsuccessful10 and most states then enacted securities laws.11

After the rampant stock market speculation of the 1920s,12 and the famous crash of 1929,13

the Roosevelt Administration proposed, as part of its New Deal legislation, securities regulation onthe federal level.14

The Securities Act of 193315 was the initial result. The administration of this Act vested inthe Federal Trade Commission.16 The Act required the registration of securities offered bycompanies and provided for full disclosure to investors through a written prospectus.17

Further regulation of securities on the federal level resulted from the Securities ExchangeAct of 1934.18 This Act provided for the regulation of securities exchanges and the broker-dealerswho buy and sell securities.19 The Act also created the Securities and Exchange Commission toadminister the federal securities laws.20

The Public Utility Holding Company Act of 1937,21 the Trust Indenture Act of 1939,22 theInvestment Company Act of 1940,23 and the Investment Advisers Act of 194024 followed as federalsecurities law became more comprehensive.

These six Acts provided the basis for the federal securities regulation that is still in effecttoday. The Securities Investor Protection Act of 197025 provided certain federal protection toaccounts of investors held by brokerage houses. Chapter 11 of the Bankruptcy Code26 contains provisions for the handling of public companies in bankruptcy.



In 1970, the American Law Institute and the American Bar Association undertook themonumental task of drafting a Federal Securities Code to integrate the various pieces of previouslegislation into a comprehensive federal law.27

In 1980, after considerable efforts by a group of Consultants and Advisers, with ProfessorLouis Loss of the Harvard Law School as Reporter, the final draft of the Federal Securities Code

was complete.

28

However, Congress has yet to enact the Federal Securities Code.The changes in technology and the Internet has created many opportunities in the area ofsecurities regulation, but also has created many problems, especially in opportunities for fraud.29 As a result, the Securities and Exchange Commission has a section within the enforcementdivision monitoring the Internet for fraud.30

The subprime crisis was very serious and caused a severe drop in stock prices. Itespecially affected a number of large broker-dealer firms because the SEC had allowed lowercapital requirements to supposedly enhance international competition.

Stock exchanges have generally become for-profit entities owned by their members andeven the public. Many thought that the stock market crash during the subprime crisis was mademuch more serious because short selling had become easier for traders.31 The decimalization of

stock prices made short selling easier. The up-tick requirement for a short sale had beeneliminated. So Regulation SHO was modified to provide an up-tick requirement in certainsituations as an attempt to stop perceived abuses in short sales.32

The SEC had adopted two rules concerning insider trading matters. Rule 10b5-1concerned situations for planned stock sales.33 Rule 10b5-2 concerned persons who could beconsidered recipients of misappropriated information for confidentiality purposes.34

Credit Default Swaps (CDSs) were a form of supposed protection for an investor buyingderivative instruments, such as Collateralized Mortgage Bonds (CMBs) or CollateralizedMortgage Obligations (CMOs), in a transaction.35 The Commodity Futures Modernization Actof 2000 had provided that CDSs were not securities or commodities by legal definition.36

As the subprime credit crisis unfolded, securities frauds that had been in existence for

years began to unravel. A massive securities fraud was uncovered in 2008 within an investmentfund managed by Bernard Madoff.37 Offshore banks had been the source of securities fraud formany years. In 2009, a large securities fraud was uncovered involving an offshore bankcontrolled by Allen Stanford.38

After the start of the subprime credit crunch, Congress enacted the Emergency EconomicStabilization Act of 2008 to provide for the Federal Reserve Board and the United StatesTreasury to have added authority to attempt to deal with problems that were occurring in thestock markets.39 Congress then enacted the Dodd-Frank Wall Street Reform and ConsumerProtection Act of 2010 to change many of the ways in which brokerage firms and banksinteracted in stock markets.40

Congress enacted the Jumpstart Our Business Startups Act of 2012 to attempt to facilitatethe raising of capital by small corporations.41 As required by this Act, the SEC has started tochange the requirements for private placement offerings and to allow Internet crowdfunding forsmall corporate offerings.

Congress enacted the USA Patriot Act of 2001 to apply to all financial institutions,including broker-dealers, in order to address possible money laundering.42 Now, broker-dealersmust take certain steps to try to find out if there is any suspicious activity that might involvemoney laundering.



Chapter 2

DEFINITION OF SECURITY

The most prudent and practical position for entrepreneurs and corporate attorneys to takeis that which considers any type of capital raising instrument, be it equity, debt or otherwise, asecurity.

In virtually all instances, corporate financing instruments offered and sold to investorsconstitute securities.43 These include traditional items such as common stock, preferred stockand bonds, as well as debentures, notes, certificates of indebtedness, options, warrants, puts,calls, delayed delivery contracts and various investment contracts.44

However, despite this broad and oversimplified approach, it is important for the businessexecutive and his or her advisers, including legal, accounting and investment advisers, tounderstand what constitutes a security, and the necessary elements which can cause an

instrument to become classified as such.

45

The reason for the importance of this understandingis due to the fact that a commercial transaction between corporations and various other businessentities, including general partnerships, joint ventures, limited partnerships or partnerships incommendam, usually involve securities.46 This often comes as a surprise to corporate executiveswho have participated in many such deals over the years without ever considering thetransactions as having involved securities.

Section 297(a) of the Federal Securities Code47 proposes to keep the broad definition of asecurity as now contained in the Securities Act of 1933 and the Securities Exchange Act of 1934.

Investment banking firms often assist a corporation in structuring and even creatingsecurities for an offering in the current securities markets, including various derivativeinstruments.48 The last two decades have witnessed a substantial increase in the offering of

many different securities products by investment banking firms due to the transfer of assets to pools and the subsequent sale of participations to investors.49 The corporate clients of theinvestment banking firms are constantly in need of additional capital.50 Many of thesecorporations own various assets, such as loans, which are transferred to pools and then sold assecurities to investors.51 This process of creating pools of assets for sale to investors, oftencalled securitization, has resulted in making large amounts of capital available to manycorporations.52

REVES v. ERNST & YOUNG, 494 U.S. 56 (1990)

SEC v. EDWARDS, 540 U.S. 389 (2004)

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Chapter 3

OFFERING OF SECURITIES

A. EXEMPTIONS FROM SECURITIES REGISTRATION

Small Issuers

Small issuers, attempting to sell not more than $5 million of securities, can have a publicoffering by filing a notification with the Securities and Exchange Commission pursuant toRegulation A.53 This notification will include an offering circular and exhibits.54

Employee Offerings

It is important for small businesses to be able to offer securities to employees asinvestment incentive programs.55 It is likewise important that the company give such employeesfull disclosure about its business, including any established pension plans.56

Intrastate Offerings

An issuer of securities can avail itself of an intrastate exemption from registration for a public offering by selling the securities only to residents of a single state, as described in Rule147.57 All of the purchasers must be actual residents of that state and the issuer must conduct atleast 80% of its business within such state of the investors.58

Private Offerings

An issuer can rely on an exemption from registration for the sale of securities notinvolving a public offering, as described in Regulation D.59 This will allow a private placementof securities by an issuer who sells to a limited number of investors without any generaladvertising or mass solicitation of investors.60

SEC v. RALSTON PURINA CO., 346 U.S. 119 (1953)

In 1974, Rule 146 provided a safe harbor for private placements.61 In 1978, anamendment to this safe harbor rule required a notice filing with the SEC.62

Secondary Sales

Since investors who purchase securities from an issuer in an unregistered offering haverestrictions against resales, these investors must usually hold such securities indefinitely.63 Inaddition, if an investor is a controlling person or an underwriter by definition, a resale is verydifficult to accomplish.64 Over the years, a mechanism devised by securities attorneys providedfor such resales by a Section 4(1-1/2) exemption.65 This was not an actual exemption, since

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there is obviously not a Section 4(1-1/2) in the Securities Act of 1933.66 This was a procedurewhereby an investor who had held restricted securities for quite a while could sell such restrictedsecurities to a purchaser who would, in turn, agree to hold the securities indefinitely subject tothe same restrictions on resale.67 Such an investor would become a substitute investor, but wouldthen be subject to a very long additional time of holding the securities before even considering

any additional restricted resale.

68

Investors who purchase restricted securities in an unregistered offering must hold thesecurities until such time as the issuer might file for a registration with the Securities andExchange Commission and allow the investors to include the restricted securities in theregistration.69 Rule 14470 allows many of those investors to sell restricted securities pursuant toan exemption from registration, provided a necessary holding period exists and subject tolimitations on the amount of the sales of securities within a given period of time.71

Rule 144A72 allows certain qualified institutional buyers to sell restricted securities pursuant to an exemption from registration.

B. SECURITIES REGISTRATION

Companies often decide to offer securities to the general public in an initial publicoffering.73 Prior to the offer or sale of securities to the general public, it is necessary for an issuerto register with the Securities and Exchange Commission.74 This registration provides for the protection of the investing public by requiring the issuer to give full disclosure to potentialinvestors.75

Section 501 of the Federal Securities Code76 proposes to make it unlawful for any personin connection with a distribution to offer securities unless the issuer has filed an offeringstatement, but does provide circumstances whereby a holder of a particular class of securities canrequire the issuer to file such an offering statement.

An issuer of securities begins the process of registration with the Securities and ExchangeCommission by preparing and filing a registration statement, meeting the requirements as setforth in Regulation C.77 The attorneys for the issuer have the responsibility of preparing thisregistration statement.78 The registration statement will contain detailed and comprehensiveinformation on the issuer, including a prospectus, financial statements prepared by accountants,and necessary exhibits.79

The process of going public entails selling and distributing the registered securities of theissuer to many different investors in the general public.80

Most issuers will use a broker-dealer to sell the securities to a very widespread group ofindividual investors.81 The usual goal of the going public process is to sell to as large a numberof investors as is feasible, with the investors located in as broad a geographic area as possible. 82

This will result in a diverse group of investors with an interest in the issuer and name recognitionfor the issuer.83 The issuer will then be a publicly held company with the likelihood that asecondary market will develop in the securities sold.84

Certain SEC reporting companies, publicly held for a time, can file for a shelfregistration.85 This is a type of registration whereby a company will register securities for sale atsome as yet undetermined time.86 Once the shelf registration is effective, the company need onlynotify the SEC and the offering can immediately commence.87 This type of offering can beuseful to a company when market conditions are extremely volatile and constantly changing. 88

Of course, the company and the broker-dealer or broker-dealers must continuously monitor



market conditions.89 This type of offering has significantly changed the relationship of somecompanies and their broker-dealer or broker-dealers by increasing competition among theinvestment banking firms.90

C. INVESTMENT BANKING

The history of investment banking in the United States is a long and illustrious one. 91

Investment banking firms acted as catalysts in much of the conversion of the agriculturaleconomy of the early United States to the industrial economy of the modern age.92

Many large corporations sell common stock to the public through a firm commitmentunderwriting.93 In this type of underwriting, a broker-dealer or a syndicate of several broker-dealers will actually purchase at an agreed upon discount all of the securities of the issuer assoon as the registration becomes effective with the Securities and Exchange Commission.94 The broker-dealers then resell the securities to the public investors at the full offering price.95

Small corporations often must sell common stock to the public through a best effortsunderwriting.96 This is not an underwriting as such, but a process in which the broker-dealer or

broker-dealers act as agents of the issuer in selling the securities directly to the public investorsat the full offering price, charging an agreed upon commission to the issuer.97

There are variations to the best efforts underwriting. One variation is the all or none.98

Here, the broker-dealers agree with the issuer to sell all of the securities within a certain time period or return all of the funds to the investors and no sales will take place.99 Another variationis the part or none.100 Here, the broker-dealers agree with the issuer to sell a certain percentage ofthe securities within a certain time period or return all of the funds to the investors and no saleswill take place.101 If the sale of securities timely reaches the necessary percentage, the offering ofthe remaining securities may continue.102

Investment banking firms offer various products to investors. They were important in theoffering of tax shelters to investors during the 1970s and the early 1980s.103

Tax shelter offerings included real estate,104 oil and gas,105 cattle,106 mining,107 movies,108

and equipment leasing.109 One of the major factors in the tremendous proliferation of tax shelter offerings in the

1970s and the early 1980s was the entrance of the large investment banking firms into thearea.110 Early tax shelters consisted of offers made directly to wealthy individuals on a small, private basis by the promoters and their affiliates.111 As the demand for tax shelter offeringsgrew with the growth of the number of wealthy people needing them, the investment bankersrealized what an important segment of business tax shelters could become. 112 The investment bankers then started offering tax shelters in both public and private deals.113

Investment banking firms have also been important participants in the raising of venturecapital for new companies.114 Such venture capital usually originates with offerings to a fewsophisticated investors in private, directly negotiated deals.115

Certain investment banking firms have become extremely active in attempts to servicetheir investment banking clients, especially in the age of the hostile takeover or leveraged buyout.116 Because these clients often need large amounts of cash very quickly, some firms have provided bridge financing directly to the client company.117 The firm will then be repaid whenthe company registers and sells a securities offering of debt in a conventional underwriting.118 Although these bridge loans schedule repayment in a short amount of time, the investment banking firms have their capital at a substantial risk during the interim.119



These same investment banking firms might take large equity positions in some of thecombined companies created by hostile takeovers or leveraged buyouts that places them in a position of being merchant bankers.120 While merchant banking has long been traditional inEurope,121 such activity does create additional risks to the capital of these investment bankingfirms in the United States.122

On November 12, 1999, the President signed into law the Gramm-Leach-Bliley Act of1999.123 The Senate and the House of Representatives of Congress had previously passed thislegislation. The purpose of the legislation was to remove restrictions placed on banks andsecurities firms during the New Deal. That legislation was the Glass-Steagall Act of 1933.124 The result of that legislation was to separate commercial banking from investment banking.Sections 16, 20, 21, and 32 provided the restrictions.

Over the past several decades, various interpretations by government regulatory agencieshave gradually eroded the restrictions. Banks consequently have become more active in thesecurities business. However, banks wanted the restrictions repealed for domestic andinternational competitive reasons.

As a result, after a number of unsuccessful attempts in the past several sessions of

Congress, the Gramm-Leach-Bliley Act is now law. The Act repeals Sections 20 and 32 of theGlass-Steagall Act. Banks will now have the ability to enter into many aspects of the securities business and the insurance business. In addition, bank holding companies, securities firms, andinsurance companies will be able to combine operations. It is expected that the recent trendtoward consolidation of such companies by mergers and acquisitions into financial supermarketswill continue at an increased pace.

During the late 1990s, there was a boom in the initial public offerings (IPOs) of Internetcompanies.125 By the year 2000, most of these offerings had crashed.126 Abuses took place inthe placement of some of this stock to persons favored by investment banking firms. SECRegulation M governs stock trading by brokerage firms.127 A number of large brokerage firmsexperienced substantial liquidity problems and were operating on very small capitalizations.These lower capitalization levels were allowed by the SEC, the NASD, and its successor, theFinancial Industry Regulatory Authority (FINRA), over concerns about international competitionin the securities markets.128

SEC Regulation FD set forth a prohibition on selective disclosures to security analysts bycompanies.129 A number of security analysts who were affiliated with investment banking firms played an important role in securing Internet companies for IPOs by offering to give thesecompanies very favorable reports and the security analysts were compensated for this activity. 130 These arrangements were not disclosed to the investors participating in buying and selling thesecompanies.



Chapter 4

SECURITIES ACT LIABILITIES

An important basis for modern securities regulation is the requirement of providing fulldisclosure to investors in the offer and sale of securities.131 Severe civil liabilities and criminal penalties can result if a person does not provide such full disclosure to investors.132

Section 11 of the Securities Act provides a cause of action for fraud in the offering ofsecurities pursuant to a registration statement.133

Section 12(1) of the Securities Act provides a cause of action for the sale of unregisteredsecurities.134

PINTER v. DAHL, 486 U.S. 622 (1988)

Section 12(2) of the Securities Act provides a cause of action for fraud in the sale ofsecurities.135 Section 12(2) applies to sales of securities in a public offering.136

GUSTAFSON v. ALLOYD CO., INC., 513 U.S. 561 (1995)

Section 12(2) can result in damage awards without the allowance of certain offsets.137 The United States Securities and Exchange Commission can bring an enforcement action

pursuant to Section 17(a) of the Securities Act for fraud in the sale of securities.138

AARON v. SEC, 446 U.S. 680 (1980)

Violations of Section 17(a) can result in criminal penalties as well.139 A private right of action is not available to investors pursuant to Section 17(a).140

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Chapter 5

REPORTING COMPANY REGISTRATION

A company having 500 equity shareholders and reaching a level of $10 million in assetsmust register with the Securities and Exchange Commission as a reporting company. 141 Thisregistration is continuous and requires annual reports, quarterly reports, and interim reportswhere necessary.142

A. PROXY REGULATION

Publicly held reporting companies are subject to compliance with the extensive rules ofthe Securities and Exchange Commission for the solicitation and voting of proxy material.143 The companies must provide complete and full disclosure to the shareholders so they can make

an informed decision when voting on corporate matters.

144

A company can be liable for violations of the proxy requirements.145 It is important to investors for a proxy statement to contain all material information

concerning a company.146 An annual report filed with the SEC once a year provides details on the reporting

company and its activities.147 Also, a report filed quarterly provides certain financial informationon the company.148 In addition, any time a material event or a material change occurs, thecompany must file a report.149

JI CASE CO. v. BORAK , 377 U.S. 426 (1964)

MILLS v. ELECTRIC AUTO-LITE CO., 396 U.S. 375 (1970)

VIRGINIA BANKSHARES, INC. v. SANDBERG, 501 U.S. 1083 (1991)

Section 601 of the Federal Securities Code150 proposes to provide the Securities andExchange Commission with authority to require each registrant to file reports and provide suchreports to record holders of classes of securities so as to keep information current and investorsinformed.

Full disclosure of financial information has always been an integral part of securitiesregulation so that an investor has the necessary corporate information to make an informedinvestment decision in the purchase or sale of stock. The omission of material facts canconstitute securities fraud.151 It was such omissions that caused the large bankruptcy filing byEnron Corporation in 2001.152 A short time later, in 2003, it was similar omissions that causedan even larger bankruptcy filing by Worldcom Corporation.153

Congress enacted the Sarbanes-Oxley Act of 2002 to further strengthen the federalsecurities laws.154 It added to the procedures that a public company needed to do to require thatfull disclosure was being made to the public investors.

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B. CORPORATE EXECUTIVE REQUIREMENTS

Officers, directors, and controlling shareholders owning 10% or more of the voting stockof a reporting company, are insiders and must file regular reports with the Securities andExchange Commission detailing any changes in their ownership.155 Such persons are subject to

a prohibition against making any profits on the purchase and sale of stock within a 6-month period.156

BLAU v. LEHMAN, 368 U.S. 403 (1962)

RELIANCE ELECTRIC CO. v. EMERSON ELECTRIC CO., 404 U.S. 418 (1972)

KERN COUNTY LAND CO. v. OCCIDENTAL PETROLEUM CORP., 411 U.S. 583 (1973)

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Chapter 6

TRADING MARKETS

A. STOCK EXCHANGES

The New York Stock Exchange has provided an area for trading stock for many years.157 Today, stock exchanges, such as the New York Stock Exchange158 and the American StockExchange,159 register with the Securities and Exchange Commission.160 Trading takes place onthe trading floor of the stock exchange by specialists through an auction process.161

On May 1, 1975, May Day,162 members of the New York Stock Exchange could nolonger charge a fixed commission on all transactions, so such members began to negotiatecommissions.

On October 27, 1986, the day of the Big Bang,163 the London Stock Exchange eliminated

fixed commissions in favor of negotiated commissions as the New York Stock Exchange had onMay Day in 1975. The Big Bang in London, England, was important to stock purchasing sincethe London Stock Exchange is one of the largest in the world.164 The London Stock Exchangeand the Tokyo Stock Exchange in Japan contribute to what has become an almost 24 hourtrading day in stocks listed on those exchanges and in New York. 165

The New York Stock Exchange had allowed member broker-dealers to become publiccompanies.166 Now, the New York Stock Exchange itself has become a public company, as hasmany other stock exchanges in the world.167

There are also regional stock exchanges registered with the SEC and located in a numberof cities in the United States.168 Such cities as Philadelphia (Pa.), Chicago (Ill.), San Francisco(Cal.), Detroit (Mich.), Cincinnati (Ohio), and Boston (Mass.) have regional stock exchanges.169 These regional exchanges often list shares of large national companies traded on otherexchanges.170 Such trading is possible through the composite tape and the consolidatedquotation system that are part of the national market system.171 The regional exchanges mightalso list the shares of local companies not traded on any other exchanges. 172 Also, someexchanges list and trade in options on shares of stock, called puts and calls.173 A put option174 isan option to sell a given number of shares of stock at a set price within a certain time period. Acall option175 is an option to purchase a given number of shares of stock at a set price within acertain time period.

SILVER v. NEW YORK STOCK EXCHANGE, 373 U.S. 341 (1963)

GORDON v. NEW YORK STOCK EXCHANGE, INC., 422 U.S. 659 (1975)

B. OVER-THE-COUNTER MARKET

The over-the-counter market consists of the trading in all other securities not traded on astock exchange.176 Such trading is done by broker-dealers who act as market makers and buyand sell securities as principals with their own funds and by broker-dealers who act as agentsmatching buyers and sellers in the market.177 Many of the larger companies have securities

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traded on the National Association of Securities Dealers Automated Quotation System(NASDAQ),178 an electronically linked network providing instant quotations to many investorsin many different locations.179 Most of the remaining companies trade on a less frequent basiswith quotes provided by the broker-dealers who trade them to information gatheringorganizations who then publish the results, such as the well-known pink sheets.180

The SEC had long wanted a national market system so investors could get the best priceon a stock transaction. Regulation NMS was adopted.181 Many brokerage firms began to set upelectronic communication networks (ECNs) as automated exchanges to match buy and sellorders internally.182 Dozens of these ECNs came into existence and were called black boxes ordark pools, because it was usually not known exactly how they worked internally.183 It wasintended that these series of events would make the overall stock market much more efficient foran investor to obtain the best price on a stock transaction.

In the past few years, brokerage firms and investment funds have set up various trading programs that use proprietary computer code with trading strategies in the form of algorithms. 184 They go to great lengths to keep this computer code secret and to closely monitor their computer programmers so that no information on the computer code can be transferred to an outsider. 185

These programs can buy or sell stock in fractions of a second. These programs have resulted inwhat is called high frequency trading, or flash trading, and has caused great concern about theeffects on the stock market and the buying and selling of stocks by the investing public.186

C. SUSPENSION OF TRADING

The Securities and Exchange Commission has the authority to suspend trading in thesecurities of a company if it is necessary to do so for the protection of investors.187 This situationcan arise where material information is not on file with the SEC or where misinformation or falseinformation is available to investors through filings or other means such as press releases ornews stories. 188

SEC v. SLOAN, 436 U.S. 103 (1978)

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Chapter 7

SECURITIES EXCHANGE ACT LIABILITIES

A. SECURITIES FRAUD

The prevention of fraud is imperative to the maintenance of investor confidence in the public trading markets189 As a result, much litigation has taken place, especially during the past20 years, over allegations of fraud in the sale of securities.190 The rights and remedies ofdefrauded investors have become well established by this myriad of litigation.191 Investorsdefrauded in the purchase of publicly offered securities, as well as privately offered securities,have causes of action against the sellers.192 The Private Securities Litigation Reform Act provided for heightened requirements to maintain securities lawsuits. 193 The SecuritiesLitigation Uniform Standards Act was designed to limit certain securities lawsuits in state

courts.

194

It is now clear that professionals, such as attorneys and accountants, involved insecurities matters can face serious liabilities as a result of these activities.195 The attorneys andaccountants must exercise extreme caution in carrying out their professional duties so as toexhibit proper responsibility in order to avoid such liabilities.196

Section 1301 of the Federal Securities Code197 proposes to make it unlawful for any person to engage in a fraudulent act or to make a misrepresentation in connection with a sale or purchase of a security.

Over the years, confusion had arisen concerning a statute of limitations period for civilfraud liability claims.198 Many courts used the state securities law statute of limitations in thestate where the federal claim existed, causing different treatment from state to state.199 Thestatute of limitations is now one year from the sale of the security or three years from the sale, ifthe fraud was concealed.200

BLUE CHIP STAMPS v. MANOR DRUG STORES, 421 U.S. 723 (1975)

ERNST & ERNST v. HOCHFELDER , 425 U.S. 185 (1976)

DURA PHARMACEUTICALS, INC. v. BROUDO, 544 U.S. 336 (2005)

B. MATERIALITY

TSC INDUS., INC. v. NORTHWAY, INC., 426 U.S. 438 (1976)

BASIC v. LEVINSON, 485 U.S. 224 (1988)

C. AIDING AND ABETTING

CENTRAL BANK OF DENVER v. FIRST INTERSTATE BANK OF DENVER , 511 U.S. 164(1994)

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STONERIDGE INV. PARTNERS v. SCIENTIFIC-ATL., 552 U.S. 148 (2008)

D. CAUSES OF ACTION

HERMAN & MACLEAN v. HUDDLESTON, 459 U.S. 375 (1983)

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Chapter 8

BROKER-DEALER REGULATION

A. REGISTRATION

Persons who are in the business of buying and selling securities must register with theSecurities and Exchange Commission and meet the requirements of the SEC rules for thecontinuing operation of a broker-dealer firm.201 The broker-dealer must also become a memberof a stock exchange registered with the SEC or a self-regulatory organization (SRO) registeredwith the SEC, such as the National Association of Securities Dealers, now FINRA.202

Problems have existed for many years because a number of broker-dealer firms haveelected to specialize in the penny stock market.203 This penny stock market consists of stocksthat trade for pennies a share and do not have a listing on any stock exchange or on the

NASDAQ electronic market for over-the-counter trading.

204

An investor might find pricequotations for the stocks, if at all, in the pink sheets.205 The pink sheets comprise a daily publication distributed to broker-dealers.206 As a result, the investor has difficulty determiningthe current bid and asked price of the stock in the over-the-counter market.207 Also, because ofthe lack of information about volume and which market makers are active, large spreads can be present between the bid and asked price.208

Problems with broker-dealer firms operating as boiler rooms or bucket shops have alsoexisted for a long time.209 A boiler room is a room containing many telephones where salesagents spend most of their time calling potential investors.210 These sales agents use high- pressure sales techniques to induce investors to purchase securities.211 A bucket shop is a firmthat will make purported sales of stocks to investors, but will keep the funds and not actually purchase the stock for the investors.212

Firms have set up to offer day trading accounts and equipment to individuals for the purpose of rapidly trading in and out of the stock market, with the goal of making a small profiton each trade.213 In a similar vein, many investors with online accounts are involved in daytrading activities by rapidly purchasing and selling stocks during a single day.214

B. BROKER-DEALER LIABILITY

Broker-dealers can be liable to customers for violations of the securities laws.215 Broker-dealers can be liable to customers for churning accounts.216 Broker-dealers can be liable to customers by charging excessive mark-ups on the price of

securities and not disclosing such.217 Broker-dealers can be liable to customers by not performing a due diligence investigation

of the securities being sold.218 Broker-dealers can violate the rules of SROs by not determining the suitability of the

customers for buying particular securities.219 Section 1416 of the Federal Securities Code220 proposes to provide that a member of a

self-regulatory organization who violates a rule of the organization is liable to a customer for anyloss caused by the violation.



Broker-dealers can be liable to customers for violations of the securities laws by personsunder their control.221

C. ARBITRATION

Mandatory arbitration is required where an investor and a broker-dealer firm sign anagreement to arbitrate. This agreement is usually contained in an application to open an account.Indeed, broker-dealers today require customers to sign agreements to submit claims for securitieslaw violations to arbitration.222

RODRIGUEZ v. SHEARSON AMERICAN EXPRESS, INC., 490 U.S. 477 (1989)

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Chapter 9

INVESTMENT ADVISER REGULATION

A. INVESTMENT ADVISERS

A person who provides advice on the purchase and sale of securities for compensationmust register as an investment adviser with the Securities and Exchange Commission.223 Suchinvestment advisers then have the responsibility of providing appropriate disclosure informationto their clients.224

Many persons who manage the portfolios of private hedge funds have faced problems in becoming registered with the SEC as investment advisers.225 Previously, a registered investmentadviser could not participate in a performance fee.226 The investment adviser would not registerwith the SEC by claiming to only have one or so clients, namely the hedge fund.227 However, it

was possible that the individual partners could be all counted as clients separately causing theinvestment adviser to have to register with the SEC.228 As a result, a rule now allows, under certain circumstances, a registered investment

adviser to participate in a performance fee for managing the portfolio of a hedge fund. 229 Also, arule now allows, under certain circumstances, the consideration of a hedge fund as only oneclient so an investment adviser of such hedge fund might not have to register with the SEC.230

Today, many persons are becoming active in the financial planning business. 231 Thegreat surge in applications for investment adviser registration by these financial planners hascaused the United States Securities and Exchange Commission to consider the requirement of amembership in a self-regulatory organization that would register with the SEC.232

SEC v. CAPITAL GAINS RESEARCH BUREAU, 375 U.S. 180 (1963)

TRANSAMERICA MORTG. ADVISORS, INC. (TAMA) v. LEWIS, 444 U.S. 11 (1979)

LOWE v. SEC, 472 U.S. 181 (1985)

B. GROWTH OF INSTITUTIONAL INVESTORS

Institutional investors constitute a growing percentage of the volume of securities purchased in the securities markets.233 This trend started several decades ago.234 Today,institutional investors represent a significant factor in the securities markets.235

Institutional investors pool the funds of many individual investors to achieve a reducedcost for the management of portfolio securities, such as in the area of administrative costs andnegotiated commissions on large, block purchases of stock.236 These institutional investor poolsalso allow the individual investor to achieve a diversity of risk by owning interests in a portfolioconsisting of the securities of many different companies.237

Portfolio managers attempt to structure the portfolio so as to increase investment returnand to minimize risk, often treating risk in an analytical manner.238 The alpha coefficient is theestimate of an asset's rate of return when the market is stationary.239 The beta coefficient can be

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used for rankings of the systematic risk of different assets.240 Some portfolio managers utilize technical analysis in the selection of stocks.241

Technical analysis is the use of charts showing the stock market price and volume performanceof a stock to try to discern a trend for predicting a future price level.242

Most portfolio managers utilize fundamental analysis in the selection of stocks.243

Fundamental analysis is the determination of the intrinsic or book value of the stock of acompany by using such ratios as the common-stock ratio and the price-earnings ratio to findwhether a stock is undervalued or overvalued in the stock market. 244



Chapter 10

TENDER OFFERS

A. FEDERAL REGULATION

Hostile Tender Offers

The hostile tender offer is one of the most intriguing areas of modern corporate finance.Much of the financial press covers the latest battle between corporate raiders and their prey. 245 Not only is the control of vast corporate treasuries at stake,246 but also are large investment banking fees and legal fees.247

This area is one that evokes a considerable amount of emotionalism, which is unusual for

the business arena.

248

Many political issues, as well as issues of economic, sociological and psychological importance, exist in large hostile takeover attempts.249 Entire communities,especially in locations where the target company might be a dominant industry, will usuallymobilize.250 Complaints of all types reach regulatory authorities.251 Lawsuits in many differentcourts, both state and federal, allege various claims and counterclaims against the raider and thetarget company.252 These include claims involving antitrust laws, securities laws, state takeoverlaws, omissions of material information in disclosure documents or misleading disclosurereleases.253

Section 299.9(a) of the Federal Securities Code254 proposes to provide a definition of atender offer to mean an offer to buy a security, or a solicitation of an offer to sell a security,directed to more than thirty-five persons.

One of the major factors in the great increase of hostile tender offers was the entrance ofthe large investment banking firms into the area in the 1970s.255 These firms had made large fees by advising their corporate clients in mergers and acquisitions during the conglomerate days ofthe 1960s.256 Such mergers and acquisitions were usually friendly, negotiated deals.257 Theinvestment bankers then realized that much larger fees were available over very short periods oftime in a hostile tender offer and they then became active in advising their corporate clients to proceed.258

The investment banking firms can provide financing to their clients for hostile tenderoffers by raising funds through the sale of junk bonds.259

The investment banking firms have also provided financing to recently formed shellcompanies by selling junk bonds or preferred stock, usually in private transactions, for use in possible hostile tender offers.260

These shell companies can then proceed to acquire stock in a potential target company insecret, until acquiring 5% of the stock.261 Any person or group acquiring 5% or more of theequity securities of a public company must make a timely filing of a report with the SEC.262 Atthat time, the filing of a report with the Securities and Exchange Commission causes theownership to become public information.263 When the filing of such a report takes place, it cancause an increase in the market activity of the stock of the company because of speculation thatthe company is in play.264 This term means that a company has attracted a potential purchaser.265



When a company is in play, the possibility exists that another person, group, or raidermight try to acquire the company at an even higher price.266 The speculators and the riskarbitrage firms will often purchase large amounts of stock based on these reports, especially if aknown corporate raider has filed the SEC report.267 Risk arbitrage firms attempt to positionthemselves to make a profit on the differences in prices between the current market price of a

stock and a higher price if the company is later acquired in a merger or tender offer.

268

The corporate raider then can consider or at any time may make a hostile tender offer fora majority of the outstanding stock so as to gain control of the target company. 269 Of course, thecorporate raider can elect to acquire less than control of a target company and hold the stock for possible resale in the market or to another company who might become interested in making ahigher tender offer.270

The raider might actually decide to sell the acquired stock back to the target company in agreenmail transaction.271 A greenmail transaction involves the purchase of all of the stockowned by a raider at a profit in order to cause the threat of a hostile takeover to go away.272

PIPER v. CHRIS-CRAFT INDUS., INC., 430 U.S. 1 (1977)

SCHREIBER v. BURLINGTON NORTHERN, INC., 472 U.S. 1 (1985)

Mergers and Acquisitions

The area of mergers and acquisitions is very active today and has remained so for overtwo decades.273 Many corporations are continually seeking other companies for expansion purposes that they perceive as undervalued in their own business lines or even in attractive new business lines.274 In most corporate combinations, either by merger or acquisition, securitiestransfer to the shareholders of at least one of the corporations.275 These securities are often thecommon stock of the surviving corporate entity, but can also consist of preferred stock or debtinstruments.276 It is imperative that these securities only transfer after registration with theSecurities and Exchange Commission, or pursuant to an appropriate exemption from suchregistration.277

A significant problem has existed for a number of years in the stock market due to shellcorporations.278 These are corporations that have no business activity and virtually no assets orliabilities.279 Many such shells were once viable corporations that underwent a valid publicoffering, but expended all of their funds in business activities, and then went out of the business.280 These shell corporations often trade in the stock market with very little publicinformation available, or with substantial misinformation present because of rumors orspeculation.281 Because of earlier problems with many of these shells, the Securities andExchange Commission has taken steps to require that the securities distributions of any suchshell corporations register with the SEC or be subject to an appropriate exemption.

More recently, problems have evolved around the creation of a shell corporation by the process of having a corporation go public with the sole purpose of merging with a yetunidentified company, or, in effect being a blank check or blind pool offering. 282 These shellscreated by a blank check or blind pool offering then trade in the market with very littlesubstantiated information until the corporation might publicly announce a potential merger.283

In modern corporate finance transactions, including business combinations, many kindsof securities are issued.284 It is important that full disclosure of all corporate finance aspects of a

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transaction be given to shareholders in order to increase investor confidence in the securitiesmarkets.285

An aspect of corporate finance for consideration and disclosure is the accountingtreatment of a transaction in the financial statement of a company.286 Such accounting treatmenton the balance sheet of a company can have an effect on the income statement so as to reflect on

the reported earnings.

287

In a merger or acquisition transaction, consideration must be given towhether the accounting treatment will be reflected as a purchase or as a pooling of interests.288 A purchase accounting treatment can increase the cost basis for assets and provide for a largerdepreciation base.289 A pooling of interests accounting treatment can result in higher earnings being reported by a company if the acquired company had earnings itself.290

An aspect of corporate finance that must be considered and disclosed in transactions isthe income tax treatment pursuant to the Internal Revenue Code as relates to the corporation andits shareholders.291 Most merger or acquisition transactions are structured so that the survivingor parent corporation does not recognize any income tax gains and the shareholders can deferany income tax gains until the securities held are sold.292

An aspect of corporate finance is the consideration and disclosure of the state corporation

law under which the corporation operates so as to determine the authority of a company to enterinto various transactions.293 Because a large number of publicly traded industrial corporationsare incorporated in Delaware, such state has become the choice of many new incorporations eachyear.294 Consequently, the Delaware General Corporation Law is essential to understandingcorporate finance transactions.295 This is especially necessary in the mechanics of merger andacquisition transactions.296 Fairness in the determination of value of the combining companies isimportant to the shareholders.297 Dissenting minority shareholders may have appraisal rights tohave value determined.298

The Board of Directors of a corporation who does not give proper consideration tofairness of value or shareholder rights can become subject to derivative lawsuits brought byshareholders.299 In such a situation, the corporation and members of the Board of Directors canalso become subject to lawsuits brought by shareholders, including class actions. 300 Today, aBoard of Directors facing a decision on a business combination will likely request a fairnessopinion before voting, with such fairness opinion usually rendered by an investment bankingfirm.301

An aspect of corporate finance that must be considered and disclosed, if applicable, intender offers as well as mergers and acquisitions is the effect of federal antitrust law to thecombined entity, especially if the resulting company will be large and a dominant force in theindustry.302 In a tender offer involving large companies, notice must be given to federalgovernmental authorities pursuant to antitrust law.303

Going Private

Many companies go public by having an initial public offering (IPO) of securities,usually common stock, sold to public investors.304 This normally will result in a trading marketfor the shares of common stock with price quotations provided by various broker-dealers who actas market makers.305 It also will result in the company becoming subject to various periodicallyrequired governmental disclosure filings as well as the requirement of the disclosure of anyextraordinary event.306

Most companies have an IPO in times of euphoric rises in the stock market. At those



times, investors are very receptive to equity ownership and such offerings will attract substantialattention. Also, because of the prevailing attitude among investors, many of the new issues ofshares of common stock will rise in price in the aftermarket. If the company is in an industryconsidered glamorous or hot by the marketplace, the rise in price might be spectacular.307

Of course, stock market activity will almost invariably turn downward at some point.

The result is that new issues will then cool off, especially if the drop is extreme as happened onOctober 27, 1987, Black Monday.308 It is often at this juncture that the founders of a company may decide that the stock

market has undervalued its shares, especially after a precipitous drop in market price, and thecompany can repurchase such shares from the public shareholders at a fraction of the initial issue price. Thus, the result could be a going private transaction.309 Afterwards, the founders couldown a private company much better capitalized as a result of the IPO, with a going business, andno longer subject to extensive governmental reporting requirements.310

Leveraged Buyouts

A leveraged buyout (LBO) of a company is the purchase of a company by the use ofextensive borrowed capital, secured by the assets of the business, with the debt paid from theearnings, and possibly partial sale of assets, of the company.311

Despite the extensive media coverage of the LBO lately, such corporate financing is not anew phenomenon.312 Actually, for many years companies have used LBOs in the sale ofcorporate divisions.313 Often companies would be eager to dispose of subsidiaries with stodgyearnings or in unpopular industries that may reflect on the overall image or perceived image ofthe parent company.314 Such parent companies would sell the division to members ofmanagement or to other companies at a very attractive price, often assisting in arrangingextensive debt financing for the sale.315

Of course, the recent upsurge in LBOs and management buyouts (MBOs) has not alwaysinvolved the traditional company division, but has also involved attractive private companies,and even more interestingly, public companies.316

Such LBOs can utilize several different steps, including tender offers, mergers,acquisitions and going private transactions.317 The result of an LBO is a company owned by afew individuals or investment groups, with several layers of debt, and expecting to liquidate thedebt through earnings and sale of divisions, assisted by large tax write-ups of assets andconsequently much larger tax depreciation schedules than previously existed.318

Many of the highly leveraged corporate combinations obtain financing through junk bonds.319 The term junk bond means a bond that does not have a rating or has a rating of lessthan investment grade.320 A bond of this type is a speculative investment.321 As a result, the bond will usually have a much higher yield to attract investors.322

B. STATE REGULATION

Because of the presence of the hostile takeover threat to the modern public corporation,many such corporations have devised a number of defensive strategies and adopted defensivecorporate measures.323

Since many public corporations incorporate in Delaware, national attention has focusedon the Delaware Chancery Court and the Delaware Supreme Court, especially in the decisions



and opinions concerning the business judgment rule.324 Because of the business judgment rule,courts are reluctant to substitute their judgment for the judgment of the board of directors of acorporation concerning business matters.325

In the 1970s, in response to the growing use of the hostile tender offer to take control of public corporations, many states began to enact state take-over laws.326 These laws appeared to

corporate raiders as favoring incumbent management of locally important industries to the stateand offering protection to such local corporations from unwanted hostile takeovers.327 As aresult, much litigation has taken place over the state take-over laws.328 The hostile tender offerhas continued through the 1980s and into the 1990s as a viable mechanism for the corporateraider.329 Likewise, many states have continued to show an interest in enacting such state take-over laws and litigating over them.330

CTS CORP. v. DYNAMICS CORP. OF AMERICA, 481 U.S. 69 (1987)

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Chapter 11

INSIDER TRADING

A substantial amount of media attention has recently focused on insider trading ofstock.331 This is the trading of stock in the market based on material nonpublic information.332 Officers, directors, and large shareholders of corporations usually know such information as wellas persons to whom they might give a tip.333 Any person who acts on such inside information issubject to civil liabilities and criminal penalties.334 The Securities and Exchange Commissioncan also bring administrative enforcement actions against such persons.335

Investment banking firms have tried to eliminate inside information problems bymaintaining a strict separation of the corporate finance departments from the trading departmentsthrough the use of a Chinese Wall.336 Such a Chinese Wall acts as a barrier to the flow of anyinformation from corporate finance personnel to trading personnel.337

Inside information is still a serious problem for the investment banking industry.

338

Despite considerable efforts to curb the use of inside information, situations continue to surfacein the media regarding such abuses.339

Section 20A of the Securities Exchange Act, added in 1988, provides for penalties forinsider trading violations.340

Section 21A of the Securities Exchange Act, added in 1988, provides for specificdamages for insider trading violations.341

Section 1303 of the Federal Securities Code342 proposes to make it unlawful for aninsider to sell or buy a security of the issuer if the insider knows a fact that is not generallyavailable, and includes a definition of an insider to mean the issuer, a director or officer of theissuer, a person controlled by, or under common control with, the issuer, and includes asecondary insider whose relationship or former relationship to the issuer gives or gave access toa fact of special significance about the issuer or the security not generally known, or who learnssuch a fact from an insider.

CHIARELLA v. UNITED STATES, 445 U.S. 222 (1980)

DIRKS v. SEC, 463 U.S. 646 (1983)

UNITED STATES v. O’HAGAN, 521 U.S. 642 (1997)

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Chapter 12

SPECIAL SECURITIES MATTERS

A. INVESTMENT COMPANIES

A company must register with the Securities and Exchange Commission as an investmentcompany if it is in the business of investing in the securities of other companies, and has 100 ormore shareholders.343 These investment companies comprise the gigantic mutual fund industrythat provides an opportunity for small investors to pool their funds and invest in many differentcompanies efficiently by purchasing large institutional size blocks of stock.344

JONES v. HARRIS ASSOCIATES, 559 U.S. 335 (2010)

Performance in the portfolio management of mutual funds is extremely important sincethe industry is very competitive and the performance results of all mutual funds becomes publicly known.345

Private investment companies have existed for many years in a form called hedgefunds.346 These hedge funds can trade in and out of securities very rapidly and use suchspeculative techniques as margin purchasing of securities and short selling of stock.347 Offers to participate in such funds are usually only made privately to wealthy individuals.348 The amountof required investment is high since the funds allow a limited number of investors to participate.349 The funds also limit the participants to sophisticated purchasers.350 This isnecessary because of the extremely speculative nature of the trading techniques used in the portfolio management.351 The portfolio manager, or managers, often use a compensationarrangement based on a percentage of profits.352 Some public mutual funds have compensationarrangements for portfolio management based on profits,353 but they are usually not as lucrativeas those of the private funds.354

Private investment companies continue to offer various participations to institutions,wealthy families, and wealthy, sophisticated individual investors.355 These private investmentcompanies usually are structured as hedge funds or venture capital funds.356 In 1994, it wasestimated that there was $47,000,000,000 raised by these hedge funds.357 In 1998, it wasestimated that there was $26,000,000,000 raised by these venture capital funds. 358 Such amountsare only estimates because these private investment companies are not required to publicly reportinformation and do not usually voluntarily reveal statistical information.359 The funds continueto offer securities in private placements and limit the number of investors.360

B. STATE SECURITIES REGULATION

State securities laws were first enacted in the United States in 1911. Challenges to theearly securities laws of the various states on Constitutional grounds were unsuccessful. WhenCongress enacted the federal securities laws in the 1930s, it preserved the rights of the states tohave securities laws.

Over the years, the states have had national associations such as the North American

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Securities Administrators Association (NASAA), and the Midwest Securities CommissionersAssociation that disbanded in 1980, in order to achieve a certain amount of uniformity in thestate securities laws.361

A Uniform Sale of Securities Act was adopted in 1929, but few states were interested init, and the federal securities laws were adopted soon after.362

In 1956, the National Conference of Commissioners on Uniform State Laws adopted theUniform Securities Act.363 In 1985, the National Conference of Commissioners on UniformState Laws adopted the Revised Uniform Securities Act.364

Many states have adopted most or a significant portion of the original Uniform SecuritiesAct, and a number of states considered the revised version.365

Section 101 of the Uniform Securities Act366 provides that it is unlawful for any person,in connection with the offer, sale or purchase of any security, directly or indirectly, to defraud, tomake any untrue statement of a material fact, or to omit to state a material fact.

Section 102 of the Uniform Securities Act367 provides that it is unlawful for any personwho receives any consideration from another person primarily for advising the other person as tothe value of securities or their purchase and sale to defraud the other person.

Section 201 of the Uniform Securities Act

368

provides that it is unlawful for any person totransact business in the state as a broker-dealer, agent, or investment adviser unless registered,which registration is subject to annual renewal.

Section 301 of the Uniform Securities Act369 provides for a requirement that any securitymust be subject to registration before offered or sold in the state unless the security or transactionis exempt.

Many states provide for several types of registration.370 Typical types of registrationwould be qualification, notification, and coordination.371

One of the most glaring and controversial aspects of many states securities laws is themerit regulation of securities offerings.372 Unlike federal securities laws, which are based on fulldisclosure to investors, merit regulation allows the state to register only those securities offeringsthat meet certain fair, just and equitable standards.373

The parties to modern securities transactions can very well reside in different states in theUnited States. While most attorneys and business executives are aware of the existence of thevarious federal securities statutes and the various state securities laws, they usually exhibitsurprise to learn that routine business transactions can often involve these federal and statesecurities laws.374 It is possible to have several different state securities laws involved in thesame domestic transaction.375 Because business transactions often take place between partiesresiding in different states or with legal entities domiciled in different states, more than one statesecurities law could have an effect on the transaction.376 As a result, such domestic transactionscan involve the state securities laws of several states at the same time.377

Section 1904 of the Federal Securities Code378 proposes to preempt state securities lawsunless the state securities commission has a procedure for registering a distribution of securitiessubstantially coordinated with the procedure of the Securities and Exchange Commission, and torequire the state to accept the federal registration statement and offering statement.379

Section 514 of the Federal Securities Code380 proposes to provide for a local distribution, being one that results in sales substantially restricted to persons who are residents of, oremployed primarily in, a single State, or an area in contiguous States, or a State and a foreigncountry, if such area meets a definition based on consideration of its population and economiccharacteristics, and involves securities of an issuer that does business primarily in that State or



area, regardless of where organized, and also to extend to a local distribution by a secondarydistributor, whether or not a resident of the State or area, but only if the secondary distributor didnot buy securities of the same class in connection with a limited offering.381

Broker-Dealers and their Agents must register with states where they do business. Thisregistration is done on the Central Registration Depository (CRD) system. This is a

computerized database. Investment Advisers now register with the state where their principal place of business is located or with the United States Securities and Exchange Commission.Investment Advisers with $25 million or more under management must register with the SEC.Those with less than $25 million under management must register with the local state. Acomputerized database for Investment Advisers and their Representatives was organized.Registration is now done on this Investment Adviser Registration Depository (IARD) system.

Congress enacted the National Securities Markets Improvement Act of 1996 that preempted some parts of state securities laws.382 After these amendments to the federalsecurities laws, a further revised Uniform Securities Act was adopted in 2002.383 The purposewas to coordinate the remaining parts of the state securities laws with the federal securities lawsto continue to have effective securities regulation.384

TRAVELERS HEALTH ASSN. v. VIRGINIA EX. REL. STATE CORPORATION COMM’N., 339 U.S. 643 (1950)

C. INTERNATIONAL SECURITIES REGULATION

In the modern world of corporate transactions and deals, it is often necessary for several persons, corporations and/or other legal entities, such as general partnerships, limited partnerships or joint ventures, to enter into agreements for the purchase of securities in a particular venture.385 It is more than likely that the parties will reside in different states, or evencountries.

It is also possible to have the involvement of federal securities laws in a transaction in aforeign country or countries, as in situations provided for in Regulation S.386

The federal securities laws can have an effect on a transaction involving United Statescitizens investing in a foreign transaction.387

It is necessary for all attorneys and business executives involved in modern businesstransactions to be fully aware and cognizant of the possibility that federal securities law isapplicable to many such transactions conducted in foreign countries.388

Section 416 of the Restatement of the Foreign Relations Law of the United States 389 asrevised by the American Law Institute provides that the United States generally has jurisdictionto prescribe with respect to any transaction in securities in the United States to which a nationalor resident is a party, to conduct, regardless of where it occurs, significantly related to suchtransaction, if the conduct has, or intends to have, a substantial effect in the United States, and toconduct occurring predominantly in the United States related to a transaction in securities, evenif the transaction occurs outside the United States.390

Section 403 of the Restatement of the Foreign Relations Law of the United States 391 asrevised by the American Law Institute provides that the judging of whether or not the exercise of jurisdiction is reasonable or unreasonable requires evaluating all relevant factors, including, theextent to which the activity takes place within the regulating state, or has substantial, direct, andforeseeable effect upon or in the regulating state.392

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Section 1905 of the Federal Securities Code393 proposes to apply federal securities law toa sale of a security, an offer to sell or buy a security, or an inducement not to buy a security, a proxy solicitation, a tender offer, or any activity as an investment adviser that occurs within theUnited States although initiated outside the United States, as well as to any prohibited, required,or actionable conduct whose constituent elements occur to a substantial, but not necessarily

predominant, extent within the United States or some or all of whose constituent elements occuroutside the United States but cause a substantial effect within it.A number of agreements are in effect between various exchanges and market systems in

the United States and other such entities in foreign countries to foster the international trading ofsecurities.394 In addition, agreements are in effect, usually consisting of a Memorandum ofUnderstanding or a mutual assistance treaty,395 between securities regulators in the United Statesand securities regulators in a number of foreign countries to facilitate the sharing of informationand to provide official assistance in obtaining information.396

More and more foreign countries have local securities laws that affect securitiestransactions.397 Many of these countries are currently in the process of modernizing theirsecurities laws to reflect the growing globalization of the trading markets as well as complex

transnational financing arrangements.

398

There are large stock exchanges in many countries around the world. They activelycompete for the stock listing business of corporations. A number of large corporations havestock exchange listings on several different exchanges. And sometimes in several differentcountries.

Stock trading has become an international business and it is often difficult to determinewhat law or laws apply to a given transaction.399 In 2010, the United States Supreme Court heldthat courts should use a transactional test to determine the applicability of United States law to a particular situation.400

MORRISON v. NATIONAL AUSTRALIA BANK LTD., 561 U.S. 247 (2010)

*The author is a member of the bars of Louisiana, New York and the District of Columbia. The authormaintains an office in New Orleans, Louisiana.

© 2000-2015 Harry StansburyAll rights reserved.

No claim of copyright for official U.S. Government works.

Securities Law Sources:

Lexis/Nexis and Westlaw both have extensive securities law information on their respective websites.Google Scholar has most United States Supreme Court decisions and other securities law material availableon its website. Bloomberg Law has an extensive amount of securities law material on its website, as well asmany Administrative decisions by the Securities and Exchange Commission. In addition to these specificwebsites, there are a number of websites that can provide securities law information at some law schools andat some law firms, and many of these locations can be accessed with no cost or password required.

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APPENDIX

Stockholder Reports

Apple Annual Report

Apple Proxy Statement

Offering Documents

Dreamworks Animation Prospectus

Facebook Prospectus

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1 See LUCIUS BEEBE, THE BIG SPENDERS 3-7 (1966); VINCENT P. CAROSSO, INVESTMENT BANKING

IN AMERICA 32 (1970); RON CHERNOW, THE HOUSE OF MORGAN 24 (1990); ARCHIBALD COX, THEROLE OF THE SUPREME COURT IN AMERICAN GOVERNMENT 31-34 (1976); MORTON J. HORWITZ,

THE TRANSFORMATION OF AMERICAN LAW, 1780-1860 211-12 (1977); 2 CHARLES WARREN, THE

SUPREME COURT IN UNITED STATES HISTORY 408-10 & n.1 (1922); 2 CHARLES WARREN, HISTORY

OF THE HARVARD LAW SCHOOL AND OF EARLY LEGAL CONDITIONS IN AMERICA 133-55 (1908).

See generally William Power, Big Board, at Age 200, Scrambles to Protect Grip on Stock Market, Wall St. J., May

13, 1992, at A1; Union Pacific's Western Empire, Forbes, Mar. 1, 1967, at 34.

2 See MORTON J. HORWITZ, THE TRANSFORMATION OF AMERICAN LAW, 1780-1860 111-14 (1977);

MORTON J. HORWITZ, THE TRANSFORMATION OF AMERICAN LAW, 1870-1960 65-107 (1992);

MARTIN MAYER, THE LAWYERS 311-14 (1966); ROY C. SMITH, THE MONEY WARS 19-20 (1990); JOEL

SELIGMAN, THE TRANSFORMATION OF WALL STREET 42 (1982); Robert C. Clark, The Four Stages of

Capitalism: Reflections on Investment Management Treatises, 94 Harv. L. Rev. 561, 562 & n.4 (1981); James T.

Kloppenberg, The Theory and Practice of American Legal History, 106 Harv. L. Rev. 1332, 1341 (1993) (reviewing

MORTON J. HORWITZ, THE TRANSFORMATION OF AMERICAN LAW, 1870-1960: THE CRISIS OF

LEGAL ORTHODOXY (1992)); see also Mark J. Osiel, Lawyers as Monopolists, Aristocrats, and Entrepreneurs,

103 Harv. L. Rev. 2009, 2038 & nn.117-18 (1990) (reviewing LAWYERS IN SOCIETY (Richard L. Abel and

Philip S.C. Lewis eds., 1988-1989)).

3 See, e.g., VINCENT P. CAROSSO, INVESTMENT BANKING IN AMERICA 42-43 (1970); WILLIAM L.

CARY, CORPORATIONS 1-6 (4th ed. unabridged 1969); ROY C. SMITH, THE MONEY WARS 24-25 (1990);

Lucian A. Bebchuk, Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law,

105 Harv. L. Rev. 1435, 1442-44 (1992).

4 See DETLEV F. VAGHTS, BASIC CORPORATION LAW 1-5 (2d ed. 1979).

5 See RON CHERNOW, THE HOUSE OF MORGAN 23 (1990).

6 See JOEL SELIGMAN, THE TRANSFORMATION OF WALL STREET 44-46 (1982).

7 CARTER F. HENDERSON & ALBERT C. LASHER, 20 MILLION CARELESS CAPITALISTS 87-92 (1967); 1

LOUIS LOSS, SECURITIES REGULATION 27 (2d ed. 1961).

8 See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 8 (2d ed. 1988); Joel Seligman, The

Historical Need For a Corporate Disclosure System, in 1 SELECTED ARTICLES ON FEDERAL SECURITIES

LAW 329, 344 (Franklin E. Gill ed., 1991); Note, Regulation of Nonissuer Transactions Under Federal and State

Securities Registration Laws, 78 Harv. L. Rev. 1635, 1643 (1965).

9 See 1 LOUIS LOSS & JOEL SELIGMAN, SECURITIES REGULATION 34 (3d ed. 1989).

10 Merrick v. N.W. Halsey & Co., 242 U.S. 568 (1917); Caldwell v. Sioux Falls Stock Yards Co., 242 U.S. 559

(1917); Hall v. Geiger Jones Co., 242 U.S. 539 (1917).

11 See Manning G. Warren III, Reflections on Dual Regulation of Securities: A Case Against Preemption, 25 B.C. L.

Rev. 495, 496 (1984).



12 See JOHN BROOKS, ONCE IN GOLCONDA 66-85 (1969).

13 See JOHN K. GALBRAITH, THE GREAT CRASH 1929 93-132 (3d ed. 1972).

14 See, e.g., WALTER K. EARLE, MR. SHEARMAN AND MR. STERLING AND HOW THEY GREW 238-42

(1963); JOSEPH C. GOULDEN, THE SUPERLAWYERS 153 (1971); J.A. LIVINGSTON, THE AMERICANSTOCKHOLDER 19-21 (1958); JOEL SELIGMAN, THE TRANSFORMATION OF WALL STREET 50-72

(1982); 2 ROBERT T. SWAINE, THE CRAVATH FIRM AND ITS PREDECESSORS, 1819-1948 703-11 (1948);

GORDON THOMAS & MAX MORGAN-WITTS, THE DAY THE BUBBLE BURST 418-423 (1979); Robert C.

Clark, The Four Stages of Capitalism: Reflections on Investment Management Treatises, 94 Harv. L. Rev. 561, 563

& n.6 (1981); Developments in the Law - Corporate Crime: Regulating Corporate Behavior Through Criminal

Sanctions, 92 Harv. L. Rev. 1227, 1236 & nn.21-22 (1979). See generally Alfred S. Konefsky & John H. Schegel,

Mirror, Mirror on the Wall: Histories of American Law Schools, 95 Harv. L. Rev. 833, 841 (1982).

15 15 U.S.C. §§ 77a-77aa (1988).

16 VINCENT P. CAROSSO, MORE THAN A CENTURY OF INVESTMENT BANKING 85 (1979).

17 See RICHARD W. JENNINGS & HAROLD MARSH, JR., SECURITIES REGULATION 63-65 (6th ed. 1987).

18 15 U.S.C. §§ 78a-78ll (1988).

19 See DAVID L. RATNER, SECURITIES REGULATION 827-40 (3d ed. 1986).

20 EDWARD T. MCCORMICK, UNDERSTANDING THE SECURITIES ACT AND THE S.E.C. 28-37 (1948);

JOEL SELIGMAN, THE HIGH CITADEL 69 (1978); Laura Nader, Enforcement Strategies and the Catch They Yield

at the SEC, 99 Harv. L. Rev. 1362, 1364 (1986) (reviewing SUSAN C. SHAPIRIO, WAYWARD CAPITALISTS -

TARGET OF THE SECURITIES AND EXCHANGE COMMISSION (1984)).

21 15 U.S.C. §§ 79a-79z-6 (1988).

22 15 U.S.C. §§ 77aaa-77bbbb (1988).

23 15 U.S.C. §§ 80a-1 to -64 (1988).

24 15 U.S.C. §§ 80b-1 to -21 (1988).

25 15 U.S.C. §§ 78aaa-78lll (1988).

26 11 U.S.C. §§ 1109, 1125, 1145 (1988).

27 See Milton H. Cohen, "Truth in Securities" Revisited, 79 Harv. L. Rev. 1340, 1366-406 (1966); Louis Loss &George A. Blackstone, Codification of the Federal Securities Laws, 28 Bus. Law. 381, 381-91 (1973). See generallyLOUIS LOSS, ANECDOTES OF A SECURITIES LAWYER 219-249 (1995).

28 FEDERAL SECURITIES CODE v-lvi (1980).

29See Jane K. Winn, Regulating the Use of the Internet in Securities Markets, 54 Bus. Law. 443, 443-448 (1998);

John C. Coffee, Jr., Brave New World?: The Impact(s) of the Internet on Modern Securities Regulation, 52 Bus.Law. 1195, 1195-1202 (1997); Alexander C. Gavis, The Offering and Distribution of Securities in Cyberspace: AReview of Regulatory and Industry Initiatives, 52 Bus. Law. 317, 317-325 (1996).



30 See Joseph J. Cella III & John R. Stark, SEC Enforcement and the Internet: Meeting the Challenge of the NextMillennium, 52 Bus. Law. 815, 815-821 (1997).

31 See LOUIS LOSS & JOEL SELIGMAN, FUNDAMENTALS OF SECURITIES REGULATION Ch. 7A (5th ed.2004 & LOUIS LOSS, JOEL SELIGMAN & TROY PAREDES, FUNDAMENTALS OF SECURITIES

REGULATION 2010 Supp.).32 Regulation SHO, 17 C.F.R. §§ 242.200-204 (2014); see LOUIS LOSS & JOEL SELIGMAN,FUNDAMENTALS OF SECURITIES REGULATION Ch. 8B3b (5th ed. 2004 & LOUIS LOSS, JOELSELIGMAN & TROY PAREDES, FUNDAMENTALS OF SECURITIES REGULATION 2010 Supp.).

33 Rule 10b5-1, 17 C.F.R. § 240.10b5-1 (2014).

34 Rule 10b5-2, 17 C.F.R. § 240.10b5-2 (2014).

35 See MICHAEL LEWIS, THE BIG SHORT: INSIDE THE DOOMSDAY MACHINE 29-30 (2010).

36 Commodity Futures Modernization Act of 2000, Pub. L. No. 106-554, 114 Stat. 2763; see LOUIS LOSS & JOELSELIGMAN, FUNDAMENTALS OF SECURITIES REGULATION 308-314 (5th ed. 2004).

37 See Samuel P. Rothschild, Note, Bad Guys in Bankruptcy: Excluding Ponzi Schemes From the Stockbroker SafeHarbor, 112 Colum. L. Rev. 1376, 1383-1386 (2012); Diana B. Henriques & Zachery Kouwe, Prominent TraderAccused of Defrauding Clients, N.Y. Times, Dec. 11, 2008, at A1. See generally Developments in the Law – Corporations and Society, 117 Harv. L. Rev. 2169, 2172-76 (2004).

38 See JOHNATHAN KWITNY, THE FOUNTAIN PEN CONSPIRACY 22-39 (1973); Clifford Kauss, Phillip LZweig & Julie Creswell, Texas Firm Accused of $8 Billion Fraud, N.Y. Times, Feb. 18, 2009, at A1.

39 Emergency Economic Stabilization Act of 2008, Pub. L. No. 110-343, 122 Stat. 3765.

40 Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Pub. L. No. 111-203, 124 Stat. 1376; seeDerek Fisher, Note, Dodd-Frank’s Failure to Address CFTC Oversight of Self -Regulatory Organization

Rulemaking, 115 Colum. L. Rev. 69, 83-86 (2015).

41 Jumpstart Our Business Startups Act of 2012, Pub. L. No. 112-106, 126 Stat. 306.

42 USA Patriot Act of 2001, Pub. L. No. 107-56, 115 Stat. 272.

43 See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 165 (2d ed. 1988); see, e.g., Marine Bank

v. Weaver, 455 U.S. 551 (1982); International Bhd. of Teamsters v. Daniel, 439 U.S. 551 (1979); United Hous. Found.,

Inc. v. Forman, 421 U.S. 837 (1975); Holden v. Hagopian, 978 F.2d 1115 (9th Cir. 1992); Banco Espanol de Credito v.

Security Pacific National Bank, 973 F.2d 51 (2d Cir. 1992); SEC v. International Loan Network, Inc., 968 F.2d 1304

(D.C. Cir. 1992); Koch v. Hankins, 928 F.2d 1471 (9th Cir. 1991); Williamson v. Tucker, 645 F.2d 404 (5th Cir. 1981),

cert. denied, 454 U.S. 897 (1981); SEC v. Koscot Interplanetary, Inc., 497 F.2d 473 (5th Cir. 1974); SEC v. Glenn W.

Turner Enters., Inc., 474 F.2d 476 (9th Cir.), cert. denied, 414 U.S. 821 (1973).44 See 2 LOUIS LOSS & JOEL SELIGMAN, SECURITIES REGULATION 869-1083 (3d ed. 1989); Michael E.

Godwin, The New Look of Municipal Bonds, 68 A.B.A. J. 1580 (1982); Roberta S. Karmel, When Is Partnership

Interest or Note a Security, N.Y. L.J., Feb. 18, 1993, at 3; Clyde Mitchell, Certificates of Deposit: Securities at

Times, N.Y. L.J., Nov. 29, 1985, at 1. See generally Roberta S. Karmel, Do the Capital Markets Need So Many

Regulators?, N.Y. L.J., Oct. 18, 1990, at 3.

45 See RICHARD W. JENNINGS & HAROLD MARSH, JR., SECURITIES REGULATION 220-22 (6th ed. 1987).See generally SEC v. Edwards, 540 U.S. 389 (2004); Landreth Timber Co. v. Landreth, 471 US 681 (1985); SEC v.



W.J. Howey Co., 328 U.S. 293 (1946); SEC v. C.M. Joiner Leasing Corp., 320 U.S. 344 (1943); SEC v. Aqua-SonicProducts Corp., 687 F. 2d 577 (2d Circuit 1982).

46 See DAVID L. RATNER, SECURITIES REGULATION 229-30 (3d ed. 1986). See generally Suzanna Andrews,

The Hollywood Deal Game, Institutional Inv., Nov. 1991, at 69; Martin Mayer, Elliot Gould As "The Entrepreneur",

Fortune, Oct. 1970, at 109.

47 FEDERAL SECURITIES CODE § 297(a) (1980).

48 See CHARLES R. GEISST, WALL STREET: A HISTORY 345-364 (1997); see also FRANK PARTNOY,

F.I.A.S.C.O. 48-61 (1997); JAMES D. COX, ROBERT W. HILLMAN & DONALD C. LANGEVOORT,

SECURITIES REGULATION 134-139 (1991).

49 See JOHN BROOKS, THE TAKEOVER GAME 14-18 (1987); 1 TAMAR FRANKEL, SECURITIZATION §1.2, at

6-7 (1991); Charles J. Johnson, Jr. & Michael L. Schler, Zero-Coupon Bonds, in SIXTEENTH ANNUAL INSTITUTE

ON SECURITIES REGULATION 53, 53-60 (Stephen J. Friedman, Charles M. Nathan, Harvey L. Pitt & Roland J.

Santoni eds., 1985); Alvin C. Warren, Jr., Comment, Financial Contract Innovation and Income Tax Policy, 107 Harv. L.

Rev. 460, 460-61 & n.2 (1993); Laura Jereski, Alice in Mortgageland, Forbes, Mar. 1, 1993, at 46; Laura Jereski,

Mortgage Derivatives Claim Victims Big and Small, Wall St. J., Apr. 20, 1994, at C1; Jonathan R. Laing, The Next

Meltdown?, Barron's, June 7, 1993, at 10; Susan Lee, What's With the Casino Society?, Forbes, Sept. 22, 1986, at 150;

Robert Lenzer & William Heuslein, The Age of Digital Capitalism, Forbes, Mar. 29, 1993, at 62; Dana W. Linden, Wall

Street R&D, Forbes, Oct. 12, 1993, at 112.

50 See VICTOR BRUDNEY & MARVIN A. CHIRELSTEIN, CORPORATE FINANCE 133-35 (3d ed. 1987);

MARTIN MAYER, MARKETS 226-29 (1988).

51 See PAUL FERRIS, THE MASTER BANKERS 123 (1984); MICHAEL LEWIS, LIAR'S POKER 136-39

(1989).

52 See RON CHERNOW, THE HOUSE OF MORGAN 656 (1990); 1 TAMAR FRANKEL, SECURITIZATION §6.3,

at 185-87 & nn.1-2 (1991); ADAM SMITH, THE ROARING EIGHTIES 19 (1988); Rodney S. Dayan & Richard T.Pratt, Mortgage-Related Securities, in SIXTEENTH ANNUAL INSTITUTE ON SECURITIES REGULATION 63,

64-72 (Stephen J. Friedman, Charles M. Nathan, Harvey L. Pitt & Roland J. Santoni eds., 1985); Simon Brady, The Year

of the Asset-Backed Eurobond, Euromoney, Feb. 1990, at 18; Hilary Rosenberg, The Unsinkable Junk Bond,

Institutional Inv., Jan. 1989, at 43.

53 15 U.S.C. § 77c(b) (1988); 17 C.F.R. §§ 230.251-.264 (1990).

54 See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 309-13 (2d ed. 1988); Ezra Weiss,

Regulation A Under the Securities Act of 1933 - Highways and Byways, 8 N.Y. L.F. 3, 40-115 (1962); Ezra Weiss,

Highways and Byways Revisited, 15 N.Y. L.F. 218, 251-68 (1969); Guy P. Lander, SEC Adopts Guidelines on

Raising Capital, N.Y. L.J., Dec. 7, 1992, at 9.

55 See DAVID R. HERWITZ, BUSINESS PLANNING 273-87 (1966); Stephen J. Friedman, The Securities Act of1933 and Employee Compensation Plans, in FOURTH ANNUAL INSTITUTE ON SECURITIES REGULATION

353, 354-56 (Robert H. Mundheim, Arthur Fleischer, Jr. & John D. Schupper eds., 1973).

56 See, e.g., ROBERT C. POZEN, FINANCIAL INSTITUTIONS: INVESTMENT MANAGEMENT 627-51 (1978);

Robert C. Clark, The Four Stages of Capitalism: Reflections on Investment Management Treatises, 94 Harv. L. Rev.

561, 571-73 (1981); James J. Junewitz, Portfolio Theory and Pension Plan Disclosure, 53 N.Y.U. L. Rev. 1153, 1155-60

(1978).



57 15 U.S.C. § 77c(a)(11) (1988); 17 C.F.R. § 230.147 (1990); SEC Securities Act Release No. 5450 (Jan. 7, 1974),

reprinted in 3 SEC DOCKET 349 (1974).

58 See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 295-305 (2d ed. 1988).

59 15 U.S.C. § 77d(2) (1988); Reg. D, 17 C.F.R. §§ 230.501-.508 (1990); SEC Securities Act Release No. 6389 (Mar. 8,1982), reprinted in 24 SEC DOCKET 1166 (1982).

60 See MOIRA JOHNSTON, TAKEOVER 151-52 (1986); LOUIS LOSS, FUNDAMENTALS OF SECURITIESREGULATION 317-50 (2d ed. 1988); Marc H. Morgenstern, Private Placement Guidelines - A Lawyer's Letter to aFirst-Time Issuer, 48 Bus. Law. 257, 259-76 (1992); see also Robert McGough, Money to Burn, FW, June 26, 1990,at 18. See generally SEC v. Ralston Purina Co., 346 U.S. 119 (1953); Doran v. Petroleum Management Corp., 545F.2d 893 (5th Cir. 1977).

61 17 C.F.R. § 230.146 (1981); SEC Securities Act Release No. 5487 (Apr. 23, 1974), reprinted in 4 SEC DOCKET 154

(1974); see Jerry C. Paradis, Safe Harbor for the Non-Public Sale of Securities - Rule 146, 22 La. B.J. 167, 173-77

(1974); Robert L. Frome, 'Continental Tobacco' Decision Analyzed, N.Y. L.J., Mar. 7, 1977, at 1; see, e.g., SEC v.

Continental Tobacco Co. of South Carolina, 463 F.2d 137 (5th Cir. 1972); Hill York Corp. v. American Int'l Franchises,

Inc., 448 F.2d 680 (5th Cir. 1971).

62 SEC Securities Act Release No. 5912 (Mar. 3, 1978), reprinted in 14 SEC DOCKET 306 (1978).


64 See A.A. Sommer, Jr., Who's "In Control"? - S.E.C., 21 Bus. Law. 559, 559-62 (1966).

65 See Carl W. Schneider, Section 4(1-1/2) - Private Resales of Restricted or Control Securities, 49 Ohio St. L.J. 501,

501-14 (1988); Lawrence R. Seidman, Comment, SEC Rule 144A: The Rule Heard Round the Globe - Or the Sounds of

Silence?, 47 Bus. Law. 333, 334-36 (1991).


67 See 3 LOUIS LOSS & JOEL SELIGMAN, SECURITIES REGULATION 1499-1502 (3d ed. 1989).

68 See DAVID L. RATNER, SECURITIES REGULATION 317-40 (3d ed. 1986); Stephen Glover, Good Intentions

in a Bad Economy, Legal Times, Dec. 31, 1990, at 20.


70 17 C.F.R. § 230.144 (1990); SEC Securities Act Release No. 5223 (Jan. 11, 1972); see James F. Olson, SEC

Makes Unheralded Changes in Rule 144 On Sales Volume, Manner, Legal Times of Wash., Oct. 2, 1978, at 14.

71

See 3 LOUIS LOSS & JOEL SELIGMAN, SECURITIES REGULATION 1502-75 (3d ed. 1989).

72 17 C.F.R. § 230.144A (1990); SEC Securities Act Release No. 6862 (Apr. 23, 1990), reprinted in 46 SEC DOCKET

26 (1990); see Simon Brady, Evolution, Not Revolution, Euromoney, June 1990, at 47.

73 See LISA ENDLICH, GOLDMAN SACHS 253-260 (1999); JAMES D. COX, ROBERT W. HILLMAN &

DONALD C. LANGEVOORT, SECURITIES REGULATION 215-216 (1991).



74 See, e.g., WILLIAM L. CARY, CORPORATIONS 1376-78 (4th ed. unabridged 1969); ERWIN O. SMIGEL, THE

WALL STREET LAWYER 160-63 (1964); Irwin B. Arieff, New Stock Issues Glide into Market, Legal Times, May 9,

1983, at 1.

75 See VICTOR BRUDNEY & MARVIN A. CHIRELSTEIN, CORPORATE FINANCE 988-93 (3d ed. 1987). Seegenerally Shaw v. Digital Equipment Corp., 82 F.3d 1194 (1st Cir. 1996).

76 FEDERAL SECURITIES CODE § 501 (1980).

77 15 U.S.C. §§ 77f, 77h (1988); Reg. C, 17 C.F.R. §§ 230.400-498 (2014); 17 C.F.R. § 230.152 (2014); 17 C.F.R. §

230.176 (2014); see SEC, INSTITUTIONAL INVESTOR STUDY REPORT, H.R. DOC. NO. 92-64, 92d Cong., 1st

Sess., at 2343-2373 (1971); LOUIS LOSS, SECURITIES REGULATION 166-67 (1951); see, e.g., Claudia

MacLachlan, It Was a Good Year For Law Firms That Did Equity Issues, Nat'l L.J., Jan. 17, 1994, at 17.

78 See MARTIN MAYER, THE LAWYERS 317-19 (1966); GERALD J. ROBINSON & KLAUS EPPLER,

GOING PUBLIC, § 81, at 354-56 (1978); WHEN CORPORATIONS GO PUBLIC 121-28 (Carlos L. Israels &

George M. Duff, Jr. eds., 1962).

79 15 U.S.C. §§ 77g, 77j, 77aa sched. A-77bb sched. B (1988); Reg. S-X, 17 C.F.R. §§ 210.1-01 to .12-29 (1990); Reg.

S-K, 17 C.F.R. §§ 229.10 to .802 (1990); see EDWARD T. MCCORMICK, UNDERSTANDING THE SECURITIES

ACT AND THE S.E.C. 109-59 (1948); GERALD J. ROBINSON & KLAUS EPPLER, GOING PUBLIC, § 83, at 358-

60 (1978); JAMES B. STEWART, THE PARTNERS 114-51 (1983); Joseph W. Bartlett & J. David Waldman, Select

Problems in Late-Round Private Financings: Soft Information; Integration; Debt vs. Equity, 17 Sec. Reg. L.J. 227, 227-

28 & n.3 (1989); Bruce A. Mann, Integration in the Context of Registered Public Offerings, in FOURTEENTH

ANNUAL INSTITUTE ON SECURITIES REGULATION 3, 3-6 (Stephen J. Friedman, Charles M. Nathan, Harvey L.

Pitt & Roland J. Santoni eds., 1983).

80 See ADAM SMITH, SUPERMONEY 19-22 (1972). See generally Thomas N. Cochran, Baby Boom, Barron's,

Dec. 20, 1993, at 15; Scott DeCarlo & Gilbert Steedley, Stock Market Lotto, Forbes, June 21, 1993, at 210; Ann

Hagedorn & Anne Newman, Blair New Issues Defy Gravity - With Help From J. Morton Davis, Wall St. J., May 6,1991, at A1; Michael Siconolfi & William Power, Underwriting Boom Puts Tortoises Ahead Of Wall Street's Hares,

Wall St. J., March 26, 1992, at A1.

81 See JOHN BROOKS, THE GO-GO YEARS 27-28 (1973).

82 See WHEN CORPORATIONS GO PUBLIC 10-11 (Carlos L. Israels & George M. Duff, Jr. eds., 1962).

83 See Carl W. Schneider, Joseph M. Manko & Robert S. Kant, Going Public - Practice, Procedure and Consequences,

27 Vill. L. Rev. 1, 3-37 (1981).

84 See Francis M. Wheat & George A. Blackstone, Guideposts for a First Public Offering, 15 Bus. Law. 539, 540-62

(1960). See generally Robert L. Frome, Do the Markets Affect an IPO's Performance?, N.Y. L.J., Sept. 28, 1989, at 3.

85 See, e.g., JOHN BROOKS, THE TAKEOVER GAME 107-30 (1987); DAVID L. RATNER, SECURITIES

REGULATION 69-70 (3d ed. 1986).

86 See Donald C. Langevoort, Information Technology and the Structure of Securities Regulation, 98 Harv. L. Rev. 747,

771-73 (1985).

87 See RON CHERNOW, THE HOUSE OF MORGAN 661-62 (1990).



88 See PAUL FERRIS, THE MASTER BANKERS 98-99 (1984).

89 See PAUL HOFFMAN, THE DEALMAKERS 106-19 (1984).

90 See A.F. Ehrbar, Upheaval in Investment Banking, Fortune, Aug. 23, 1982, at 90.

91See VINCENT P. CAROSSO, INVESTMENT BANKING IN AMERICA 1-25 (1970). See generally United

States v. Morgan, 118 F. Supp. 621 (S.D.N.Y. 1953).

92 See PAUL HOFFMAN, THE DEALMAKERS 1-32 (1984); STEWART H. HOLBROOK, THE AGE OF THE

MOGULS 19, 152 (1953); MORTON J. HORWITZ, THE TRANSFORMATION OF AMERICAN LAW, 1780-1860

31-42 (1977); see also Eugene D. Genovese, Book Review, 91 Harv. L. Rev. 726, 726-28 (1978) (reviewing MORTON

J. HORWITZ, THE TRANSFORMATION OF AMERICAN LAW, 1780-1860 (1977)). See generally THOMAS

PIKETTY, CAPITAL IN THE TWENTY-FIRST CENTURY 164 (2014).


94

See 1 LOUIS LOSS & JOEL SELIGMAN, SECURITIES REGULATION 324-41 (3d ed. 1989).


96 See RICHARD W. JENNINGS & HAROLD MARSH, JR., SECURITIES REGULATION 32 (6th ed. 1987).


98 See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 86 (2d ed. 1988); 6 LOUIS LOSS,

SECURITIES REGULATION 3681 (2d ed. Supp. 1969).

99 See RICHARD W. JENNINGS & HAROLD MARSH, JR., SECURITIES REGULATION 30 (6th ed. 1987).

100 See 1 LOUIS LOSS & JOEL SELIGMAN, SECURITIES REGULATION 342 & n.45 (3d ed. 1989).

101 See 1 LOUIS LOSS & JOEL SELIGMAN, SECURITIES REGULATION 342 n.45 (3d ed. 1989); WHEN

CORPORATIONS GO PUBLIC 78 (Carlos L. Israels & George M. Duff, Jr. eds., 1962).

102 See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 86 (2d ed. 1988); 4 LOUIS LOSS,

SECURITIES REGULATION 2296-97 (2d ed. Supp. 1969).

103 See, e.g., CHARLES RAW, BRUCE PAGE & GODFREY HODGSON, "DO YOU SINCERELY WANT TO BE

RICH?" 338-46 (1971); Note, Procedures and Remedies in Limited Partners' Suits for Breach of the General Partner's

Fiduciary Duty, 90 Harv. L. Rev. 763, 763 & n.1, 765 & n.12, 767 (1977). See generally Eleanore Carruth, The New Oil

Rush in Our Own Backyard, Fortune, June 1974, at 154; The Rockers Are Rolling in It, Forbes, Apr. 15, 1973, at 28;Roundtable Discussion: Tax Sheltered Investments, Wall St. Transcript, June 12, 1978, at 50,944; Dana L. Thomas,

Outwitting Uncle Sam, Barron's, Sept. 19, 1977, at 3.

104 See Andrew Patner, Real Estate Syndicator Spins an Intricate Web And Gets Tangled in It, Wall St. J., Feb. 1,

1990, at A1.

105 See KIM I. EISLER, SHARK TANK 147-48 (1990); DAVID MCCLINTIC, STEALING FROM THE RICH 25-29

(1977); Raymond Brady, Personal Money Machine of John King, Dun's, June 1970, at 34.



106 See ADAM SMITH, SUPERMONEY 15-18 (1972).

107 See Michael Brody, Gimme Shelter, Barron's, Sept. 25, 1978, at 4.

108 See Ellen J. Pollock, Nightmare On Golden Pond, Am. Law., Mar. 1983, at 97.

109 See STEPHEN FENICHELL, OTHER PEOPLE'S MONEY 12-20 (1985).

110 See Wall Street's New Fashions, Forbes, July 15, 1971, at 22.

111 See FERDINAND LUNDBERG, THE RICH AND THE SUPER-RICH 402-03 (1968); JAMES PRESLEY, A

SAGA OF WEALTH 231-32 (1978); JACQUELINE THOMPSON, THE VERY RICH BOOK 328-30 (1981);

DANIEL YERGEN, THE PRIZE 575 (1991). See generally David T. Maguire, Scamalot: The Land of Tax Shelter

Prosecution, 70 A.B.A. J. 52 (July 1984).

112 See JAMES B. STEWART, THE PROSECUTORS 233-42 (1987).

113

See CARY REICH, FINANCIER 130-63 (1983). See generally Laura Landro, Overseas Distributor Takes OnBig Studios By Doing Own Films, Wall St. J., Apr. 16, 1985, at 1; Laura Sachar, Testing the Limits In Limited

Partnerships, Fin. World, July 12, 1988, at 30.

114See PAUL HOFFMAN, THE DEALMAKERS 182 (1984); JOSEPH WECHSBERG, THE MERCHANT

BANKERS 247-49 (1966); Larry Light & Joan O'C. Hamilton, Rewriting the Rules of Venture Capital, Bus. Wk., July19, 1993, at 70; Has the Bear Market Killed Venture Capital?, Forbes, June 15, 1970, at 28. See generally Joseph H.Fishman, Creating Around Copyright, 128 Harv. L. Rev. 1333, 1338 & n.23 (2015); Jonathan L. Zittrain, TheGenerative Internet, 119 Harv. L. Rev. 1974, 2027-28 & n.203 (2006); Developments in the Law – Corporations andSociety, 117 Harv. L. Rev. 2169, 2176-77 & n.38 (2004).

115 See WILLIAM D. BYGRAVE & JEFFRY A. TIMMONS, VENTURE CAPITAL AT THE CROSSROADS 38-

43 (1992); DOUGLAS G. CARLSTON, SOFTWARE PEOPLE 191-95 (1985); PETER COLLIER & DAVID

HOROWITZ, THE ROCKEFELLERS 290-302 (1976); THOMAS M. DOERFLINGER & JACK L. RIVKIN,RISK AND REWARD 12-13 (1987); JACQUELINE THOMPSON, FUTURE RICH 37-38 (1985); Note,

Community Development Corporations: Operations and Financing, 83 Harv. L. Rev. 1558, 1626-27 (1970); Steven

S. Anreder, Up the Entrepreneur, Barron's, Aug. 25, 1980, at 4; Connie Bruck, Paul Brountas At The Top, Am.

Law., Oct. 1988, at 158.

116See CONNIE BRUCK, THE PREDATOR'S BALL 10-20 (1988). See generally WILLIAM D. COHAN, THE

LAST TYCOONS Ch. 19 (2007); John Brodie, It’s Ralph’s World…, Fortune, Sept. 17, 2007, at 65; Neil Weinberg,

(Sachs Appeal), Forbes, Jan. 29, 2007, at 56; Dyan Machan, Herbert Allen and His Merry Dealsters, Forbes, July 1,

1996, at 68; Susan Caminiti, Ralph Lauren: The Emperor Has Clothes, Fortune, Nov. 1996, at 80; Deidre Fanning,

“Bid-‘em-up Bruce”?, Forbes, Aug. 7, 1989, at 58.

117See John J. Madden, Investment Banks Adopt New Role With Bridge Financing, N.Y. L.J., Mar. 16, 1987, at 29.

118 See BRYAN BURROUGH & JOHN HELYER, BARBARIANS AT THE GATE 156 (1990).

119 See Tom Bancroft, Psst!!! Wanna Buy a Bridge?, FW, Apr. 3, 1990, at 26.




121 See PAUL FERRIS, THE CITY 76-84 (1960); JOSEPH WECHSBERG, THE MERCHANT BANKERS 8-20

(1966); DEREK WILSON, ROTHSCHILD 16-27 (1988).

122 See Amy C. Pershing, The Perils of Merchant Banking, Institutional Inv., Feb. 1988, at 45.

123 Gramm-Leach-Bliley Act of 1999, Pub. L. No. 106-102, 113 Stat. 1338.

124 Glass-Steagall Act of 1933, 12 U.S.C. secs. 24, 78, 377-378 (1988).

125 See FRANK PORTNOY, INFECTIOUS GREED 374-392 (2003); Dyan Machan, An Edison for a New Age?,Forbes, May 17, 1999, at 178.

126 See JOHN CASSITY, DOT.CON Ch. 20 (2002). See generally Developments in the Law – Corporations and

Society, 117 Harv. L. Rev. 2169, 2172-76 (2004).

127 Reg. M, 17 C.F.R. §§ 242.100-105 (2014).

128 See WILLIAM D. COHAN, MONEY AND POWER Ch. 22 (2011); VICKY WARD, THE DEVIL’S CASINO173-174 (2010); ANDREW ROSS SORKIN, TOO BIG TO FAIL 14 (2009); WILLIAM D. COHAN, HOUSE OFCARDS Ch. 26 (2009).

129 Reg. FD, 17 C.F.R. §§ 243.100-103 (2014).

130 See CHARLES D. ELLIS, THE PARTNESHIP Ch. 17 (2008).

131 LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 154-159 (1983).

132 See 1 ALAN R. BROMBERG & LEWIS D. LOWENFELS, SECURITIES FRAUD AND COMMODITIES

FRAUD § 2.2, at 2:13 to 2:16 (1991); DAVID R. HERWITZ, BUSINESS PLANNING 189-90, 192-99, 202-261

(1966); 4 HERBERT B. NEWBERG, NEWBERG ON CLASS ACTIONS § 22.01, at 4 & n.3 (2d ed. 1985); James R.Farrand, Ancillary Remedies in SEC Civil Enforcement Suits, 89 Harv. L. Rev. 1779, 1779-90 (1976); Louis Loss,

Comment, The Assault on Securities Act Section 12(2), 105 Harv. L. Rev. 908, 908-16 (1992); William R. McLucas,

Stephen M. DeTore & Arian Colachis, SEC Enforcement: A Look at the Current Program and Some Thoughts About

the 1990s, 46 Bus. Law. 797, 823 (1991); Marc I. Steinberg, The Propriety and Scope of Cumulative Remedies Under

the Federal Securities Laws, 67 Cornell L. Rev. 557, 560-606 (1982). See generally TOM BOWER, MAXWELL 258-

60 (1988); Note, Liability Insurance for Corporate Executives, 80 Harv. L. Rev. 648, 657-68 (1967); David Spears &

Leanore Barth, The SEC's Interpretation Of Its New Cease-and-Desist Powers, N.Y. L.J., Oct. 13, 1992, at 1.

13315 U.S.C. § 77k (1988). See generally Harden v. Raffensperger, Hughes & Co., Inc., 65 F.3d 1392 (7th Cir.

1995); Feit v. Leasco Data Processing Equip. Corp., 332 F.Supp. 544 (E.D.N.Y. 1971); Escott v. BarChris Constr.

Corp., 283 F. Supp. 643 (S.D.N.Y. 1968).

13415 U.S.C. § 77l (1988).

135 Pinter v. Dahl, 486 U.S. 622 (1988).

136 Gustafson v. Alloyd Co., Inc., 513 U.S. 561 (1995).

137 Randall v. Loftsgaarden, 478 US 647 (1986).



138 15 U.S.C. § 77q(a) (1988).

139 United States v. Naftalin, 441 U.S. 768 (1979); see LOUIS LOSS, FUNDAMENTALS OF SECURITIES

REGULATION 799-801 (1983).

140Aaron v. SEC, 446 US 680 (1980). See generally Globus v. Law Research Service, Inc., 418 F.2d 1276 (1969).

141 15 U.S.C. §§ 78l(g)-(h) (1988); SEC Securities Exchange Act Release No. 23,406 (July 8, 1986), reprinted in 36

SEC DOCKET 56 (1986); see Hugh L. Sowards, The Securities Acts Amendments of 1964: New Registration and

Reporting Requirements, 19 U. Miami L. Rev. 33, 33-40 (1964).

142 15 U.S.C. sec. 78m(a) (1988); see William L. Cary, Federalism and Corporate Law: Reflections Upon Delaware,

83 Yale L.J. 663, 692-703 (1974); Michael J. Connell, Current Developments Under the 1933 and 1934 Acts, in

SIXTEENTH ANNUAL INSTITUTE ON SECURITIES REGULATION 77, 77-80 (Stephen J. Friedman, Charles

M. Nathan, Harvey L. Pitt & Roland J. Santoni eds., 1985); Arthur Fleischer, Jr., "Federal Corporate Law": An

Assessment, 78 Harv. L. Rev. 1146, 1146-72 (1965); Carl W. Schneider & Jason M. Shargel, "Now That You Are

Publicly Owned...", 36 Bus. Law. 1631, 1632-34 (1981); see also 56 SEC ANN. REP. 70-72 (1990); Donald C.Langevoort, Information Technology and the Structure of Securities Regulation, 98 Harv. L. Rev. 747, 757-58 &

n.41 (1985); Barry D. Bayer & Benjamin H. Cohen, Bringing CD-ROM to Your Laptop, Legal Times, Feb. 7, 1994,

at 37; Richard Karp, Hello EDGAR, Bye-Bye Paper, Barron's, June 21, 1993, at 18; Jim Meyer, Surfing the 'Net, 80

A.B.A. J. 100 (Feb. 1994); Richard H. Rowe, Mandatory Electronic SEC Filing Set To Begin in 1987, N.Y. L.J.,

Dec. 8, 1986, at 33; Gary Slutsker & Janet Novack, Haste Makes Waste, Forbes, Aug. 24, 1987, at 94.

14315 U.S.C. § 78n(a) (1988); see EDWARD R. ARANOW & HERBERT A. EINHORN, PROXY CONTESTS FOR

CORPORATE CONTROL 89-146 (2d ed. 1968); EDWARD R. ARANOW & HERBERT A. EINHORN, PROXY

CONTESTS FOR CORPORATE CONTROL 81-129 (1957); Myron P. Curzan & Mark L. Pelesh, Revitalizing

Corporate Democracy: Control of Investment Managers' Voting on Social Responsibility Proxy Issues, 93 Harv. L. Rev.

670, 672-77 (1980); Melvin A. Eisenberg, Access to the Corporate Proxy Machinery, 83 Harv. L. Rev. 1489, 1519-26

(1970); Patrick F. Ryan, Rule 14a-8 and Institutional Shareholder Proposals, in 2 SELECTED ARTICLES ON

FEDERAL SECURITIES LAW 190, 191-95 (Franklin E. Gill ed., 1991); Sherry R. Sontag, Investors Use Clout In theCorporate Governance Battle, Nat'l L.J., Dec. 2, 1991, at 23.

144 See EDWARD R. ARANOW & HERBERT A. EINHORN, PROXY CONTESTS FOR CORPORATE

CONTROL 146-59 (2d ed. 1968); EDWARD R. ARANOW & HERBERT A. EINHORN, PROXY CONTESTS

FOR CORPORATE CONTROL 129-39 (1957); WILLIAM L. CARY, CORPORATIONS 297-361 (4th ed.

unabridged 1969); RON CHERNOW, THE HOUSE OF MORGAN 506-11 (1990); JOHN BROOKS, THE

GAMES PLAYERS 3-29 (1980); J. PAUL GETTY, HOW TO BE RICH 21-24 (1965); ROBERT LENZNER, THE

GREAT GETTY 52-58 (1986); RUSSELL MILLER, THE HOUSE OF GETTY 105-23 (1986); LOUIS NIZER,

MY LIFE IN COURT 427-523 (1961); Kenneth J. Bialkin, Proxy Contests, in FIFTEENTH ANNUAL INSTITUTE

ON SECURITIES REGULATION 207, 225-26 (Stephen J. Friedman, Charles M. Nathan, Harvey L. Pitt & Roland

J. Santoni eds., 1984); Karen Donovan, Proxy Fight Tests SEC's New Rules Easing Speech, Nat. L.J., Dec. 14,

1992, at 17; Richard H. Miller, Proxy Contest Will Re-Enter The Spotlight, N.Y. L.J., June 4, 1990, at 5; AndyZipser, Wrong Number?, Barron's, Nov. 30, 1992, at 18; see, e.g., Gould v. American-Hawaiian Steamship Co., 535

F.2d 761 (3d Cir. 1976); Playboy Enters., Inc., SEC Securities Exchange Act Release No. 17,059 (Aug. 13, 1980),

reprinted in 20 SEC DOCKET 916 (1980).

145 See LOUIS LOSS & JOEL SELIGMAN, FUNDAMENTALS OF SECURITIES REGULATION 1022-25 (3ded. 1995). See generally Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991); Mills v. Electric Auto-LiteCo., 396 U.S. 375 (1970); JI Case Co. v. Borak, 377 U.S. 426 (1964).



146 See LOUIS LOSS & JOEL SELIGMAN, FUNDAMENTALS OF SECURITIES REGULATION 471-80 (3d ed.

1995).

147 4 FED. SEC. L. REP. (CCH) ¶¶ 31,101-107.

148 4 FED. SEC. L. REP. (CCH) ¶¶ 31,031-37.

149 4 FED. SEC. L. REP. (CCH) ¶¶ 31,001-04; see, e.g., Barry S. Augenbraun & Ernest Ten Eyck, Financial

Statement Representations in Acquisition Transactions, 47 Bus. Law. 157, 157-59 (1991); Paul M. Bernstein,

Disclosure of Merger Negotiations, N.Y. L.J., May 23, 1984, at 1.


151 See LOUIS LOSS & JOEL SELIGMAN, FUNDAMENTALS OF SECURITIES REGULATION 175-177 (5th

ed. 2005).

152 See Diana B. Henriques & Zachery Kouwe, Prominent Trader Accused of Defrauding Clients, N.Y. Times, Dec.

11, 2008, at A1.

153 See Clifford Kauss, Phillip L Zweig & Julie Creswell, Texas Firm Accused of $8 Billion Fraud, N.Y. Times,Feb. 18, 2009, at A1.

154Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745; see Roberta Romano, The Sarbanes-Oxley Act

and Quack Corporate Governance, 114 Yale L.J. 1521 (2005).

155. See MOIRA JOHNSTON, TAKEOVER 247 (1986); LOUIS LOSS, FUNDAMENTALS OF SECURITIES

REGULATION 541-82 (2d ed. 1988); Frederick M. Hopkins, Note, Gollust v. Mendell: Toward an Objective

Standard of Standing Under Section 16(b), 48 Bus. Law. 373, 375-76 (1992); Robert T. Lang & Melvin Katz,

Liability For "Short Swing" Trading in Corporate Reorganizations, in SELECTED ARTICLES ON FEDERAL

SECURITIES LAW 679, 679-706 (Herbert S. Wander & Warren F. Grienenberger eds., 1968); Thomas O. Lind,"Et Seq.", Briefly Speaking (New Orleans B. Ass'n, New Orleans, La.), Summer 1991, at 2; see, e.g.,

Foremost-McKesson v. Provident Sec. Co., 423 U.S. 232 (1976); Reliance Electric Co. v. Emerson Electric Co., 404

U.S. 418 (1972); Blau v. Lehman, 368 U.S. 403 (1962); C.R.A. Realty Corp. v. Crotty, 878 F.2d 562 (2d Cir. 1989);

Mayer v. Chesapeake Insurance Co., 877 F.2d 1154 (2d Cir. 1989); Texas Int'l Airlines, Inc v. National Airlines,

Inc., 714 F.2d 533 (5th Cir. 1983); American Standard, Inc. v. Crane, 510 F.2d 1043 (2d Cir.), cert. denied, 421 U.S.

1000 (1974); Chemical Fund, Inc. v. Xerox Corp., 377 F.2d 107 (2d Cir. 1967).

156. See JAMES D. COX, ROBERT W. HILLMAN & DONALD C. LANGEVOORT, SECURITIES REGULATION

866-879 (1991). See generally Kern County Land Co. v. Occidental Petroleum Corp., 411 U.S. 582 (1973);

Smolowe v. Delendo Corp., 136 F.2d 231 (2d Cir.), cert. denied, 320 U.S. 751 (1943).

157 See JEAN STROUSE, MORGAN 66 (1999).

158 ROBERT SOBEL, N.Y.S.E. 12-13 (1975).

159 ROBERT SOBEL, AMEX 217-19 (1972).

160 15 U.S.C. § 78e (1988).



161 See CHRIS WELLES, THE LAST DAYS OF THE CLUB 8-16 (1975); see, e.g., Gordon v. New York Stock Exch.,

Inc., 422 U.S. 659 (1975); Silver v. New York Stock Exch., 373 U.S. 341 (1963).

162 See RON CHERNOW, THE HOUSE OF MORGAN 602-03 (1990); MARTIN MAYER, MARKETS 224 (1988).

See generally Arlene Hershman, Big Shift on Wall Street, Dun's Rev., May 1976, at 39.

163 See MARTIN MAYER, MARKETS 189-200 (1988).

164 See PAUL FERRIS, THE CITY 18-29 (1960); Roberta S. Karmel, 'Big Bang' in London, N.Y. L.J., Dec. 20,

1984, at 1.

165 See PAUL FERRIS, THE MASTER BANKERS 176 (1984); Bryan Burrough, Craig Forman & Kathryn Graven,

How Merrill Lynch Moves Its Stock Deals All Around the World, Wall St. J., Nov. 9, 1987, at 1.

166 See WILLIAM D. COHAN, MONEY AND POWER Ch. 9 (2011).

167 See WILLIAM D. COHAN, MONEY AND POWER Ch. 17 (2011).

168 2 FED. SEC. L. REP. (CCH) ¶ 21,310.10.

169 See SEC, REPORT OF SPECIAL STUDY OF SECURITIES MARKETS, H.R. DOC. NO. 95, 88th Cong., 1st

Sess., pt. 2, at 911-912 (1963); 37 SEC ANN. REP. 73-74 (1971); The Regional Stock Exchanges Fight for

Survival, Fortune, Nov. 1973, at 118.


171 See Norman S. Poser, Restructuring the Stock Markets: A Critical Look at the SEC's National Market System, 56 N.Y.U. L. Rev. 881, 915-45 (1981). See generally Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 135 F.3d256 (3d Cir. en banc 1998).

172See Carl W. Schneider, Joseph M. Manko & Robert S. Kant, Going Public - Practice, Procedure and Consequences,

27 Vill. L. Rev. 1, 41-44 (1981).

173 See MARTIN MAYER, MARKETS 90 (1987); JOEL SELIGMAN, THE SEC AND THE FUTURE OF FINANCE

82-83 (1985).

174 LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 233-35 (2d ed. 1988); MARTIN MAYER,

MARKETS 47-48 (1987); JOEL SELIGMAN, THE SEC AND THE FUTURE OF FINANCE 83-84 (1985).

175 LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 233-35 (2d ed. 1988); MARTIN

MAYER, MARKETS 47-49 (1987); JOEL SELIGMAN, THE SEC AND THE FUTURE OF FINANCE 83-84

(1985).

176 See, e.g., VINCENT P. CAROSSO, INVESTMENT BANKING IN AMERICA 103 (1970); ROBERT SOBEL,

INSIDE WALL STREET 67-90 (1977). See generally Saul Hansell, The Wild, Weird World Of Electronic Exchanges,

Institutional Inv., Sept. 1989, at 91.

177 See JOHN BROOKS, THE GO-GO YEARS 21-25 (1973); ROBERT SOBEL, N.Y.S.E. 330-54 (1975).



178 See VINCENT P. CAROSSO, MORE THAN A CENTURY OF INVESTMENT BANKING 155 (1979); Eric A.

Chiappinelli, Red October: Its Origins, Consequences, and the Need to Revive the National Market System, 18 Sec.

Reg. L.J. 144, 162-63 & n.64 (1990).

179 See JOEL SELIGMAN, THE SEC AND THE FUTURE OF FINANCE 18-20 (1985).

180 See 5 LOUIS LOSS, SECURITIES REGULATION 3317-20 (2d ed. Supp. 1969).

181 Reg. NMS, 17 C.F.R. § 242.600-613 (2014).

182 See Neil Weinberg & Daniel Kruger, The Big Board Comes Back From the Brink, Forbes, Nov. 13, 2000, at 274.

183 See Floyd Norris, Sacrificing Sense For Speed in Markets, N.Y. Times, Apr. 11, 2014, at B1.

184 See DAVID A. VISE & STEVE COLL, EAGLE ON THE STREET 196-198 (1991).

185 See SCOTT PATTERSON, THE QUANTS 93-95, 180-208, 310-312 (2010).

186 See MICHAEL LEWIS, FLASH BOYS: A WALL STREET REVOLT 44-55 (2014).

187 15 U.S.C. § 78l(k) (1988).

188 See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 446-49 (2d ed. 1988). See generally

SEC v. Sloan, 436 U.S. 103 (1978).

189 See JOEL SELIGMAN, THE TRANSFORMATION OF WALL STREET 156-89 (1982); DETLEV F. VAGHTS,

BASIC CORPORATION LAW 541-57 (2d ed. 1979); John C. Coffee, Jr., Milking Milken: Sentencing as Quid Pro

Quo, Legal Times, Dec. 3, 1990, at 29; John Sturc & Gerald Lins, Congress Gets Tough on Securities Violations, Legal

Times, Oct. 1, 1990, at 27.


191See Alan R. Bromberg & Lewis D. Lowenfels, Aiding and Abetting Securities Fraud: A Critical Examination, 52

Alb. L. Rev. 637, 639-43 (1988); Kenneth R. Cone & James E. Laurence, How Accurate are Estimates of AggregateDamages in Securities Fraud Cases?, 48 Bus. Law. 505, 505-21 (1994); Dean Furbush & Jeffrey W. Smith, Estimatingthe Number of Damaged Shares in Securities Fraud Litigation: An Introduction to Stock Trading Models, 48 Bus. Law.527, 527-42 (1994); Donald C. Langevoort, Disclosures that "Bespeak Caution", 49 Bus. Law. 481, 481-92 (1994);Mark L. Mitchell& Jeffry M. Netter, The Role of Financial Economics in Securities Fraud Cases: Applications at theSecurities and Exchange Commission, 48 Bus. Law. 545, 545-72 (1994); Note, The Fraud-on-the-Market Theory, 95Harv. L. Rev. 1143, 1144-53 (1982); see, e.g., Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (1972);Superintendent of Ins. v. Bankers Life & Casualty Co., 404 U.S. 6 (1971). See generally Dura Pharmaceuticals, Inc. v.Broudo, 544 U.S. 336 (2005); Basic, Inc. v. Levinson, 485 U.S. 224 (1988); Ernst & Ernst v. Hochfelder, 425 U.S.185 (1976); Blue Chip Stamps v. Manor Drug Store, 421 U.S. 723 (1975).

192 18 U.S.C. §§ 1961-1968 (1988); see 1 ALAN R. BROMBERG & LEWIS D. LOWENFELS, SECURITIES FRAUDAND COMMODITIES FRAUD § 2.2, at 2:18 to 2:44.1 (1991); 4 HERBERT B. NEWBERG, NEWBERG ON CLASSACTIONS § 22.01, at 4 & nn.4-6 (2d ed. 1985); ADAM SMITH, SUPERMONEY 165-69 (1972); Joseph A. Grundfest,Disimplying Private Rights of Action Under the Federal Securities Laws: The Commission's Authority, 107 Harv. L.Rev. 961, 982 & n.79 (1994); Milton Pollack, Book Review, 90 Harv. L. Rev. 482, 484 (1976) (reviewingMULTINATIONAL APPROACHES - CORPORATE INSIDERS (Louis Loss ed., 1976)); Developments in the Law -Class Actions, 89 Harv. L. Rev. 1318, 1321-31 (1976); Note, Ancillary Relief in SEC Injunction Suits for Violation of



Rule 10b-5, 79 Harv. L. Rev. 656, 657-68 (1966); Note, Expert Legal Testimony, 97 Harv. L. Rev. 797, 800-03 (1984); Note, Pleading Securities Fraud with Particularity Under Rule 9(b), 97 Harv. L. Rev. 1432, 1434-47 (1984); Paul M.Barrett, Justices Deal Investors a Blow In Certain Suits, Wall St. J., Apr. 20, 1994, at A3; Dennis J. Block & Jonathan M.Hoff, Damages Remedy of §12(2) And Class Actions, N.Y. L.J., Apr. 2, 1992, at 5; Edward Brodsky, Expert TestimonyIn Securities Cases, N.Y. L.J., May 18, 1977, at 1; Judy Gotterer, Lawyer Testimony: Slow, Steady Growth, Legal

Times of Wash., Apr. 16, 1979, at 17; Linda Greenhouse, High Court Ruling Sharply Curbs Suits On Securities Fraud, N.Y. Times, Apr. 20, 1994, at A1; Jonathan F. Mack, Class Certification of Common Law Claims In Securities FraudActions, N.Y. L.J., Nov. 6, 1992, at 1; Claudia MacLachlan, High Court Hears Case on Private Securities Lawsuits, Nat'lL.J., Dec. 13, 1993, at 17; Floyd Norris, A Victory for Accountants and Lawyers in Securities Fraud Cases, N.Y. Times,Apr. 20, 1994, at C6; see, e.g., Reves v. Ernst & Young, 507 U.S. 170 (1993); Holmes v. Securities Investor ProtectionCorp., 503 U.S. 258 (1992); H.J. Inc. v. Northwestern Bell Telephone, 492 U.S. 229 (1989); Agency Holding Corp. v.Malley-Duff& Assoc., Inc., 483 U.S. 143 (1987); Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479 (1985); American National Bank & Trust Co. v. Haroco, 473 U.S. 606 (1985). See generally Stoneridge Investment Partners, LLC v.Scientific-Atlanta, Inc., 552 US 148 (2008); Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S.164 (1994); LOUIS LOSS & JOEL SELIGMAN, FUNDAMENTALS OF SECURITIES REGULATION Ch. 11D(4th ed. 2001 & 2003 Supp.).

193 Private Securities Litigation Reform Act of 1995, Pub. L. No. 104-67, 109 Stat. 737.

194 Securities Litigation Uniform Standards Act of 1998, Pub. L. No. 105-353, 112 Stat. 3227.

195 See DAVID R. HERWITZ, ACCOUNTING FOR LAWYERS 125-26 (1980); LOUIS LOSS, FUNDAMENTALS

OF SECURITIES REGULATION 1051-72 (2d ed. 1988); Joseph I. Goldstein & Catherine Dixon, New Teeth for the

Public's Watchdog: The Expanding Role of the Independent Accountant in Detecting, Preventing, and Reporting

Financial Fraud, 44 Bus. Law. 439, 457-61 (1989); Lee Berton, How MiniScribe Got Its Auditor's Blessing On

Questionable Sales, Wall St. J., May 14, 1992, at A1; Lee Berton, Inventory Chicanery Tempts More Firms, Wall St. J.,

Dec. 14, 1992, at A1; Brent Bowers & Udayan Gupta, Shareholder Suits Beset More Small Companies, Wall St. J., Mar.

9, 1994, at B1; Edward Brodsky, Accountants' Liability To Investors Expanded, N.Y. L.J., Aug. 7, 1978, at 1; Gail D.

Cox, Unlimited Liability, Nat. L.J., Dec. 21, 1992, at 1; Milo Geyelin & Lee Berton, Accountants Assail Malpractice

Suits - While Assisting Them, Wall St. J., Aug. 12, 1993, at A1; The Law: Trouble for the Top, Forbes, Sept. 1, 1968, at

23; see, e.g., Touche, Ross & Co. v. SEC, 609 F.2d 570 (2d Cir. 1979); Herzfeld v. Laventhol, Krekstein, Horwath &

Horwath, 540 F.2d 27 (2d Cir. 1976).

196 See PAUL HOFFMAN, LIONS OF THE EIGHTIES 269-74 (1982); PAUL HOFFMAN, LIONS IN THE

STREET 161-71 (1973); ABA Statement of Policy Regarding Lawyers' Response to Auditors' Requests for

Information, 31 Bus. Law. 1709 (1976); Assn. of the Bar of N.Y. Report by Special Committee on Lawyers' Role in

Securities Transactions, 32 Bus. Law. 1879 (1977); Edward F. Donohue, Attorney Liability in the Preparation of

Securities Disclosure Documents: Limiting Liability in the Face of Expanded Duties, 18 Sec. Reg. L.J. 115, 115-21

(1990); James R. Doty, Regulatory Expectations Regarding the Conduct of Attorneys in the Enforcement of the

Federal Securities Laws: Recent Development and Lessons for the Future, 48 Bus. Law. 1543, 1543-65 (1993);

James J. Fuld, Lawyer's Responses to Auditors - Some Practical Aspects, 44 Bus. Law. 159, 159-66 (1988); James J.

Fuld, Lawyer's Standards and Responsibilities in Rendering Opinions, 33 Bus. Law. 1295, 1298-1316 (1978); James

J. Fuld, Legal Opinions in Business Transactions: An Attempt to Bring Some Order Out of Some Chaos, 28 Bus.

Law. 915, 940-44 (1973); Stuart C. Goldberg, Policing Responsibility of the Securities Bar: The Attorney-Client

Relationship and the Code of Professional Responsibility - Consideration for Expertising Securities Attorneys, 19

N.Y. L.F. 221, 221-45 (1973); Joseph L. Johnson, Jr., Note, Liability of Attorneys for Legal Opinions Under the

Federal Securities Laws, 27 B.C. L. Rev. 325, 326-30 (1986); William R. McLucas & Laurie Romanowich, SEC

Enforcement Proceedings Under Section 15(c)(4) of the Securities Exchange Act of 1934, 41 Bus. Law. 145, 149-67

(1985); Stephen R. Volk, Arthur N. Field & Joseph T. McLaughlin, Law Firm Policies and Procedures in an Era of

Increasing Responsibilities: Analysis of a Survey of Law Firms, 48 Bus. Law. 1567, 1567-81 (1993); Rush Loving,

Jr., How Cortes Randell Drained the Fountain of Youth, Fortune, Apr. 1970, at 94; Gail Sindell, Securities Lawyers

Watching Their Backs, Legal Times, Nov. 12, 1990, at 51; Sherry R. Sontag, Harder to Sue, Nat'l L.J., June 17,

1991, at 1; see, e.g., DiLeo v. Ernst & Young, 901 F.2d 624 (7th Cir. 1990); Adams v. Standard Knitting Mills, Inc.,



623 F.2d 422 (6th Cir.), cert. denied, 449 U.S. 1067 (1980); Meyerhofer v. Empire Fire & Marine Ins. Co., 497 F.2d

1190 (2d Cir. 1974); George C. Kern, Jr., SEC Securities Exchange Act Release No. 29,356 (June 21, 1991),

reprinted in 49 SEC DOCKET 422 (1991). See generally SEC v. National Student Marketing Corp., 457 F. Supp.

682 (D.D.C. 1978); William R. Carter, Sec. Ex. Act Rel. No. 17,597, 22 SEC Dock. 292 (1981).


198 See JAMES D. COX, ROBERT W. HILLMAN & DONALD C. LANGEVOORT, SECURITIES

REGULATION 1103-1104 (1991).

199 See JAMES D. COX, ROBERT W. HILLMAN & DONALD C. LANGEVOORT, SECURITIES REGULATION1095-1096 (1991).


1995).

201 15 U.S.C. §§ 78g-78h, 78o (1988); Reg. G, 12 C.F.R. § 207 (1990); Reg. T, 12 C.F.R. § 220 (1990); Reg. U, 12

C.F.R. § 221 (1990); Reg. X, 12 C.F.R. § 224 (1990); 17 C.F.R. §§ 240.10b-6 to .10b-8, 240.10b-13 (1990); seeDONNA S. CARPENTER & JOHN FELONI, THE FALL OF THE HOUSE OF HUTTON 99 (1989); WILLIAM

GREIDER, SECRETS OF THE TEMPLE 311-12 (1987); 6 LOUIS LOSS & JOEL SELIGMAN, SECURITIES

REGULATION 2965-76 (3d ed. 1990); CHRIS WELLES, THE LAST DAYS OF THE CLUB 242-245 (1975); T.G.

Callery & Anne H. Wright, NASD Disciplinary Proceedings - Recent Developments, 48 Bus. Law. 791, 791-839

(1993); Jeffry L. Davis, William C. Dale & James A. Overdahl, Using Finance Theory to Measure Damages in Cases

Involving Fraudulent Trade Allocation Schemes, 49 Bus. Law. 591, 597-610 (1994); Daniel R. Fischel & David J. Ross,

Should the Law Prohibit "Manipulation" in Financial Markets?, 105 Harv. L. Rev. 503, 507-42 (1991); William W.

Foshay, Market Activities of Participants in Securities Distributions, 45 Va. L. Rev. 907, 907-26 (1959); Fred N.

Gerard& Michael L. Hirschfeld, The Scienter Requirement Under Rule 10b-6, 46 Bus. Law. 777, 777-780 (1991);

Michael P. Jamroz, The Net Capital Rule, 47 Bus. Law. 863, 863-68 (1992); Robert L. Knauss, A Reappraisal of the

Role of Disclosure, 62 Mich. L. Rev. 607, 635-40 & n.136 (1964); Donald C. Langevoort, Information Technology and

the Structure of Securities Regulation, 98 Harv. L. Rev. 747, 751-54 (1985); William T. Lesh, Federal Regulation of

Over-the-Counter Brokers and Dealers in Securities, 59 Harv. L. Rev. 1237, 1244-1274 & n.27 (1946); David A. Lipton,A Primer on Broker-Dealer Registration, 36 Cath. L. Rev. 899, 899-908 (1987); Henry F. Minnerop, The Role and

Regulation of Clearing Brokers, 48 Bus. Law. 841, 841-852 (1993); Art Detman, Can Ross Perot Change Wall Street?,

Dun's, Mar. 1973, at 46; Robert L. Frome, Registration of Employee Broker Dealer, N.Y. L.J., Oct. 27, 1988, at 3;

Roberta S. Karmel, Net Capital, Customer Protection Rule Revisions, N.Y. L.J., Dec. 19, 1985, at 1; Carol J. Loomis,

The Unbelievable Last Days of Hayden, Stone, Fortune, Jan. 1971, at 114; Rifka Rosenwein, In-housers Gain From Rise

In Securities Compliance Work, Manhattan Law., Mar. 1-7, 1988, at 1; Michael Siconolfi, Lehman Brothers Plans

Pretax Charge of $30 Million for Severance Payments, Wall St. J., Apr. 1, 1994, at A8; see, e.g., Miley v.

Oppenheimer& Co., 637 F.2d 318 (5th Cir. 1981); Arthur James Huff, SEC Securities Exchange Act Release No. 29,017

(Mar. 28, 1991), reprinted in 48 SEC DOCKET 10 (1991).

202 15 U.S.C. § 78o(b)(8)-(9) (1988); see LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 602-24

(2d ed. 1988); ROBERT C. POZEN, FINANCIAL INSTITUTIONS: INVESTMENT MANAGEMENT 50-57 (1978).

203 See The Penny Stock Scandal, Bus. Wk., Jan. 23, 1989, at 74.

204 See John C. Boland, Penny Dreadfuls, Barron's, Aug. 16, 1982, at 10. See generally Securities EnforcementRemedies and Penny Stock Reform Act of 1990, Pub. L. No. 101-429, 104 Stat. 931; SEC v. First Jersey Securities,Inc., 101 F.3d 1450 (2d Cir. 1996).

205 JOEL SELIGMAN, THE TRANSFORMATION OF WALL STREET 490 (1982).



206 JOEL SELIGMAN, THE SEC AND THE FUTURE OF FINANCE 18 (1985); CHRIS WELLES, THE LAST

DAYS OF THE CLUB 284-86 (1975).

207 See Rhonda Brammer, The Abracadabra Man, Barron's, Mar. 16, 1987, at 6.

208 See Anthony De Toro, Market Manipulation of Penny Stocks, 17 Sec. Reg. L.J. 241, 245-46 (1989).

209 See JOHN BROOKS, ONCE IN GOLCONDA 75 (1969); Ann Hagedorn, Boiler Room Brokers Just Keep

Resurfacing, J.T. Moran Case Shows, Wall St. J., Apr. 26, 1990, at A1.

210 See MURRAY T. BLOOM, ROGUES TO RICHES 25 (1971); LOUIS LOSS, FUNDAMENTALS OF

SECURITIES REGULATION 829-31 (2d ed. 1988); see, e.g., Berko v. SEC, 316 F.2d 137 (2d Cir. 1963); Kahn v.

SEC, 297 F.2d 112 (2d Cir. 1961).

211 See PAUL HOFFMAN, THE DEALMAKERS 124-39 (1984); see also Constance Mitchell, Fast-Talking Brokers in

Little Rock Target Small City Treasuries, Wall St. J., Apr. 12, 1989, at A1.

212 See VINCENT P. CAROSSO, INVESTMENT BANKING IN AMERICA 127 & n.62 (1970); ROBERT SOBEL,AMEX 15-16 (1972).

213 See GREGORY J. MILLMAN, THE DAY TRADERS 88-100 (1999).

214 See EDWARD CHANCELLOR, DEVIL TAKE THE HINDMOST Ch. 10 (1999). See generally Carol J. Loomis,

The Bloomberg, Fortune, Apr. 23, 2007, at 60; Richard Stern & Jason Zweig, "A New Guy Can Do It Better ",

Forbes, Nov. 25, 1991, at 122.

215 See Donald C. Langevoort, Fraud and Deception by Securities Professionals, 61 Tex. L. Rev. 1247, 1271-94 (1983);

Charity Scott, Caveat Vendor: Broker-Dealer Liability Under the Securities Exchange Act, 17 Sec. Reg. L.J. 274, 275-77

(1989); Roberta S. Karmel, Revisiting the Shingle, Fiduciary-Duty Theories, N.Y. L.J., Oct. 16, 1986, at 1.

216 See Note, Churning by Securities Dealers, 80 Harv. L. Rev. 869, 869-85 (1967); Richard A. Booth, New Churning

Cases Add Twist To Claims for Portfolio Damages, Nat'l L.J. June 24, 1991, at 34.

217 See Joseph I. Goldstein & L.D. Cox, Penny Stock Markups and Markdowns, 85 Nw. U.L. Rev. 676, 676-95 (1991);

Note, Insider Trading in Junk Bonds, 105 Harv. L. Rev. 1720, 1722-25 (1992); Roberta S. Karmel, Pegging Dealer

Profits, N.Y. L.J., Aug. 20, 1987, at 1.

218 See, e.g., Victor Brudney, Origins and Limited Applicability of the "Reasonable Basis" or "Know Your

Merchandise" Doctrine, in FOURTH ANNUAL INSTITUTE ON SECURITIES REGULATION 239, 247-49 (Robert

H. Mundheim, Arthur Fleischer, Jr. & John D. Schupper eds., 1973).

219

See, e.g., Martin Lipton, The Customer Suitability Doctrine, in FOURTH ANNUAL INSTITUTE ON SECURITIESREGULATION 273, 275-81 (Robert H. Mundheim, Arthur Fleischer, Jr. & John D. Schupper eds., 1973).


221 See Ralph C. Ferrara & Diane Sanger, Derivitive Liability in Securities Law: Controlling Person Liability,

Respondeat Superior, and Aiding and Abetting, 40 Wash. & Lee L. Rev. 1007, 1007-29 (1983).



222 See Lewis D. Lowenfels & Alan R. Bromberg, Securities Industry Arbitrations: An Examination and Analysis, in 3

SELECTED ARTICLES ON FEDERAL SECURITIES LAW 137, 138-164 (Franklin E. Gill ed., 1991); Michael

McGowan, See You in Arbitration, 79 A.B.A. J. 110 (May 1993); Brigid McMenamin, Friends of the Shafted, Forbes,

Apr. 26, 1993, at 185; Rob Rossi, Brokers, Attorneys Try to Curb 'Claims Advisers', Legal Times, Nov. 22, 1993, at 4;

Michael Siconolfi, Stock Investors Win More Punitive Awards In Arbitration Cases, Wall St. J., June 11, 1990, at A1.

See generally Rodriguez de Quijas v. Shearson American Express, Inc., 490 U.S. 477 (1989); Shearson/AmericanExpress, Inc. v. McMahon, 482 U.S. 220 (1987).

223 15 U.S.C. § 80b-2(a)(11) (1988); see 1 TAMAR FRANKEL, THE REGULATION OF MONEY MANAGERS 149-

68 (1978).

224 See ROBERT C. POZEN, FINANCIAL INSTITUTIONS: INVESTMENT MANAGEMENT 260-78 (1978); seealso Robert C. Pozen, Money Managers and Securities Research, 51 N.Y.U. L. Rev. 923, 923-28 (1976). See generallyLowe v. SEC, 472 U.S. 181 (1985); Transamerica Mortg. Advisors, Inc. (TAMA) v. Lewis, 444 U.S. 11 (1979);SEC v. Capital Gains Research Bureau, 375 U.S. 180 (1963).

225 See Roberta S. Karmel, Trends in Investment Adviser Regulation, N.Y. L.J., Apr. 18, 1985, at 1.

226 See 1 LOUIS LOSS, SECURITIES REGULATION 1410-11 (2d ed. 1961).

227 See INVESTMENT PARTNERSHIPS AND "OFFSHORE" INVESTMENT FUNDS 410-12 (Douglas W. Hawes

ed., 1969).

228 See Robert C. Hacker & Ronald D. Rotunda, SEC Registration of Private Investment Partnerships after Abrahamson

v. Fleschner, 78 Colum. L. Rev. 1471, 1476-81 (1978).

229 Rule 203(b)(3)-1, 17 C.F.R. § 275.203b3-1 (1990).

230 Rule 205-3, 17 C.F.R. § 275.205-3 (1990).

231 See 1 TAMAR FRANKEL, THE REGULATION OF MONEY MANAGERS 175 (1978 & Supp. 1989).

232 See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 675 & n.14 (2d ed. 1988 & Supp. 1990).

233 See JOEL SELIGMAN, THE TRANSFORMATION OF WALL STREET 487 (1982); ROY C. SMITH, THE

MONEY WARS 76 (1990); Robert C. Clark, The Four Stages of Capitalism: Reflections on Investment Management

Treatises, 94 Harv. L. Rev. 561, 564 & n. 9 (1981); see also SEC, INSTITUTIONAL INVESTOR STUDY REPORT,

H.R. DOC. NO. 92-64, 92d Cong., 1st Sess., at 58-59 (1971); JOHN TRAIN, THE MONEY MASTERS 46-47 (1980);

JOHN TRAIN, THE NEW MONEY MASTERS 175-77 (1989); Donald C. Langevoort, Information Technology and

the Structure of Securities Regulation, 98 Harv. L. Rev. 747, 771 & n.104 (1985).

234 See BRUCE WASSERSTEIN, BIG DEAL 67 (1998); RAJ K. BHALA, FOREIGN BANK REGULATIONAFTER BCCI 39-40 (1994); JAMES J. FISHMAN, THE TRANSFORMATION OF THREADNEEDLE STREET29 (1993).

235 See generally PETER L. BERNSTEIN, CAPITAL IDEAS Ch.1 (1992).

236 See CHRIS WELLES, THE LAST DAYS OF THE CLUB 38 (1975); Robert C. Clark, The Four Stages of

Capitalism: Reflections on Investment Management Treatises, 94 Harv. L. Rev. 561, 566-67 & n. 19 (1981).



237 See BENJAMIN GRAHAM, DAVID L. DODD & SIDNEY COTTLE 65 (4th ed. 1962); Robert C. Clark, The Four

Stages of Capitalism: Reflections on Investment Management Treatises, 94 Harv. L. Rev. 561, 564 & n. 8 (1981).

238 See VICTOR BRUDNEY & MARVIN A. CHIRELSTEIN, CORPORATE FINANCE 58-113 (3d ed. 1987); JACK

C. FRANCIS, INVESTMENTS 311 (2d ed. 1976); A.A. Sommer, Jr., Book Review, 93 Harv. L. Rev. 1595, 1599-1601

(1980) (reviewing HOMER KRIPKE, THE SEC AND CORPORATE DISCLOSURE: REGULATION IN SEARCHOF A PURPOSE (1979)).

239 JACK C. FRANCIS, INVESTMENTS 331 (2d ed. 1976).

240 JACK C. FRANCIS, INVESTMENTS 333 (2d ed. 1976).

241 See JACK C. FRANCIS, INVESTMENTS 541-43 (2d ed. 1976).

242 See JACK C. FRANCIS, INVESTMENTS 546-64 (2d ed. 1976).

243 See JACK C. FRANCIS, INVESTMENTS 257 (2d ed. 1976).

244 See BENJAMIN GRAHAM, DAVID L. DODD & SIDNEY COTTLE 194-238 (4th ed. 1962); see also JOHN

BROOKS, THE TAKEOVER GAME 85-86 (1987); Note, Valuation of Dissenters' Stock Under Appraisal Statutes, 79

Harv. L. Rev. 1453, 1456-71 (1966).

245 See MOIRA JOHNSTON, TAKEOVER 1-31 (1986).

246 See SEC, INSTITUTIONAL INVESTOR STUDY REPORT, H.R. DOC. NO. 92-64, 92d Cong., 1st Sess., at 2771-

2774 (1971); MOIRA JOHNSTON, TAKEOVER 232-35 (1986); LOUIS NIZER, MY LIFE IN COURT 427-428

(1961); 1 SHARK REPELLANTS AND GOLDEN PARACHUTES: A HANDBOOK FOR THE PRACTITIONER 3-

4 (Robert H. Winter, Mark H. Stumpf & Gerard L. Hawkins eds., 1991); Arthur Fleischer, Jr. & Robert H. Mundheim,

Corporate Acquisition by Tender Offer, 115 U. Pa. L. Rev. 317, 317-38 (1967); Note, Cash Tender Offers, 83 Harv. L.

Rev. 377, 377-88 (1969).

247 See GEORGE ANDERS, MERCHANTS OF DEBT 109-10 (1992); RICHARD M. CLURMAN, TO THE END OF

TIME 236-37 (1992); Peter Petre, Merger Fees That Bend the Mind, Fortune, Jan. 20, 1986, at 18; Randall Smith, In

Failed Bid for UAL, Lawyers and Bankers Didn't Fail to Get Fees, Wall St. J., Nov. 30, 1989, at A1.

248 See William S. Rukeyser, Getting Tough with Tenders, Fortune, Aug. 1967, at 108.

249 See PAUL HOFFMAN, THE DEALMAKERS 141-59 (1984); PAUL HOFFMAN, LIONS OF THE EIGHTIES176-96 (1982); JAMES B. STEWART, THE PARTNERS 245-82 (1983); Joseph H. Flom, The Role of the Takeover inthe American Economy, 32 Bus. Law. 1299, 1299-1300 (1977). See generally LAWRENCE LEDERMAN,TOMBSTONES 122-123 (1992); ANTHONY BIANCO, RAINMAKER 127-134 (1991).

250 See RICHARD PHALON, THE TAKEOVER BARONS OF WALL STREET 240 (1981); James H. Fogelson,

Joanne R. Wenig & Brian P. Friedman, Changing the Takeover Game: The SEC's Proposed Amendments to the

Williams Act, 17 Harv. J. on Legis. 409, 410-12, 438-40, 459-63 (1980).

251 See HOPE LAMPERT, TILL DEATH DO US PART 67, 109-16 (1983).



252 See Lucien A. Bebchuck, Toward Undistorted Choice and Equal Treatment in Corporate Takeovers, 98 Harv. L. Rev.

1693, 1742-44 (1985); Ida C. Wurczinger, Note, Toward a Definition of "Tender Offer", 19 Harv. J. on Legis. 191, 191-

94, 197-205, 210-12 (1982); Roundtable Discussion: Takeovers, Wall St. Transcript, Nov. 2, 1981, at 63,470.

253 See EDWARD R. ARANOW, HERBERT A. EINHORN & GEORGE BERLSTEIN, DEVELOPMENTS IN

TENDER OFFERS FOR CORPORATE CONTROL 1-2 (1977); EDWARD R. ARANOW & HERBERT A.EINHORN, TENDER OFFERS FOR CORPORATE CONTROL 64-116 (1973); 1 ARTHUR FLEISCHER, JR.,

TENDER OFFERS: DEFENSES, RESPONSES, AND PLANNING 297-321 (1983); 1 MARTIN LIPTON & ERICA

H. STEINBERGER, TAKEOVERS & FREEZEOUTS §6.06[1], at 6-121 to 6-122 (1992); J.P. MARK, THE EMPIRE

BUILDERS 197-98 (1987); Herbert M. Wachtell, Special Tender Offer Litigation Tactics, 32 Bus. Law. 1433, 1433-42

(1977); Steven Brill, Conoco, Am. Law., Nov. 1981, at 39. See generally Schreiber v. Burlington Northern, Inc., 472

U.S. 1 (1985); Piper v. Chris-Craft Industries, Inc., 430 U.S. 1 (1977); Lerro v. Quaker Oats Co., 84 F.3d 239 (7th

Cir. 1996); Hanson Trust PLC v. SCM Corp., 774 F.2d 47 (2d Cir. 1985); SEC v. Carter Hawley Hale Stores, Inc.,

760 F.2d 945 (9th Cir. 1985).

254 FEDERAL SECURITIES CODE § 299.9(a) (1980).

255

See Ruthlessness By the Rules, Forbes, Feb. 1, 1976, at 24.

256 See Diversification's Marriage Brokers, Forbes, Feb. 15, 1967, at 38.


258 See SAMUEL L. HAYES III & PHILIP M. HUBBARD, INVESTMENT BANKING: A TALE OF THREE CITIES

131-33 (1990); Connie Bruck, Kamikaze, Am. Law., Dec. 1985, at 75; Craig Forman, A Hot New Export To Europe

Takes Hold: The Hostile Takeover, Wall St. J., Apr. 19, 1988, at 1.

259 See MOIRA JOHNSTON, TAKEOVER 145-47 (1986); Power On Wall Street, Bus. Wk., July 7, 1986, at 56;

Randall Smith, How Drexel Wields Its Power in Market For High-Yield Bonds, Wall St. J., May 26, 1988, at 1.

260 See Roberta S. Karmel, Applying Margin Rules To Junk Bonds, N.Y. L.J., Feb. 20, 1986, at 1; James B. Stewart &

Rhonda L. Rundle, Drexel Burnham Mulls A Future Threatened By Junk-Bond Curbs, Wall St. J., Dec. 13, 1985, at 1;

John D. Williams, How 'Junk Financings' Aid Corporate Raiders In Hostile Acquisitions, Wall St. J., Dec. 6, 1984, at 1.

See generally HENRY HANSMANN, THE OWNERSHIP OF ENTERPRISE 64-65 (1996).


262 See KENNETH M. DAVIDSON, MEGAMERGERS 49-51 (1985).

263 See CONNIE BRUCK, THE PREDATOR'S BALL 154 (1988).

264

See ALLAN SLOAN, THREE PLUS ONE EQUALS BILLIONS 139-41 (1983).


THOMAS PETZINGER, JR., OIL & HONOR 125-253 (1987); James B. Stewart & Daniel Hertzberg, Investment

Bankers Feed a Merger Boom And Pick Up Fat Fees, Wall St. J., Apr. 2, 1986, at 1.

266 See BRYAN BURROUGH & JOHN HELYER, BARBARIANS AT THE GATE 205-08 (1990); see also Ronald J.

Gilson & Reinier H. Kraakman, The Mechanisms of Market Efficiency, 70 Va. L. Rev. 549, 554-88 (1984).




268 See JOHN BROOKS, THE TAKEOVER GAME 141-44 (1987); KENNETH M. DAVIDSON, MEGAMERGERS

32-41 (1985); RICHARD PHALON, THE TAKEOVER BARONS OF WALL STREET 125-39 (1981); Kim Masters,

Arbs' Counsel Keep Sharp Eye on Battle, Legal Times of Wash., Dec. 7, 1981, at 1; Richard Vilkin, Advising Risk

Arbitraguers Challenges M&A Lawyers, Legal Times of Wash., June 1, 1981, at 28.

269 See 1 MARTIN LIPTON & ERICA H. STEINBERGER, TAKEOVERS & FREEZEOUTS §1.06[4], at 1-40 to 1-49

(1992); William Meyers, How Ron Perelman Became The Richest Man In America, Institutional Inv., May 1989, at 140.

270 See RON CHERNOW, THE HOUSE OF MORGAN 600-01 (1990); ADAM SMITH, THE ROARING EIGHTIES

193-99 (1988).

271 See JOHN TAYLOR, STORMING THE MAGIC KINGDOM 112-37 (1987). See generally Kamerman v.

Steinberg, 891 F.2d 424 (1989).

272 See Note, Preferred Greenmail: Targeted Stock Repurchases and the Management-Entrenched Hypothesis, 98 Harv.

L. Rev. 1045, 1045-47 (1985).

273 See GEORGE ANDERS, MERCHANTS OF DEBT 9 (1992); SARAH BARTLETT, THE MONEY MACHINE 42

(1991); RICHARD M. CLURMAN, TO THE END OF TIME 49-50 (1992); ROBERT LENZNER, THE GREAT

GETTY 223-28 (1986); DAVID MCCLINTIC, INDECENT EXPOSURE 96-110 (1982); RUSSELL MILLER, THE

HOUSE OF GETTY 334-45 (1986); WILLIAM SHAWCROSS, MURDOCH 134-39 (1993); SYDNEY L. STERN &

TED SCHOENHAUS, TOYLAND 258-60 (1990); ANDREW TOBIAS, THE FUNNY MONEY GAME 34-37 (1971);

see, e.g., Stanley H. Brown, Dr. Hammer's Magic Tingle, Fortune July 1968, at 98; Getty Oil: The House That J. Paul

Built, Forbes, Mar. 1, 1974, at 30; Look Who's Playing with Toys, Forbes, Dec. 15, 1971, at 22; John McDonald, J. Paul

Getty's Changed Plans, Fortune, Dec. 1967, at 108; Meshulam Riklis: The Power, the Profit and the Glory, Forbes, Mar.

15, 1971, at 24; Occidental Petroleum: Lucky Like a Fox, Forbes, June 1, 1968, at 24; Randall Smith, Merger Activity

Falls for Fourth Straight Year But Some Say the Worst Is Finally Over, Wall St. J., Jan. 4, 1993, at R8; Shawn Tully,

The Man Who Scored in Cola-Columbia, Fortune, Feb. 22, 1982, at 73. See generally Arthur In Paley-Land, Forbes,

May 1, 1975, at 20; Revlon After Revson, Forbes, Sept. 15, 1975, at 26; The Gilt-Edged Profession, Forbes, Sept. 15,

1971, at 30; The Movies: Why Everyone Wants In, Forbes, Dec. 15, 1967, at 22.

274 See JOSEPH R. DAUGHEN & PETER BINZEN, THE WRECK OF THE PENN CENTRAL 242-51 (1971); ROY

C. SMITH, THE MONEY WARS 314-17 (1990); Joann S. Lublin & Craig Forman, Europe's Merger Boom Triggers an

Invasion By U.S. Deal Makers, Wall St. J., Aug. 23, 1989, at A1.

275 See ROY C. SMITH, THE MONEY WARS 89-90 (1990); James C. Freund & Robert L. Easton, The Three-Piece

Suitor: An Alternate Approach to Negotiated Corporate Acquisitions, 34 Bus. Law. 1679, 1684-87 (1979); see also

Laurie M. Grossman & Gabriella Stern, Blockbuster to Buy Controlling Stake In Spelling in Swap, Wall St. J., Mar. 9,

1993, at B10; Lawrence Rout, A Risk Arbitrageur Plays Dangerous Game Of Betting on Mergers, Wall St. J., Feb. 22,

1979, at 1.

276 See ROBERT C. CLARK, CORPORATE LAW § 10.23, at 413-14 (1986); RONALD J. GILSON, THE LAW AND

FINANCE OF CORPORATE ACQUISITIONS 26-28 (1987).

277 SEC Securities Act Release No. 5316 (Oct. 6, 1972); see Edward F. Greene & James J. Junewitz, A Reappraisal of

Current Regulation of Mergers and Acquisitions, 132 U. Pa. L. Rev. 647, 649-77 (1984).

278 See Leib Orlanski, Going Public Through the Backdoor and the Shell Game, 58 Va. L. Rev. 1451, 1451-85 (1972).



279 See DAVID L. RATNER, SECURITIES REGULATION 364-71 (3d ed. 1986).


281 See Anthony De Toro, Market Manipulation of Penny Stocks, 17 Sec. Reg. L.J. 241, 242-43 (1989).

282 See Anthony De Toro, Market Manipulation of Penny Stocks, 17 Sec. Reg. L.J. 241, 242-43 & n.10 (1989).

283 See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 708 & n.27 (2d ed. 1988).

284 See Louis Loss, Teaching the Regulatory Aspects of Corporate Finance, Harv. L. Sch. Bull., Dec. 1953, at 3; see also

DIANA B. HENRIQUES, FIDELITY'S WORLD Ch. 6 (1995); KURT EICHENWALD, SERPENT ON THE

ROCK Ch.14 (1995); G.W. MILLER, TOY WARS Ch. 3 (1998); HILARY ROSENBERG, THE VULTURE

INVESTORS Ch.1 (1992). See generally LOUIS LOSS, ANECDOTES OF A SECURITIES LAWYER 219-249

(1995).

285 See, e.g., JOEL SELIGMAN, THE TRANSFORMATION OF WALL STREET 561-62 (1982).


287 See, e.g., What Are Earnings? The Growing Credibility Gap, Forbes, May 15, 1967, at 28.

288 See DAVID R. HERWITZ, BUSINESS PLANNING 782-95 (1966); DAVID R. HERWITZ, BUSINESS

PLANNING 720-33 (Temp. 2d ed. 1984).

289 See VICTOR BRUDNEY & MARVIN A. CHIRELSTEIN, CORPORATE FINANCE 594-618 (3d ed. 1987).

290 See RONALD J. GILSON, THE LAW AND FINANCE OF CORPORATE ACQUISITIONS 258-86 (1987).

291 26 U.S.C. §§ 351, 354, 357-358, 361, 368 (1986); see BORIS I. BITTKER & JAMES S. EUSTICE, FEDERAL

INCOME TAXATION OF CORPORATIONS AND SHAREHOLDERS §§ 14.30-14.35, at 14-92 to 14-125 (4th ed.

1979); VICTOR BRUDNEY & MARVIN A. CHIRELSTEIN, CORPORATE FINANCE 620-25 (3d ed. 1987).

292 See BORIS I. BITTKER & JAMES S. EUSTICE, FEDERAL INCOME TAXATION OF CORPORATIONS AND

SHAREHOLDERS §§ 14.10-14.35, at 14-16 to 14-91 (4th ed. 1979); DAVID R. HERWITZ, BUSINESS PLANNING

801-35 (1966); DAVID R. HERWITZ, BUSINESS PLANNING 739-806 (Temp. 2d ed. 1984); RONALD J. GILSON,

THE LAW AND FINANCE OF CORPORATE ACQUISITIONS 449-98 (1987).

293 See WILLIAM L. CARY, CORPORATIONS 10-11 (4th ed. unabridged 1969); see, e.g., Robert C. Clark, The Four

Stages of Capitalism: Reflections on Investment Management Treatises, 94 Harv. L. Rev. 561, 563 & n.5 (1981).

294 See WILLIAM L. CARY, CORPORATIONS 9-10 (4th ed. unabridged 1969); MOIRA JOHNSTON, TAKEOVER261-62 (1986); LOUIS NIZER, MY LIFE IN COURT 496-523 (1961).

295 Del. Code Ann. tit. 8, §§ 251, 259, 261-262 (1974); see RONALD J. GILSON, THE LAW AND FINANCE OF

CORPORATE ACQUISITIONS 501-57 (1987); DETLEV F. VAGHTS, BASIC CORPORATION LAW 74-75 (2d ed.

1979).





DETLEV F. VAGHTS, BASIC CORPORATION LAW 751-75 (2d ed. 1979); see, e. g., Paramount Communications,

Inc. v. QVC Network, Inc., 637 A.2d 34 (Del. 1994); Cede & Co v. Technicolor, Inc., 634 A.2d 345 (Del. 1993); In re

Tri-Star Pictures, Inc. Litigation, 634 A.2d 319 (Del. 1993); Paramount Communications, Inc. v. Time, Inc., 571 A.2d

1140 (Del. 1989); Revlon v. MacAndrews & Forbes Holdings, 506 A.2d 173 (Del. 1986); Smith v. Van Gorkom, 488

A.2d 858 (Del. 1985); Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 1983); Singer v. Magnavox, 380 A.2d 969 (Del.1977).

298 See VICTOR BRUDNEY & MARVIN A. CHIRELSTEIN, CORPORATE FINANCE 647-68 (3d ed. 1987); Victor

Brundy & Marvin A. Chirelstein, Fair Shares in Corporate Mergers and Takeovers, 88 Harv. L. Rev. 297, 304-07 & nn.

19-20 (1974); James Vorenberg, Exclusiveness of the Dissenting Shareholder's Appraisal Right, 77 Harv. L. Rev. 1189,

1199 & nn.35-36 (1964).

299 See, e.g., WILLIAM L. CARY, CORPORATIONS 868-1007 (4th ed. unabridged 1969); Victor Brudney, The

Independent Director - Heavenly City or Potemkin Village?, 95 Harv. L. Rev. 597, 607-31 & nn.50-51, 85 & 87 (1982).

300 See, e.g., WILLIAM L. CARY, CORPORATIONS 1008-20 (4th ed. unabridged 1969); Carol J. Loomis, A Squeeze

on the Directors, Fortune, May 15, 1969, at 120.

301 See Robert J. Giuffra, Jr., Note, Investment Banker’s Fairness Opinions in Corporate Control Transactions, 96 Yale

L.J. 119, 137-139 & n.104 (1986); see also EUGENE F. BRIGHAM & LOUIS C. GAPENSKI, FINANCIAL

MANAGEMENT 233-267 (8th ed. 1997).

302 See, e.g., PAUL HOFFMAN, LIONS OF THE EIGHTIES 1-25 (1982); JAMES B. STEWART, THE PARTNERS

53-113 (1983).

303 See JOHN BROOKS, THE TAKEOVER GAME 261 (1987); RONALD J. GILSON, THE LAW AND FINANCE

OF CORPORATE ACQUISITIONS 1079-94 (1987).

304

See DAVID R. HERWITZ, BUSINESS PLANNING 200-02 (1966).

305 See KEN AULETTA, GREED AND GLORY ON WALL STREET 11-14 (1986).

306 See JOEL SELIGMAN, THE TRANSFORMATION OF WALL STREET 312-23 (1982).

307 See, e.g., SEC, REPORT OF SPECIAL STUDY OF SECURITIES MARKETS, H.R. DOC. NO. 95, 88th Cong., 1st

Sess., pt. 1, at 514-516 (1963); JOHN BROOKS, THE TAKEOVER GAME 67-69 (1987); KIM I. EISLER, SHARK

TANK 38 (1990); MICHAEL C. JENSEN, THE FINANCIERS 24-37 (1976); MICHAEL S. MALONE, GOING

PUBLIC 16-25 (1991); STEPHEN MANES & PAUL ANDREWS, GATES 301-07 (1993); JOSEPH WECHSBERG,

THE MERCHANT BANKERS 243-44 (1966); Daniel J. McCauley, Jr., The Securities Laws - After 40 Years: A Need

For Rethinking, 48 Notre Dame Law. 1092, 1098-1100 (1973); John C. Boland, High-Flying Fledglings, Barron's, Dec.

13, 1982, at 8; Rhonda Brammer, Outpour of Offerings, Barron's, June 27, 1983, at 13; Sara Calian, IPOs Raise a Record

$39.4 Billion for '92, Wall St. J., Jan. 4, 1993, at C1; Thomas N. Cochran, Year of the IPO, Barron's, Jan. 4, 1993, at 20;

Golden Eggs? Or Lemons?, Forbes, July 15, 1969, at 24; Arthur M. Louis, The Fastest Richest Texan Ever, Fortune,

Nov. 1968, at 168; Gene C. Marcial, Ripe Young Stocks, Ready For the Picking, Bus. Wk., Dec. 30, 1991/Jan. 6, 1992,

at 76.

308 See, e.g., JOHN BROOKS, THE GO-GO YEARS 1-14 (1973); ADAM SMITH, PAPER MONEY 271-73 (1981);

Fred R. Bleakley, A Decade of Debt Is Now Giving Way To the Age of Equity, Wall St. J., Dec. 16, 1991, at A1;

Laurence J. DeMaria, Stocks Plunge 508 Points, A Drop of 22.6%; 604 Million Volume Nearly Doubles Record, N.Y.

Times, Oct. 20, 1987, at A1; Laurence J. DeMaria, Stocks Widely Battered Again But The Dow Rises By 102 As



Biggest Issues Find Buyers, N.Y. Times, Oct. 21, 1987, at A1; Roberta S. Karmel, Black Monday, N.Y. L.J., Dec. 17,

1987, at 1; Cary Reich, Apocalypse Now?, Institutional Inv., Nov. 1987, at 79; Richard E. Rustin & George Getschow,

New-Issue Stock Boom Nears a Danger Point, Some Regulators Warn, Wall St. J., Nov. 21, 1980, at 1; James B. Stewart

& Daniel Hertzberg, How the Stock Market Died and Rose Again A Day After the Crash, Wall St. J., Nov. 20, 1987, at

A1.

309 See ARTHUR M. BORDEN, GOING PRIVATE § 1.02, at 1-3 (1991); Note, Going Private, 84 Yale L.J. 903, 903-

11 (1975).

310 See ARTHUR M. BORDEN, GOING PRIVATE § 1.07, at 1-8 to 1-14 & nn.6 & 14 (1991); Arthur M. Borden,

Going Private - Old Tort, New Tort or No Tort?, 49 N.Y.U. L. Rev. 987, 987-1020 (1974).

311 See SARAH BARTLETT, THE MONEY MACHINE 45-47 (1991); Robert L. Frome, SEC Takes Position On

Leveraged Buy-Outs, N.Y. L.J., Apr. 5, 1979, at 1; John D. Williams, King of the Buyouts, Kohlberg Kravis Helps Alter

Corporate U.S., Wall St. J., Apr. 11, 1986, at 1.

312 See VICTOR BRUDNEY & MARVIN A. CHIRELSTEIN, CORPORATE FINANCE 437-64 (3d ed. 1987).

313 See CARY REICH, FINANCIER 222-41 (1983).

314 See JOHN BROOKS, THE GO-GO YEARS 153-58 (1973); see also Wendy Bounds, Kodak to Sell Sterling

Winthrop Drug And Two Other Units to Focus on Film, Wall St. J., May 4, 1994, at A3; William M. Bulkeley,

Conglomerates Make A Surprising Comeback - With a '90s Twist, Wall St. J., Mar. 1, 1994, at A1; Christina Duff,

Kmart to Sell PayLess to Firm For $1 Billion, Wall St. J., Nov. 1, 1993, at A3; Daniel Pearl & Gautam Naik, Georgia-

Pacific Signs Letter of Intent To Sell Butler Paper to Alco Standard, Wall St. J., Mar. 16, 1993, at A7; Anita Sharp,

Flagstar Plans to Sell Most of Canteen To Compass for $450 Million; End Loss, Wall St. J., Apr. 28, 1994, at A3.

315 See KENNETH M. DAVIDSON, MEGAMERGERS 19 (1985).

316

See William T. Allen, Independent Directors In MBO Transactions: Are They Fact or Fantasy?, 45 Bus. Law. 2055,2055-56 (1990); Carl Ferenbach, L.B.O.s: A New Capital Market (And How to Cope With It), Mergers & Acquisitions,

Fall 1983, at 21.

317 See SARAH BARTLETT, THE MONEY MACHINE 157-69 (1991); Stephen R. Waite & Martin S. Fridson, Do

Leveraged Buyouts Pose Major Credit Risks?, Mergers & Acquisitions, July-Aug. 1989, at 43.

318 See G.C. Hill & John D. Williams, Leveraged Purchases Of Firms Keep Gaining Despite Rising Risks, Wall St. J.,

Dec. 29, 1983, at 1; Allan Sloan, Luring Banks Overboard?, Forbes, April 9, 1984, at 39.

319 See JOHN BROOKS, THE TAKEOVER GAME 207-08 (1987); Note, Distress-Contingent Convertible Bonds: A

Proposed Solution to the Excess Debt Problem, 104 Harv. L. Rev. 1857, 1857 & n.2 (1991).

320 See SARAH BARTLETT, THE MONEY MACHINE 253 (1991); Richard Lieb, Junk Bond Holders Face

Bankruptcy Risk, N.Y. L.J., Dec. 4, 1989, at 44; Constance Mitchell, Junk Bond Issuance Posts a Strong Rebound,

Partly Reflecting Late 1991 Good Performance, Wall St. J., Jan. 4, 1993, at R36; Patrick M. Reilly, Ralph Ingersoll

Finds Newspapers Are Fun, Junk Bonds Are Not, Wall St. J., Mar. 26, 1990, at A1.

321 See Note, Distress-Contingent Convertible Bonds: A Proposed Solution to the Excess Debt Problem, 104 Harv. L.

Rev. 1857, 1858 & n.8, 1866, 1877 (1991); Ford S. Worthy, The Coming Defaults in Junk Bonds, Fortune, Mar. 16,

1987, at 26.



322 See CONNIE BRUCK, THE PREDATOR'S BALL 27-39 (1988); JAMES B. STEWART, DEN OF THIEVES 45-

47 (1991); Janet Bush & Anatole Kaletsky, When the Junk Heap Topples, Fin. Times, Feb. 14, 1990, at I26; John Liscio,

The Buyout Bubble, Barron's, Oct. 31, 1988, at 6; see also Nick Gilbert, A Closer Look at First Executive, Fin. World,

May 5, 1987, at 22.

323 See 1 ARTHUR FLEISCHER, JR., TENDER OFFERS: DEFENSES, RESPONSES, AND PLANNING 3-65(1983); 1 SHARK REPELLANTS AND GOLDEN PARACHUTES: A HANDBOOK FOR THE PRACTITIONER 5-

9 (Robert H. Winter, Mark H. Stumpf & Gerard L. Hawkins eds., 1991); Michael Bradley & Michael Rosenzweig,

Defensive Stock Repurchases, 99 Harv. L. Rev. 1377, 1378-84 (1986); Note, Protecting Shareholders Against Partial

and Two-Tiered Takeovers: The "Poison Pill", 97 Harv. L. Rev. 1964, 1964-68 (1984); see, e.g., Field v. Trump, 850

F.2d 938 (2d Cir. 1988), cert. denied, 489 U.S. 1012 (1989); Chromalloy Am. Corp. v. Sun Chem. Corp., 611 F.2d 240

(8th Cir. 1979); Smallwood v. Pearl Brewing Co., 489 F.2d 579 (5th Cir.), cert. denied, 419 U.S. 873 (1974); Applied

Digital Data Sys. Inc. v. Milgo Elec. Corp., 425 F. Supp. 1145 (S.D.N.Y. 1977).

324 See ROBERT C. CLARK, CORPORATE LAW § 3.4, at 123-25& nn.3-4 (1986); Maurice A. Hartnett, III, The

History of the Delaware Court of Chancery, 48 Bus. Law. 367, 367-70 (1992); E.N. Veasey, The National Court of

Excellence, 48 Bus. Law. 357, 357-58 (1992); William Meyers, Showdown In Delaware: The Battle To Shape Takeover

Law, Institutional Inv., Feb. 1989, at 64.

325 See, e.g., R.F. Balotti & James J. Hanks, Rejudging the Business Judgment Rule, 48 Bus. Law. 1337, 1337-52

(1993); Charles Hansen, The Duty of Care, the Business Judgment Rule, and The American Law Institute Corporate

Governance Project, 48 Bus. Law. 1355, 1355-74 (1993); Paul M. Bernstein, Something for Everyone In Cash Out

Merger, N.Y. L.J., Mar. 22, 1983, at 1; Karen Donovan, Corporate Directors Take Beating From Del. Supreme Court,

Nat'l L.J., Dec. 27, 1993/Jan. 3, 1994, at 17; James C. Freund & Rodman Ward, Jr., What's 'In,' 'Out' in Takeovers In

Wake of Paramount v. Time, Nat'l L.J., Mar. 26, 1990, at 22; E.P. Welch & A.J. Turezyn, Courts Took Quick Action in

Paramount, Nat'l L.J., Jan. 10, 1994, at 20. See generally Curtis Hearn & Walter Baus, Director Liability and the Use of

Advisory Directors, 10 La. Corp. Newsl. No. 2 (La. St. B. Ass'n Sec. on Corp. & Bus. L., New Orleans, La.), Fall 1986.

326 See EDWARD R. ARANOW, HERBERT A. EINHORN & GEORGE BERLSTEIN, DEVELOPMENTS INTENDER OFFERS FOR CORPORATE CONTROL 207-57 (1977); EDWARD R. ARANOW & HERBERT A.

EINHORN, TENDER OFFERS FOR CORPORATE CONTROL 153-72 (1973); Manning G. Warren III, Reflectionson Dual Regulation of Securities: A Case Against Preemption, 25 B.C. L. Rev. 495, 513 & n.146 (1984).

327 See RONALD J. GILSON, THE LAW AND FINANCE OF CORPORATE ACQUISITIONS 1073-78 (1987).

328 See Donald C. Langevoort, Comment, The Supreme Court and the Politics of Corporate Takeovers: A Comment on

CTS Corp. v. Dynamics Corp. of America, 101 Harv. L. Rev. 96, 97 & n.7 (1987).


330 See Thomas L. Hazen, State Anti-Takeover Legislation: The Second and Third Generations, 23 Wake Forest L. Rev.

77, 77-88 (1988); Evelyn Sroufe & Catherine Gelband, Business Combination Statutes: A "Meaningful Opportunity" for

Success?, 45 Bus. Law. 891, 891-93 (1990); Barbara Franklin, Shifting Fight To the States On Hostile Bids, Nat'l L.J.,Sept. 25, 1989, at 1. See generally CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69 (1987); Edgar v. Mite

Corp., 457 U.S. 624 (1982).

331 See, e.g., ADAM SMITH, THE ROARING EIGHTIES 214-20 (1988); MARK STEVENS, THE INSIDERS 11-22,

117-21 (1987); R.F. WINANS, TRADING SECRETS 299-311 (1986); James B. Stewart & Daniel Hertzberg, Secret

Dealing Helped Paul Bilzerian Make Takeover Bids Work, Wall St. J., May 19, 1988, at 1.



332 See CONNIE BRUCK, THE PREDATOR'S BALL 317-53 (1988); PAUL HOFFMAN, LIONS OF THE

EIGHTIES 278-81 (1982); Roberta S. Karmel, Defining Insider Trading, N.Y. L.J., Oct. 15, 1987, at 1.

333 See, e.g., JOHN BROOKS, BUSINESS ADVENTURES 118-44 (1969); RON CHERNOW, THE HOUSE OF

MORGAN 562-67 (1990); RICHARD W. JENNINGS & HAROLD MARSH, JR., SECURITIES REGULATION

1044-56 (6th ed. 1987); Victor Brundy, Insiders, Outsiders, and Informational Advantages Under the FederalSecurities Laws, 93 Harv. L. Rev. 322, 322-39 (1979); Alan M. Weinberger, Preventing Insider Trading Violations:

A Survey of Corporate Compliance Programs, 18 Sec. Reg. L.J. 180, 182-85 (1990); James B. Stewart & Daniel

Hertzberg, Small Securities Firm Links Drexel's Milken, Goldman's Freeman, Wall St. J., Apr. 6, 1988, at 1.

334 See DAVID L. RATNER, SECURITIES REGULATION 614-16 (3d ed. 1986); JAMES B. STEWART, DEN OF

THIEVES 234-52 (1991); Stuart J. Kaswell, An Insider's View of the Insider Trading and Securities Fraud Enforcement

Act of 1988, 45 Bus. Law. 145, 152-71 (1989); David E. Brodsky, Result In Chestman Sends Mixed Message, Nat'l L.J.,

Dec. 30, 1991-Jan. 6, 1992, at 21; Linda Himelstein, Cleaning Up After SEC Crackdown, Legal Times, May 28, 1990, at

1; Roberta S. Karmel, A Decade of Greed, N.Y. L.J., Mar. 1, 1990, at 3; Harvey Pitt & Karl Groskaufmanis, 2nd

Circuit's Recent Insider-Trading Decision Invites Legislative Fix, Legal Times, May 21, 1990, at 25; David Snouffer,

HLS Professors Analyze Boesky Scandal, Harv. L. Rec., Jan. 15, 1987, at 2; see, e.g., United States v. Carpenter, 484

U.S. 19 (1987); Moss v. Morgan Stanley, Inc., 719 F.2d 5 (2d Cir. 1983), cert. denied, sub nom. Moss v. Newman, 465

U.S. 1025 (1984); United States v. Newman, 664 F.2d 12 (2d Cir. 1981), cert. denied, 464 U.S. 863 (1983); Zweig v.

Hearst Corp., 594 F.2d 1261 (9th Cir. 1979).

335 See LOUIS L. JAFFE & NATHANIEL L. NATHANSON, ADMINISTRATIVE LAW 546-550 (3d ed. 1968).

336 See Martin Lipton & Robert B. Mazur, The Chinese Wall Solution to the Conflict Problems of Securities Firms,

50 N.Y.U. L. Rev. 459, 460-64 (1975).

337 See JOHN BROOKS, THE TAKEOVER GAME 144-46, 154-55 (1987).

338 See RON CHERNOW, THE HOUSE OF MORGAN 632-35 (1990); PAUL HOFFMAN, THE DEALMAKERS

160-76 (1984); JAMES B. STEWART, THE PROSECUTORS 134-77 (1987).

339 See DAVID W. EWING, INSIDE THE HARVARD BUSINESS SCHOOL 236 (1990); DOUGLAS FRANTZ,

LEVINE & CO. 331-48 (1987); Donald Baer, A Yuppie Fable, Am. Law., July/Aug. 1986, at 83. See generally Insider

Trading and Securities Fraud Enforcement Act of 1988, Pub. L. No. 100-104, 102 Stat. 4677; United States v.

O’Hagan, 521 U.S. 642 (1997); Dirks v. SEC, 463 U.S. 646 (1983); Chiarella v. United States, 445 U.S. 222 (1980);

SEC v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir. 1968), cert. denied sub nom Kline v. SEC, 394 U.S. 976

(1969); Investors Management Co., Inc., 44 SEC 633 (1971).


1995).


1995).


343 15 U.S.C. § 80a-3 (1988); see 1 TAMAR FRANKEL, THE REGULATION OF MONEY MANAGERS 195-254(1978). See generally MATTHEW P. FINK, THE RISE OF MUTUAL FUNDS: AN INSIDER’S VIEW (2008)

217-218; David Whitford & Joseph Nocera, Has Fidelity Lost It?, Fortune, June 9, 1997, at 58.



344 See SEC, INSTITUTIONAL INVESTOR STUDY REPORT, H.R. DOC. NO. 92-64, 92d Cong., 1st Sess., at 370-72

(1971); CHRIS WELLES, THE LAST DAYS OF THE CLUB 27-31 (1975); Note, The Regulation of Risky

Investments, 83 Harv. L. Rev. 603, 608 (1970). See generally Jones v. Harris Associates, 559 U.S. 335 (2010); Daily

Income Fund, Inc. v. Fox, 464 US 523 (1984); Burks v. Lasker, 441 U.S. 471 (1979); John Morley & Quinn Curtis,

Taking Exit Rights Seriously: Why Governance and Fee Litigation Don’t Work in Mutual Funds, 120 Yale L.J. 84(2010).

345 See JAMES L. FARRELL, Jr., GUIDE TO PORTFOLIO MANAGEMENT 1-23 (1983); ADAM SMITH, THE

MONEY GAME 207-19 (1967); JOHN TRAIN, THE MONEY MASTERS 160-61 (1980); JOHN TRAIN, THE NEW

MONEY MASTERS 138-39 (1989); Wall Street: The Performers, Forbes, June 15, 1967, at 24; see also Diane H.

Gropper, Basket Investing: The New Force In The Stock Market, Institutional Inv., Sept. 1988, at 49.

346 See E.L. Hennessee, Flowering Hedges, Barron's, Dec. 13, 1993, at 16; Heyday of the Hedge Funds, Dun's Rev., Jan.

1968, at 23; Dyan Machan & Riva Atlas, George Soros, Meet A.W. Jones, Forbes, Jan. 17, 1994, at 42.


(1971); JOHN TRAIN, THE NEW MONEY MASTERS 31-35 (1989); Susan Lee, Selling Short, Forbes, Apr. 22, 1985,at 99.

348 See ADAM SMITH, SUPERMONEY 178-79 (1972). See Neil Weinberg & Bernard Condon, The Sleaziest Show

on Earth, Forbes, May 24, 2004, at 110; James M. Clash, Robert Lenzner, Michael Maiello & Josephine Lee, The

$500 Billion Hedge Fund Folly, Forbes, Aug. 6, 2001, at 70.


350 See Douglas W. Hawes, Hedge Funds - Investment Clubs of the Rich, 23 Bus. Law. 576, 576-77 (1968).

351 See Carol J. Loomis, Hard Times Come to the Hedge Funds, Fortune, Jan. 1970, at 100.

352 See THE MONEY MANAGERS 111-22 (Gilbert E. Kaplan & Chris Welles eds., 1969).


(1971); JOHN TRAIN, THE NEW MONEY MASTERS 141 (1989); Leslie A. Glick, Mutual Fund Management Fees:

In Search of a Standard, 25 Bus. Law. 1471, 1483-85 (1970).

354 See MARTIN MAYER, NEW BREED ON WALL STREET 11-12 (1969).

355 See Cary Reich, Has Allen Got a Deal For You!, Institutional Inv., Apr. 1983, at 69.

356 See Michael Peltz, High Tech's Premier Venture Capitalist, Institutional Inv., June 1996, at 89.

357 See GREGORY J. MILLMAN, THE VANDALS’ CROWN 230 (1995).

358 See RANDALL E. STROSS, EBOYS xvi (2000).

359 See Anise Wallace, The World's Greatest Money Manager, Institutional Inv., June 1981, at 39.

360 See Kevin Muehring, John Meriwether By the Numbers, Institutional Inv., Nov. 1996, at 68.



361 See 1 LOUIS LOSS & JOEL SELIGMAN, SECURITIES REGULATION 39-148 (3d ed. 1989 & Supp. 1990);

Milton H. Gray, Blue Sky Practice - A Morass?, 15 Wayne L. Rev. 1519, 1523-24 (1969); Louis Loss, The Harvard Law

School Study of State Securities Regulation, Harv. L. Sch. Bull., Dec. 1954, at 9.

362 UNIF. SALE OF SECURITIES ACT, 9 U.L.A. 625 (1929).

363 UNIF. SECURITIES ACT, 9C U.L.A. 86 (1956); 1 BLUE SKY L. REP. (CCH) ¶¶ 5500-73.

364 UNIF. SECURITIES ACT, 7B U.L.A. 509 (1985); 1 BLUE SKY L. REP. (CCH) ¶¶ 5591-707.

365 See F.L. Liebolt, Jr., The Revised Uniform Securities Act - Is ABA Endorsement in the Offing?, 45 Bus. Law. 1333,

1334 (1990); Note, Secondary Trading in Securities: Labyrinth Beneath the Blue Sky, 1969 Wash. U.L.Q. 41, 42-43 &

n.9 (1969).

366 UNIF. SECURITIES ACT, 7B U.L.A. 509, 516 (master ed. 1985).

367 UNIF. SECURITIES ACT, 7B U.L.A. 509, 525-26 (master ed. 1985).



370 See JOHN BROOKS, THE TAKEOVER GAME 42-43 (1987); see, e.g., Sam Adler, Mid-Sized Firms Turning

to Blue-Sky Specialists, Manhattan Law., Apr. 4-10, 1989, at 5.


372 See Conrad G. Goodkind, Blue Sky Law: Is There Merit in the Merit Requirements?, 1976 Wis. L. Rev. 79, 79-87

(1976).

373 See Hugh H. Makens, Who Speaks for the Investor? An Evaluation of the Assault on Merit Regulation, 13 U. Balt.

L. Rev. 435, 437-43 (1984).

374 See JOSEPH C. LONG, BLUE SKY LAW § 1.02 at 1-2 to 1-5 (1985); see, e.g., Guy C. Lyman, Jr., Securities

Regulation in Louisiana - A Practical Introduction to the Blue Sky Law, 16 La. B.J. 327, 327-28 (1969).

375 See 1 LOUIS LOSS, SECURITIES REGULATION 23-107 (2d ed. 1961); LOUIS LOSS & EDWARD M.

COWETT, BLUE SKY LAW 3-42 (1958). See generally Harry C. Stansbury, A Primer on Securities Regulation in

Louisiana, 13 La. Corp. Newsl. No. 1 (La. St. B. Ass'n Sec. on Corp. & Bus. L., New Orleans, La.), Fall 1990.

376 See JOSEPH C. LONG, BLUE SKY LAW § 3.01 at 3-2 to 3-5 (1985); see also Joseph C. Long, State Securities

Regulation: An Overview, 32 Okla. L. Rev. 541, 579-97 & n.193 (1979).

377 See Thomas L. Krebs & David R. Donaldson, Securities Litigation in Alabama: Open Shirts, Gold Chains and Pinkie

Rings: A Guide for Widows and Orphans, 20 Cumb. L. Rev. 481, 594-97 (1990).




379 See Jeffrey B. Bartell, Federal-State Relations Under the Federal Securities Code, 32 Vand. L. Rev. 457, 470-87

(1979).


381 See Jeffrey B. Bartell, Federal-State Relations Under the Federal Securities Code, 32 Vand. L. Rev. 457, 487-91(1979).

382 National Securities Markets Improvement Act of 1996, Pub. L. No. 104-290, 110 Stat. 3416.

383 UNIF. SECURITIES ACT, 7C U.L.A. 69 (2002).

384 See generally Travelers Health Assn. v. Virginia ex rel. State Corporation Comm'n, 339 U.S. 643 (1950); A.S.

Goldmen & Co., Inc. v. New Jersey Bureau of Securities, 163 F.3d 780 (3d Cir. 1999); Borthwick v. First

Georgetown Securities, Inc., 892 F.2d 178 (2d Cir. 1989); Kreis v. Mates Investment Fund, Inc., 473 F.2d 1308 (8th

Cir. 1973).


386Reg. S, 17 C.F.R. §§ 230.901-905 (2014); see Note, American Adjudication of Transnational Securities Fraud, 89

Harv. L. Rev. 553, 563-71 (1976).

387 SEC Securities Act Release No. 6568 (Feb. 28, 1985), reprinted in 32 SEC DOCKET 707 (1985); SEC Securities Act

Release No. 6866 (June 6, 1990), reprinted in 46 SEC DOCKET 7 (1990); see 2 LOUIS LOSS & JOEL SELIGMAN,

SECURITIES REGULATION 792-806 (3d ed. 1989); see, e.g., Manuel Lorenz, EEC Law and Other Problems in

Applying the SEC Proposal on Multinational Offerings to the U.K., 21 Int'l Law. 795, 795-99 (1987); Louis Loss,

Extraterritoriality in the Federal Securities Code, 20 Harv. Int'l L.J. 305, 305-14 (1979); Robert C. Pozen, Disclosure and

Trading in an International Securities Market, 15 Int'l Law. 84, 84-90 (1981); Morton R. Pierce, SEC Looks at

Multinationals, N.Y. L.J., Sept. 10, 1990, at 5; Jorie Roberts, Symposium Airs Multinational Issues, Harv. L. Rec., Mar.

2, 1979, at 6.

388 See HENRY J. STEINER & DETLEV F. VAGHTS, TRANSNATIONAL LEGAL PROBLEMS 1047-74 (2d ed.

1976); Note, Predictability and Comity: Toward Common Principles of Extraterritorial Jurisdiction, 98 Harv. L. Rev.

1310, 1314-16 (1985); Martin Mayer, Bernie Cornfeld's First Billion, Fortune, Mar. 1968, at 138.

389 RESTATEMENT (THIRD) OF THE FOREIGN RELATIONS LAW OF THE UNITED STATES § 416 (1987).

390 See RICHARD W. JENNINGS & HAROLD MARSH, JR., SECURITIES REGULATION 1582-86, 1592-97 (6th

ed. 1987).

391 RESTATEMENT (THIRD) OF THE FOREIGN RELATIONS LAW OF THE UNITED STATES § 403 (1987).

392 See RICHARD W. JENNINGS & HAROLD MARSH, JR., SECURITIES REGULATION 1582, 1597-1603 (6th

ed. 1987).





395 See Stuart J. Kaswell, An Insider's View of the Insider Trading and Securities Fraud Enforcement Act of 1988, 45

Bus. Law. 145, 171-75 (1989).

396 See Roberta S. Karmel, The SEC Goes International, N.Y. L.J., June 20, 1985, at 1.

397 See, e.g., NORMAN S. POSER, INTERNATIONAL SECURITIES REGULATION § 1.4, at 8-9 (1991); David M.Barnard, The U.K. Financial Services Act, 1986: A New Regulatory Framework, 21 Int'l Law. 343, 344-48 (1987);

Kelly C. Crabb, The Reality of Extralegal Barriers to Mergers and Acquisitions in Japan, 21 Int'l Law. 97, 101-04

(1987); Sam S. Miller, Regulating Financial Services in the United Kingdom - An American Perspective, 44 Bus. Law.

323, 323-25 (1989).

398 See, e.g., NORMAN S. POSER, INTERNATIONAL SECURITIES REGULATION § 4.2, at 376-78 (1991);

Manning G. Warren III, Global Harmonization of Securities Laws: The Achievements of the European Communities, 31

Harv. Int'l L.J. 185, 185-209 (1990); Nina Easton, Reuters Goes Public in Unusual Style, Legal Times, June 11, 1984, at

1; Merrill Lynch: Bullish on the World, Forbes, Nov. 1, 1972, at 30; Ann Monroe, Morgan Stanley Banks On a Hybrid

Strategy As Its World Changes, Wall St. J., June 27, 1985, at 1; Lois Moore, New U.K. Laws On Insider Dealing, N.Y.

L.J., Dec. 3, 1992, at 5.

399 Europe & Overseas Commodity Traders v. Banque Paribas London, 147 F.3d 118 (2d Cir. 1998); AVC

Nederland B.V. v. Atrium Investment Partnership, 740 F.2d 148 (2d Cir. 1984); ITT v. Cornfeld, 619 F.2d 909 (2d

Cir. 1980); ITT v. Vencap, Ltd., 519 F.2d 1001 (2d Cir. 1975); Bersch v. Drexel Firestone, Inc., 519 F.2d 974 (2d

Cir.), cert denied, 423 U.S. 1018 (1975); Leasco Data Processing Equip. Corp. v. Maxwell, 468 F.2d 1362 (2d Cir.

1972); Schoenbaum v. Firstbrook, 405 F.2d 200 (2d Cir.), modified on other grounds, 405 F.2d 215 (2d Cir.) (en

banc), cert. denied, 395 U.S. 906 (1968); see Nathaniel Popper, An Exchange Expands its Global Reach, N.Y.

Times, Jan. 2, 2014, at B1.

400 Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010); see LOUIS LOSS & JOEL SELIGMAN,

FUNDAMENTALS OF SECURITIES REGULATION Ch. 14C (5th ed. 2004 & LOUIS LOSS, JOEL SELIGMAN

& TROY PAREDES, FUNDAMENTALS OF SECURITIES REGULATION 2010 Supp.).