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CLASSIC SECURITIES REGULATION

By
Harry Case Stansbury*

Chapter 1
SECURITIES INDUSTRY REGULATION

The industrial revolution started in the United States during the 19th century.1 Privately
owned corporations organized by authority of state law.2 As a result, competition soon developed
among 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 law
giving broad discretion to management.4
Laws did not initially exist in the United States to regulate the issuance of securities and
trading in the securities markets.5 The first such laws enacted were on the state level and not on the
federal 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 securities
laws, or Blue Sky Laws, was to regulate the Eastern promoters who were selling Midwesterners
securities of companies with very dubious assets.9 Constitutional challenges to these laws were
unsuccessful10 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 on
the federal level.14
The Securities Act of 193315 was the initial result. The administration of this Act vested in
the Federal Trade Commission.16 The Act required the registration of securities offered by
companies and provided for full disclosure to investors through a written prospectus.17
Further regulation of securities on the federal level resulted from the Securities Exchange
Act of 1934.18 This Act provided for the regulation of securities exchanges and the broker-dealers
who buy and sell securities.19 The Act also created the Securities and Exchange Commission to
administer the federal securities laws.20
The Public Utility Holding Company Act of 1937,21 the Trust Indenture Act of 1939,22 the
Investment Company Act of 1940,23 and the Investment Advisers Act of 194024 followed as federal
securities law became more comprehensive.
These six Acts provided the basis for the federal securities regulation that is still in effect
today. The Securities Investor Protection Act of 197025 provided certain federal protection to
accounts 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 the
monumental task of drafting a Federal Securities Code to integrate the various pieces of previous
legislation into a comprehensive federal law.27
In 1980, after considerable efforts by a group of Consultants and Advisers, with Professor
Louis 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 of
securities 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 enforcement
division monitoring the Internet for fraud.30
The subprime crisis was very serious and caused a severe drop in stock prices. It
especially affected a number of large broker-dealer firms because the SEC had allowed lower
capital requirements to supposedly enhance international competition.
Stock exchanges have generally become for-profit entities owned by their members and
even the public. Many thought that the stock market crash during the subprime crisis was made
much 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 been
eliminated. So Regulation SHO was modified to provide an up-tick requirement in certain
situations as an attempt to stop perceived abuses in short sales.32
The SEC had adopted two rules concerning insider trading matters. Rule 10b5-1
concerned situations for planned stock sales.33 Rule 10b5-2 concerned persons who could be
considered recipients of misappropriated information for confidentiality purposes.34
Credit Default Swaps (CDSs) were a form of supposed protection for an investor buying
derivative instruments, such as Collateralized Mortgage Bonds (CMBs) or Collateralized
Mortgage Obligations (CMOs), in a transaction.35 The Commodity Futures Modernization Act
of 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 investment
fund managed by Bernard Madoff.37 Offshore banks had been the source of securities fraud for
many years. In 2009, a large securities fraud was uncovered involving an offshore bank
controlled by Allen Stanford.38
After the start of the subprime credit crunch, Congress enacted the Emergency Economic
Stabilization Act of 2008 to provide for the Federal Reserve Board and the United States
Treasury to have added authority to attempt to deal with problems that were occurring in the
stock markets.39 Congress then enacted the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 to change many of the ways in which brokerage firms and banks
interacted in stock markets.40
Congress enacted the Jumpstart Our Business Startups Act of 2012 to attempt to facilitate
the raising of capital by small corporations.41 As required by this Act, the SEC has started to
change the requirements for private placement offerings and to allow Internet crowdfunding for
small 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-dealers
must take certain steps to try to find out if there is any suspicious activity that might involve
money laundering.

Chapter 2
DEFINITION OF SECURITY

The most prudent and practical position for entrepreneurs and corporate attorneys to take
is that which considers any type of capital raising instrument, be it equity, debt or otherwise, a
security.
In virtually all instances, corporate financing instruments offered and sold to investors
constitute securities.43 These include traditional items such as common stock, preferred stock
and 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 business
executive and his or her advisers, including legal, accounting and investment advisers, to
understand 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 understanding
is due to the fact that a commercial transaction between corporations and various other business
entities, including general partnerships, joint ventures, limited partnerships or partnerships in
commendam, usually involve securities.46 This often comes as a surprise to corporate executives
who have participated in many such deals over the years without ever considering the
transactions as having involved securities.
Section 297(a) of the Federal Securities Code47 proposes to keep the broad definition of a
security 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 creating
securities for an offering in the current securities markets, including various derivative
instruments.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 the
investment banking firms are constantly in need of additional capital.50
Many of these
corporations own various assets, such as loans, which are transferred to pools and then sold as
securities to investors.51 This process of creating pools of assets for sale to investors, often
called securitization, has resulted in making large amounts of capital available to many
corporations.52
REVES v. ERNST & YOUNG, 494 U.S. 56 (1990)
SEC v. EDWARDS, 540 U.S. 389 (2004)

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 public
offering by filing a notification with the Securities and Exchange Commission pursuant to
Regulation 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 as
investment incentive programs.55 It is likewise important that the company give such employees
full 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 Rule
147.57 All of the purchasers must be actual residents of that state and the issuer must conduct at
least 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 not
involving a public offering, as described in Regulation D.59 This will allow a private placement
of securities by an issuer who sells to a limited number of investors without any general
advertising 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, an
amendment 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 have
restrictions against resales, these investors must usually hold such securities indefinitely.63 In
addition, if an investor is a controlling person or an underwriter by definition, a resale is very
difficult to accomplish.64 Over the years, a mechanism devised by securities attorneys provided
for such resales by a Section 4(1-1/2) exemption.65 This was not an actual exemption, since

there is obviously not a Section 4(1-1/2) in the Securities Act of 1933.66 This was a procedure
whereby an investor who had held restricted securities for quite a while could sell such restricted
securities to a purchaser who would, in turn, agree to hold the securities indefinitely subject to
the same restrictions on resale.67 Such an investor would become a substitute investor, but would
then 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 the
securities until such time as the issuer might file for a registration with the Securities and
Exchange Commission and allow the investors to include the restricted securities in the
registration.69 Rule 14470 allows many of those investors to sell restricted securities pursuant to
an exemption from registration, provided a necessary holding period exists and subject to
limitations 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 public
offering.73 Prior to the offer or sale of securities to the general public, it is necessary for an issuer
to 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 potential
investors.75
Section 501 of the Federal Securities Code76 proposes to make it unlawful for any person
in connection with a distribution to offer securities unless the issuer has filed an offering
statement, but does provide circumstances whereby a holder of a particular class of securities can
require the issuer to file such an offering statement.
An issuer of securities begins the process of registration with the Securities and Exchange
Commission by preparing and filing a registration statement, meeting the requirements as set
forth in Regulation C.77 The attorneys for the issuer have the responsibility of preparing this
registration statement.78 The registration statement will contain detailed and comprehensive
information 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 the
issuer 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 of
individual investors.81 The usual goal of the going public process is to sell to as large a number
of 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 recognition
for the issuer.83 The issuer will then be a publicly held company with the likelihood that a
secondary market will develop in the securities sold.84
Certain SEC reporting companies, publicly held for a time, can file for a shelf
registration.85 This is a type of registration whereby a company will register securities for sale at
some as yet undetermined time.86 Once the shelf registration is effective, the company need only
notify the SEC and the offering can immediately commence.87 This type of offering can be
useful 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 some
companies and their broker-dealer or broker-dealers by increasing competition among the
investment 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 agricultural
economy 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 commitment
underwriting.93 In this type of underwriting, a broker-dealer or a syndicate of several brokerdealers will actually purchase at an agreed upon discount all of the securities of the issuer as
soon 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 efforts
underwriting.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 investors
at 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 variation
is the part or none.100 Here, the broker-dealers agree with the issuer to sell a certain percentage of
the securities within a certain time period or return all of the funds to the investors and no sales
will take place.101 If the sale of securities timely reaches the necessary percentage, the offering of
the remaining securities may continue.102
Investment banking firms offer various products to investors. They were important in the
offering 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 the
area.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 offerings
grew with the growth of the number of wealthy people needing them, the investment bankers
realized 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 venture
capital for new companies.114 Such venture capital usually originates with offerings to a few
sophisticated investors in private, directly negotiated deals.115
Certain investment banking firms have become extremely active in attempts to service
their 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 when
the 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 the
combined 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 in
Europe,121 such activity does create additional risks to the capital of these investment banking
firms in the United States.122
On November 12, 1999, the President signed into law the Gramm-Leach-Bliley Act of
123
1999.
The Senate and the House of Representatives of Congress had previously passed this
legislation. The purpose of the legislation was to remove restrictions placed on banks and
securities 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 agencies
have gradually eroded the restrictions. Banks consequently have become more active in the
securities business. However, banks wanted the restrictions repealed for domestic and
international 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 the
Glass-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, and
insurance companies will be able to combine operations. It is expected that the recent trend
toward consolidation of such companies by mergers and acquisitions into financial supermarkets
will continue at an increased pace.
During the late 1990s, there was a boom in the initial public offerings (IPOs) of Internet
companies.125 By the year 2000, most of these offerings had crashed. 126 Abuses took place in
the placement of some of this stock to persons favored by investment banking firms. SEC
Regulation M governs stock trading by brokerage firms. 127 A number of large brokerage firms
experienced substantial liquidity problems and were operating on very small capitalizations.
These lower capitalization levels were allowed by the SEC, the NASD, and its successor, the
Financial Industry Regulatory Authority (FINRA), over concerns about international competition
in the securities markets.128
SEC Regulation FD set forth a prohibition on selective disclosures to security analysts by
companies.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 these
companies 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 these
companies.

Chapter 4
SECURITIES ACT LIABILITIES

An important basis for modern securities regulation is the requirement of providing full
disclosure 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 of
securities pursuant to a registration statement.133
Section 12(1) of the Securities Act provides a cause of action for the sale of unregistered
securities.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 of
securities.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

Chapter 5

REPORTING COMPANY REGISTRATION


A company having 500 equity shareholders and reaching a level of $10 million in assets
must register with the Securities and Exchange Commission as a reporting company. 141 This
registration is continuous and requires annual reports, quarterly reports, and interim reports
where necessary.142
A. PROXY REGULATION
Publicly held reporting companies are subject to compliance with the extensive rules of
the 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 information
on the company.148 In addition, any time a material event or a material change occurs, the
company 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 and
Exchange Commission with authority to require each registrant to file reports and provide such
reports to record holders of classes of securities so as to keep information current and investors
informed.
Full disclosure of financial information has always been an integral part of securities
regulation so that an investor has the necessary corporate information to make an informed
investment decision in the purchase or sale of stock. The omission of material facts can
constitute securities fraud.151 It was such omissions that caused the large bankruptcy filing by
Enron Corporation in 2001.152 A short time later, in 2003, it was similar omissions that caused
an even larger bankruptcy filing by Worldcom Corporation.153
Congress enacted the Sarbanes-Oxley Act of 2002 to further strengthen the federal
securities laws.154 It added to the procedures that a public company needed to do to require that
full disclosure was being made to the public investors.

B. CORPORATE EXECUTIVE REQUIREMENTS


Officers, directors, and controlling shareholders owning 10% or more of the voting stock
of a reporting company, are insiders and must file regular reports with the Securities and
Exchange 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)

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 Stock
Exchange,159 register with the Securities and Exchange Commission.160 Trading takes place on
the 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 no
longer charge a fixed commission on all transactions, so such members began to negotiate
commissions.
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 on
May Day in 1975. The Big Bang in London, England, was important to stock purchasing since
the London Stock Exchange is one of the largest in the world. 164 The London Stock Exchange
and the Tokyo Stock Exchange in Japan contribute to what has become an almost 24 hour
trading day in stocks listed on those exchanges and in New York.165
The New York Stock Exchange had allowed member broker-dealers to become public
companies.166 Now, the New York Stock Exchange itself has become a public company, as has
many other stock exchanges in the world.167
There are also regional stock exchanges registered with the SEC and located in a number
of 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 other
exchanges.170 Such trading is possible through the composite tape and the consolidated
quotation system that are part of the national market system.171 The regional exchanges might
also list the shares of local companies not traded on any other exchanges. 172 Also, some
exchanges list and trade in options on shares of stock, called puts and calls.173 A put option174 is
an option to sell a given number of shares of stock at a set price within a certain time period. A
call option175 is an option to purchase a given number of shares of stock at a set price within a
certain 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 a
stock exchange.176 Such trading is done by broker-dealers who act as market makers and buy
and sell securities as principals with their own funds and by broker-dealers who act as agents
matching buyers and sellers in the market.177 Many of the larger companies have securities

traded on the National Association of Securities Dealers Automated Quotation System


(NASDAQ),178 an electronically linked network providing instant quotations to many investors
in many different locations.179 Most of the remaining companies trade on a less frequent basis
with quotes provided by the broker-dealers who trade them to information gathering
organizations 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 price
on a stock transaction. Regulation NMS was adopted.181 Many brokerage firms began to set up
electronic communication networks (ECNs) as automated exchanges to match buy and sell
orders internally.182 Dozens of these ECNs came into existence and were called black boxes or
dark pools, because it was usually not known exactly how they worked internally. 183 It was
intended that these series of events would make the overall stock market much more efficient for
an 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 in
what is called high frequency trading, or flash trading, and has caused great concern about the
effects 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 the
securities of a company if it is necessary to do so for the protection of investors.187 This situation
can arise where material information is not on file with the SEC or where misinformation or false
information is available to investors through filings or other means such as press releases or
news stories. 188
SEC v. SLOAN, 436 U.S. 103 (1978)

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 past
20 years, over allegations of fraud in the sale of securities.190 The rights and remedies of
defrauded investors have become well established by this myriad of litigation. 191 Investors
defrauded 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 Securities
Litigation 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 in
securities matters can face serious liabilities as a result of these activities.195 The attorneys and
accountants must exercise extreme caution in carrying out their professional duties so as to
exhibit 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 civil
fraud liability claims.198 Many courts used the state securities law statute of limitations in the
state where the federal claim existed, causing different treatment from state to state.199 The
statute of limitations is now one year from the sale of the security or three years from the sale, if
the 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)

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


D. CAUSES OF ACTION
HERMAN & MACLEAN v. HUDDLESTON, 459 U.S. 375 (1983)

Chapter 8
BROKER-DEALER REGULATION

A. REGISTRATION
Persons who are in the business of buying and selling securities must register with the
Securities and Exchange Commission and meet the requirements of the SEC rules for the
continuing operation of a broker-dealer firm.201 The broker-dealer must also become a member
of a stock exchange registered with the SEC or a self-regulatory organization (SRO) registered
with 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 have
elected to specialize in the penny stock market.203 This penny stock market consists of stocks
that 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 price
quotations 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 determining
the current bid and asked price of the stock in the over-the-counter market.207 Also, because of
the 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 also
existed for a long time.209 A boiler room is a room containing many telephones where sales
agents spend most of their time calling potential investors.210 These sales agents use highpressure sales techniques to induce investors to purchase securities.211 A bucket shop is a firm
that 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 profit
on each trade.213 In a similar vein, many investors with online accounts are involved in day
trading 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 any
loss caused by the violation.

Broker-dealers can be liable to customers for violations of the securities laws by persons
under their control.221
C. ARBITRATION
Mandatory arbitration is required where an investor and a broker-dealer firm sign an
agreement 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 securities
law violations to arbitration.222
RODRIGUEZ v. SHEARSON AMERICAN EXPRESS, INC., 490 U.S. 477 (1989)

Chapter 9
INVESTMENT ADVISER REGULATION

A. INVESTMENT ADVISERS
A person who provides advice on the purchase and sale of securities for compensation
must register as an investment adviser with the Securities and Exchange Commission.223 Such
investment advisers then have the responsibility of providing appropriate disclosure information
to 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 investment
adviser could not participate in a performance fee.226 The investment adviser would not register
with 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 the
investment 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, a
rule now allows, under certain circumstances, the consideration of a hedge fund as only one
client 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 The
great surge in applications for investment adviser registration by these financial planners has
caused the United States Securities and Exchange Commission to consider the requirement of a
membership 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 reduced
cost for the management of portfolio securities, such as in the area of administrative costs and
negotiated commissions on large, block purchases of stock.236 These institutional investor pools
also allow the individual investor to achieve a diversity of risk by owning interests in a portfolio
consisting of the securities of many different companies.237
Portfolio managers attempt to structure the portfolio so as to increase investment return
and to minimize risk, often treating risk in an analytical manner.238 The alpha coefficient is the
estimate of an asset's rate of return when the market is stationary.239 The beta coefficient can be

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 performance
of 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 a
company by using such ratios as the common-stock ratio and the price-earnings ratio to find
whether 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 usually
mobilize.250 Complaints of all types reach regulatory authorities.251 Lawsuits in many different
courts, both state and federal, allege various claims and counterclaims against the raider and the
target company.252 These include claims involving antitrust laws, securities laws, state takeover
laws, omissions of material information in disclosure documents or misleading disclosure
releases.253
Section 299.9(a) of the Federal Securities Code254 proposes to provide a definition of a
tender 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 of
the 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 of
the 1960s.256 Such mergers and acquisitions were usually friendly, negotiated deals.257 The
investment bankers then realized that much larger fees were available over very short periods of
time 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 tender
offers by raising funds through the sale of junk bonds.259
The investment banking firms have also provided financing to recently formed shell
companies 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 in
secret, until acquiring 5% of the stock.261 Any person or group acquiring 5% or more of the
equity securities of a public company must make a timely filing of a report with the SEC. 262 At
that time, the filing of a report with the Securities and Exchange Commission causes the
ownership to become public information.263 When the filing of such a report takes place, it can
cause an increase in the market activity of the stock of the company because of speculation that
the 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 raider
might try to acquire the company at an even higher price. 266 The speculators and the risk
arbitrage firms will often purchase large amounts of stock based on these reports, especially if a
known corporate raider has filed the SEC report.267 Risk arbitrage firms attempt to position
themselves 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 for
a majority of the outstanding stock so as to gain control of the target company. 269 Of course, the
corporate 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 a
higher tender offer.270
The raider might actually decide to sell the acquired stock back to the target company in a
greenmail transaction.271 A greenmail transaction involves the purchase of all of the stock
owned 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 over
two 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, securities
transfer to the shareholders of at least one of the corporations.275 These securities are often the
common stock of the surviving corporate entity, but can also consist of preferred stock or debt
instruments.276 It is imperative that these securities only transfer after registration with the
Securities and Exchange Commission, or pursuant to an appropriate exemption from such
registration.277
A significant problem has existed for a number of years in the stock market due to shell
corporations.278 These are corporations that have no business activity and virtually no assets or
liabilities.279 Many such shells were once viable corporations that underwent a valid public
offering, 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 public
information available, or with substantial misinformation present because of rumors or
speculation.281 Because of earlier problems with many of these shells, the Securities and
Exchange Commission has taken steps to require that the securities distributions of any such
shell 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 yet
unidentified company, or, in effect being a blank check or blind pool offering. 282 These shells
created by a blank check or blind pool offering then trade in the market with very little
substantiated information until the corporation might publicly announce a potential merger.283
In modern corporate finance transactions, including business combinations, many kinds
of securities are issued.284 It is important that full disclosure of all corporate finance aspects of a

transaction be given to shareholders in order to increase investor confidence in the securities


markets.285
An aspect of corporate finance for consideration and disclosure is the accounting
treatment of a transaction in the financial statement of a company.286 Such accounting treatment
on 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 to
whether 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 larger
depreciation 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 is
the income tax treatment pursuant to the Internal Revenue Code as relates to the corporation and
its shareholders.291 Most merger or acquisition transactions are structured so that the surviving
or parent corporation does not recognize any income tax gains and the shareholders can defer
any 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 enter
into various transactions.293 Because a large number of publicly traded industrial corporations
are incorporated in Delaware, such state has become the choice of many new incorporations each
year.294 Consequently, the Delaware General Corporation Law is essential to understanding
corporate finance transactions.295 This is especially necessary in the mechanics of merger and
acquisition transactions.296 Fairness in the determination of value of the combining companies is
important to the shareholders.297 Dissenting minority shareholders may have appraisal rights to
have value determined.298
The Board of Directors of a corporation who does not give proper consideration to
fairness of value or shareholder rights can become subject to derivative lawsuits brought by
shareholders.299 In such a situation, the corporation and members of the Board of Directors can
also become subject to lawsuits brought by shareholders, including class actions.300 Today, a
Board of Directors facing a decision on a business combination will likely request a fairness
opinion before voting, with such fairness opinion usually rendered by an investment banking
firm.301
An aspect of corporate finance that must be considered and disclosed, if applicable, in
tender offers as well as mergers and acquisitions is the effect of federal antitrust law to the
combined entity, especially if the resulting company will be large and a dominant force in the
industry.302 In a tender offer involving large companies, notice must be given to federal
governmental 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 market
for the shares of common stock with price quotations provided by various broker-dealers who act
as market makers.305 It also will result in the company becoming subject to various periodically
required governmental disclosure filings as well as the requirement of the disclosure of any
extraordinary 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 substantial
attention. Also, because of the prevailing attitude among investors, many of the new issues of
shares of common stock will rise in price in the aftermarket. If the company is in an industry
considered 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 on
October 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 the
company 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 could
own a private company much better capitalized as a result of the IPO, with a going business, and
no 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 of
extensive borrowed capital, secured by the assets of the business, with the debt paid from the
earnings, and possibly partial sale of assets, of the company.311
Despite the extensive media coverage of the LBO lately, such corporate financing is not a
new phenomenon.312 Actually, for many years companies have used LBOs in the sale of
corporate divisions.313 Often companies would be eager to dispose of subsidiaries with stodgy
earnings or in unpopular industries that may reflect on the overall image or perceived image of
the parent company.314 Such parent companies would sell the division to members of
management or to other companies at a very attractive price, often assisting in arranging
extensive debt financing for the sale.315
Of course, the recent upsurge in LBOs and management buyouts (MBOs) has not always
involved 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 a
few individuals or investment groups, with several layers of debt, and expecting to liquidate the
debt through earnings and sale of divisions, assisted by large tax write-ups of assets and
consequently 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 less
than 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 defensive
corporate measures.323
Since many public corporations incorporate in Delaware, national attention has focused
on 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 a
corporation 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 state
and offering protection to such local corporations from unwanted hostile takeovers. 327 As a
result, much litigation has taken place over the state take-over laws.328 The hostile tender offer
has continued through the 1980s and into the 1990s as a viable mechanism for the corporate
raider.329 Likewise, many states have continued to show an interest in enacting such state takeover laws and litigating over them.330
CTS CORP. v. DYNAMICS CORP. OF AMERICA, 481 U.S. 69 (1987)

Chapter 11

INSIDER TRADING
A substantial amount of media attention has recently focused on insider trading of
stock.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 well
as persons to whom they might give a tip.333 Any person who acts on such inside information is
subject to civil liabilities and criminal penalties.334 The Securities and Exchange Commission
can also bring administrative enforcement actions against such persons.335
Investment banking firms have tried to eliminate inside information problems by
maintaining a strict separation of the corporate finance departments from the trading departments
through the use of a Chinese Wall.336 Such a Chinese Wall acts as a barrier to the flow of any
information 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 surface
in the media regarding such abuses.339
Section 20A of the Securities Exchange Act, added in 1988, provides for penalties for
insider trading violations.340
Section 21A of the Securities Exchange Act, added in 1988, provides for specific
damages for insider trading violations.341
Section 1303 of the Federal Securities Code342 proposes to make it unlawful for an
insider to sell or buy a security of the issuer if the insider knows a fact that is not generally
available, and includes a definition of an insider to mean the issuer, a director or officer of the
issuer, a person controlled by, or under common control with, the issuer, and includes a
secondary insider whose relationship or former relationship to the issuer gives or gave access to
a fact of special significance about the issuer or the security not generally known, or who learns
such 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. OHAGAN, 521 U.S. 642 (1997)

Chapter 12
SPECIAL SECURITIES MATTERS

A. INVESTMENT COMPANIES
A company must register with the Securities and Exchange Commission as an investment
company if it is in the business of investing in the securities of other companies, and has 100 or
more shareholders.343 These investment companies comprise the gigantic mutual fund industry
that provides an opportunity for small investors to pool their funds and invest in many different
companies 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 since
the 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 hedge
funds.346 These hedge funds can trade in and out of securities very rapidly and use such
speculative 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 amount
of 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 is
necessary because of the extremely speculative nature of the trading techniques used in the
portfolio management.351 The portfolio manager, or managers, often use a compensation
arrangement based on a percentage of profits.352 Some public mutual funds have compensation
arrangements for portfolio management based on profits,353 but they are usually not as lucrative
as 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 investment
companies usually are structured as hedge funds or venture capital funds.356 In 1994, it was
estimated that there was $47,000,000,000 raised by these hedge funds.357 In 1998, it was
estimated that there was $26,000,000,000 raised by these venture capital funds.358 Such amounts
are only estimates because these private investment companies are not required to publicly report
information and do not usually voluntarily reveal statistical information.359 The funds continue
to 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 the
early securities laws of the various states on Constitutional grounds were unsuccessful. When
Congress enacted the federal securities laws in the 1930s, it preserved the rights of the states to
have securities laws.
Over the years, the states have had national associations such as the North American

Securities Administrators Association (NASAA), and the Midwest Securities Commissioners


Association that disbanded in 1980, in order to achieve a certain amount of uniformity in the
state securities laws.361
A Uniform Sale of Securities Act was adopted in 1929, but few states were interested in
it, and the federal securities laws were adopted soon after.362
In 1956, the National Conference of Commissioners on Uniform State Laws adopted the
Uniform Securities Act.363 In 1985, the National Conference of Commissioners on Uniform
State Laws adopted the Revised Uniform Securities Act.364
Many states have adopted most or a significant portion of the original Uniform Securities
Act, 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, to
make 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 person
who receives any consideration from another person primarily for advising the other person as to
the value of securities or their purchase and sale to defraud the other person.
Section 201 of the Uniform Securities Act368 provides that it is unlawful for any person to
transact 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 security
must be subject to registration before offered or sold in the state unless the security or transaction
is exempt.
Many states provide for several types of registration.370 Typical types of registration
would be qualification, notification, and coordination.371
One of the most glaring and controversial aspects of many states securities laws is the
merit regulation of securities offerings.372 Unlike federal securities laws, which are based on full
disclosure to investors, merit regulation allows the state to register only those securities offerings
that meet certain fair, just and equitable standards.373
The parties to modern securities transactions can very well reside in different states in the
United States. While most attorneys and business executives are aware of the existence of the
various federal securities statutes and the various state securities laws, they usually exhibit
surprise to learn that routine business transactions can often involve these federal and state
securities laws.374 It is possible to have several different state securities laws involved in the
same domestic transaction.375 Because business transactions often take place between parties
residing in different states or with legal entities domiciled in different states, more than one state
securities law could have an effect on the transaction.376 As a result, such domestic transactions
can 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 laws
unless the state securities commission has a procedure for registering a distribution of securities
substantially coordinated with the procedure of the Securities and Exchange Commission, and to
require 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, or
employed primarily in, a single State, or an area in contiguous States, or a State and a foreign
country, if such area meets a definition based on consideration of its population and economic
characteristics, 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 secondary
distributor, whether or not a resident of the State or area, but only if the secondary distributor did
not 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. This
registration 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. A
computerized 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 federal
securities laws, a further revised Uniform Securities Act was adopted in 2002.383 The purpose
was to coordinate the remaining parts of the state securities laws with the federal securities laws
to continue to have effective securities regulation.384
TRAVELERS HEALTH ASSN. v. VIRGINIA EX. REL. STATE CORPORATION COMMN.,
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 even
countries.
It is also possible to have the involvement of federal securities laws in a transaction in a
foreign 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 States
citizens investing in a foreign transaction.387
It is necessary for all attorneys and business executives involved in modern business
transactions to be fully aware and cognizant of the possibility that federal securities law is
applicable to many such transactions conducted in foreign countries.388
Section 416 of the Restatement of the Foreign Relations Law of the United States 389 as
revised by the American Law Institute provides that the United States generally has jurisdiction
to prescribe with respect to any transaction in securities in the United States to which a national
or resident is a party, to conduct, regardless of where it occurs, significantly related to such
transaction, if the conduct has, or intends to have, a substantial effect in the United States, and to
conduct occurring predominantly in the United States related to a transaction in securities, even
if the transaction occurs outside the United States.390
Section 403 of the Restatement of the Foreign Relations Law of the United States391 as
revised 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, the
extent to which the activity takes place within the regulating state, or has substantial, direct, and
foreseeable effect upon or in the regulating state.392

Section 1905 of the Federal Securities Code393 proposes to apply federal securities law to
a 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 the
United 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 occur
outside 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 of
securities.394 In addition, agreements are in effect, usually consisting of a Memorandum of
Understanding or a mutual assistance treaty,395 between securities regulators in the United States
and securities regulators in a number of foreign countries to facilitate the sharing of information
and to provide official assistance in obtaining information.396
More and more foreign countries have local securities laws that affect securities
transactions.397 Many of these countries are currently in the process of modernizing their
securities 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 actively
compete for the stock listing business of corporations. A number of large corporations have
stock exchange listings on several different exchanges. And sometimes in several different
countries.
Stock trading has become an international business and it is often difficult to determine
what law or laws apply to a given transaction.399 In 2010, the United States Supreme Court held
that 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 author
maintains an office in New Orleans, Louisiana.

2000-2015 Harry Stansbury


All 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 available
on its website. Bloomberg Law has an extensive amount of securities law material on its website, as well as
many Administrative decisions by the Securities and Exchange Commission. In addition to these specific
websites, there are a number of websites that can provide securities law information at some law schools and
at some law firms, and many of these locations can be accessed with no cost or password required.

APPENDIX

Stockholder Reports
Apple Annual Report
Apple Proxy Statement

Offering Documents
Dreamworks Animation Prospectus
Facebook Prospectus

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, THE
ROLE 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).

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

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

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 AMERICAN
STOCKHOLDER 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 generally
LOUIS LOSS, ANECDOTES OF A SECURITIES LAWYER 219-249 (1995).
28

29

FEDERAL SECURITIES CODE v-lvi (1980).

See 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: A
Review 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 Next
Millennium, 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, JOEL
SELIGMAN & 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 & JOEL
SELIGMAN, 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 Safe
Harbor, 112 Colum. L. Rev. 1376, 1383-1386 (2012); Diana B. Henriques & Zachery Kouwe, Prominent Trader
Accused 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 L
Zweig & 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; see
Derek Fisher, Note, Dodd-Franks 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-Sonic
Products 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 of
1933 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 SECURITIES
REGULATION 317-50 (2d ed. 1988); Marc H. Morgenstern, Private Placement Guidelines - A Lawyer's Letter to a
First-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., 545
F.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).

63

See RICHARD W. JENNINGS & HAROLD MARSH, JR., SECURITIES REGULATION 504-07 (6th ed. 1987).

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).
66

See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 375-76 (2d ed. 1988).

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.
69

See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 365-66 (2d ed. 1988).

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). See
generally 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 35860 (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, 22728 & 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.

91

See 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).
93

See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 77-78 (2d ed. 1988).

94

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

95

See RICHARD W. JENNINGS & HAROLD MARSH, JR., SECURITIES REGULATION 35-36 (6th ed. 1987).

96

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

97

See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 85-86 (2d ed. 1988).

98

See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 86 (2d ed. 1988); 6 LOUIS LOSS,
SECURITIES REGULATION 3681 (2d ed. Supp. 1969).
99

100

See RICHARD W. JENNINGS & HAROLD MARSH, JR., SECURITIES REGULATION 30 (6th ed. 1987).
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 On
Big 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.
114

See 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., July
19, 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, The
Generative Internet, 119 Harv. L. Rev. 1974, 2027-28 & n.203 (2006); Developments in the Law Corporations and
Society, 117 Harv. L. Rev. 2169, 2176-77 & n.38 (2004).
115

See WILLIAM D. BYGRAVE & JEFFRY A. TIMMONS, VENTURE CAPITAL AT THE CROSSROADS 3843 (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.
116

See CONNIE BRUCK, THE PREDATOR'S BALL 10-20 (1988). See generally WILLIAM D. COHAN, THE
LAST TYCOONS Ch. 19 (2007); John Brodie, Its Ralphs 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.
117

See 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.

120

See RON CHERNOW, THE HOUSE OF MORGAN 694-95 (1990).

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 DEVILS CASINO
173-174 (2010); ANDREW ROSS SORKIN, TOO BIG TO FAIL 14 (2009); WILLIAM D. COHAN, HOUSE OF
CARDS 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 25860 (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.
133

15 U.S.C. 77k (1988). See generally Harden v. Raffensperger, Hughes & Co., Inc., 65 F.3d 1392 (7 th 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).
134

15 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).
140

Aaron 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.
143

15 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 the
Corporate 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; Andy
Zipser, 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 (3d
ed. 1995). See generally Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991); Mills v. Electric Auto-Lite
Co., 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.
150

FEDERAL SECURITIES CODE 601 (1980).

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.
154

Sarbanes-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.
170

See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 598-99 (2d ed. 1988).

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.3d
256 (3d Cir. en banc 1998).
172

See 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.
190

See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 871-1049 (2d ed. 1988).

191

See 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 Aggregate
Damages in Securities Fraud Cases?, 48 Bus. Law. 505, 505-21 (1994); Dean Furbush & Jeffrey W. Smith, Estimating
the 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 the
Securities and Exchange Commission, 48 Bus. Law. 545, 545-72 (1994); Note, The Fraud-on-the-Market Theory, 95
Harv. 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 FRAUD
AND COMMODITIES FRAUD 2.2, at 2:18 to 2:44.1 (1991); 4 HERBERT B. NEWBERG, NEWBERG ON CLASS
ACTIONS 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) (reviewing
MULTINATIONAL 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 Testimony
In 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 Fraud
Actions, N.Y. L.J., Nov. 6, 1992, at 1; Claudia MacLachlan, High Court Hears Case on Private Securities Lawsuits, Nat'l
L.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 Protection
Corp., 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).
197

FEDERAL SECURITIES CODE 1301 (1980).

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 REGULATION
1095-1096 (1991).
200

See LOUIS LOSS & JOEL SELIGMAN, FUNDAMENTALS OF SECURITIES REGULATION 1109-1124 (3d ed.
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); see
DONNA 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 Enforcement
Remedies 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 SECURITIES
REGULATION 273, 275-81 (Robert H. Mundheim, Arthur Fleischer, Jr. & John D. Schupper eds., 1973).
220

221

FEDERAL SECURITIES CODE 1416 (1980).

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/American
Express, 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 14968 (1978).
224

See ROBERT C. POZEN, FINANCIAL INSTITUTIONS: INVESTMENT MANAGEMENT 260-78 (1978); see
also Robert C. Pozen, Money Managers and Securities Research, 51 N.Y.U. L. Rev. 923, 923-28 (1976). See generally
Lowe 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 REGULATION
AFTER BCCI 39-40 (1994); JAMES J. FISHMAN, THE TRANSFORMATION OF THREADNEEDLE STREET
29 (1993).
235

236

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

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 SEARCH
OF 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 27712774 (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 34 (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 EIGHTIES
176-96 (1982); JAMES B. STEWART, THE PARTNERS 245-82 (1983); Joseph H. Flom, The Role of the Takeover in
the 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, 19194, 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.

257

See JOHN BROOKS, THE GO-GO YEARS 170-73 (1973).

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).
261

See MOIRA JOHNSTON, TAKEOVER 235-36 (1986).

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).

265

See VICTOR BRUDNEY & MARVIN A. CHIRELSTEIN, CORPORATE FINANCE 677-79 (3d ed. 1987);
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).

267

See MOIRA JOHNSTON, TAKEOVER 111-14 (1986).

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).

280

See RICHARD W. JENNINGS & HAROLD MARSH, JR., SECURITIES REGULATION 451-52 (6th ed. 1987).

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).

286

See DETLEV F. VAGHTS, BASIC CORPORATION LAW 731-32 (2d ed. 1979).

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, TAKEOVER
261-62 (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).
296

See DETLEV F. VAGHTS, BASIC CORPORATION LAW 714-15 (2d ed. 1979).

297

See VICTOR BRUDNEY & MARVIN A. CHIRELSTEIN, CORPORATE FINANCE 668-805 (3d ed. 1987);
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 Bankers 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, 90311 (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, GeorgiaPacific 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 4547 (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 59 (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 IN


TENDER 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, Reflections
on 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).
329

See 5 LOUIS LOSS & JOEL SELIGMAN, SECURITIES REGULATION 2123-2309 (3d ed. 1990).

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 Federal
Securities 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.
OHagan, 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).
340

See LOUIS LOSS & JOEL SELIGMAN, FUNDAMENTALS OF SECURITIES REGULATION 836-37 (3d ed.
1995).
341

See LOUIS LOSS & JOEL SELIGMAN, FUNDAMENTALS OF SECURITIES REGULATION 870-73 (3d ed.
1995).
342

343

FEDERAL SECURITIES CODE 1303 (1980).

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 INSIDERS 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 Dont 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.
347

See SEC, INSTITUTIONAL INVESTOR STUDY REPORT, H.R. DOC. NO. 92-64, 92d Cong., 1st Sess., at 369-70
(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.
349

See JOHN BROOKS, THE GO-GO YEARS 141-44 (1973).

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).

353

See SEC, INSTITUTIONAL INVESTOR STUDY REPORT, H.R. DOC. NO. 92-64, 92d Cong., 1st Sess., at 366-67
(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).

368

UNIF. SECURITIES ACT, 7B U.L.A. 509, 528 (master ed. 1985).

369

UNIF. SECURITIES ACT, 7B U.L.A. 509, 550 (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.
371

See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 11-14 (2d ed. 1988).

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).
378

FEDERAL SECURITIES CODE 1904 (1980).

379

See Jeffrey B. Bartell, Federal-State Relations Under the Federal Securities Code, 32 Vand. L. Rev. 457, 470-87
(1979).
380

FEDERAL SECURITIES CODE 514 (1980).

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).
385

See RON CHERNOW, THE HOUSE OF MORGAN 695-99 (1990).

386

Reg. 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).
393

FEDERAL SECURITIES CODE 1905 (1980).

394

See 5 LOUIS LOSS & JOEL SELIGMAN, SECURITIES REGULATION 2567-70 (3d ed. 1990).

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.).