Tag: Irving R. Kaufman Memorial Securities Law Competition

by Christo­pher Menen­dez*

Sec­tion 11 of the Secu­ri­ties Act of 1933 impos­es lia­bil­i­ty on issuers of secu­ri­ties for state­ments that are found to be mate­ri­al­ly mis­lead­ing, which are state­ments con­tain­ing the type of infor­ma­tion a rea­son­able investor would find sig­nif­i­cant when mak­ing an invest­ment deci­sion. In con­junc­tion with the ris­ing salience of cli­mate issues and con­cern about “green­wash­ing,” there has been a push by some investors to bring sec­tion 11 claims based on the pro­fessed, but ulti­mate­ly unsuc­cess­ful, com­mit­ments of com­pa­nies to com­bat cli­mate change. How­ev­er, these claims are unlike­ly to be suc­cess­ful in com­bat­ting green­wash­ing, as sus­tain­abil­i­ty issues are not nor­mal­ly the sort of infor­ma­tion that courts pre­sume investors con­sid­er mate­r­i­al. This Con­tri­bu­tion argues that sec­tion 11 is ill-suit­ed to address cli­mate-based mis­state­ments and encour­ages the adop­tion of rules the Secu­ri­ties and Exchange Com­mis­sion has recent­ly pro­posed to more effec­tive­ly cov­er cli­mate disclosures.

by Gra­ham Ellis*

Sec­tion 11 of the Secu­ri­ties Act impos­es lia­bil­i­ty for dam­age caused by untrue or mis­lead­ing infor­ma­tion in Resale Reg­is­tra­tion State­ments on under­writ­ers. The exact scope of the statu­to­ry def­i­n­i­tion of under­writer, par­tic­u­lar­ly its cat­e­go­ry of “par­tic­i­pants,” is sub­ject to a cir­cuit split. Thus, whether finan­cial advi­sors in direct list­ings are liable is an open ques­tion. In this Con­tri­bu­tion, Gra­ham Ellis (’22) argues that the courts should not adopt a cat­e­gor­i­cal rule of inclu­sion or exclu­sion relat­ed to finan­cial advi­sor under­writer sta­tus, but instead, should for­mu­late an ad hoc analy­sis that empha­sizes Congress’s ini­tial pur­pose of assign­ing lia­bil­i­ty to ‘gate­keep­ers’ in secu­ri­ties trans­ac­tions. This test should inquire into whether the finan­cial advi­sor to the trans­ac­tion act­ed as a con­duit between the issu­ing com­pa­ny and the invest­ing pub­lic, and whether the finan­cial advi­sor pub­licly vouched for the accu­ra­cy of the reg­is­tra­tion statement.

by Charles Bloom*

For decades, the pri­vate right of action for secu­ri­ties fraud has been nar­rowed, both by Con­gress and in the courts. In this Con­tri­bu­tion, Charles Bloom (’21) con­sid­ers the extent to which the Supreme Court’s most recent deci­sion in a secu­ri­ties fraud case revers­es that trend. Ulti­mate­ly, this Con­tri­bu­tion will argue that the Court has per­mis­si­bly expand­ed pri­vate lia­bil­i­ty for secu­ri­ties fraud, clos­ing cer­tain loop­holes cre­at­ed by its ear­li­er precedents.

by William Bris­tow*

Do Sec­tion 10(b) the Exchange Act and SEC Rule 10b‑5 apply to secu­ri­ties trans­ac­tions entered into in the Unit­ed States where the secu­ri­ty is not sold on a nation­al exchange and is val­ued based on the price of a dif­fer­ent secu­ri­ty not sold with­in the Unit­ed States? In this Con­tri­bu­tion, William Bris­tow (’21) dis­cuss­es the impli­ca­tions of Mor­ri­son v. Nation­al Aus­tralia Bank Ltd., where the Supreme Court held that the Exchange Act does not apply extrater­ri­to­ri­al­ly and thus only applies to domes­tic secu­ri­ties trans­ac­tions. This Con­tri­bu­tion argues that Morrison’s “trans­ac­tion­al test” estab­lish­es a suf­fi­cient con­di­tion for the appli­ca­tion of the Exchange Act, not a nec­es­sary condition.

By Math­ews R. de Car­val­ho*         

When does the use of the Exchange Act cross the line into for­bid­den extrater­ri­to­ri­al­i­ty? In this con­tri­bu­tion, Math­ews R. de Car­val­ho (’19) exam­ines recent fed­er­al court deci­sions which try to devel­op a body of law under which Sec­tion 10(b) might be applied to par­ties out­side the Unit­ed States with­out con­tra­ven­ing the pre­sump­tion against extrater­ri­to­ri­al­i­ty. This Con­tri­bu­tion argues that one approach tak­en by cir­cuit courts – the irrev­o­ca­ble lia­bil­i­ty test – rep­re­sents the most faith­ful appli­ca­tion of the Supreme Court’s dic­tates in Mor­ri­son v. Nation­al Aus­tralia Bank Ltd.