Securities Regulation : Cases and Materials

by Cox, James D.; Hillman, Robert W.; Langevoort, Donald C.

• ISBN13: 9780735544529
• ISBN10: 0735544522
• Edition: 4th
• Format: Hardcover
• Copyright: 2004-04-01
• Publisher: Wolters Kluwer

Summary

Keeping pace with the many changes in the area, Securities Regulation: Cases and Materials, Fourth Edition, introduces a wealth of new material in the same highly flexible structure that earned its position as the bestseller in the field. the authors keep their book challenging yet teachable by: Mixing doctrine and professional judgments. Offering maximum flexibility for instructors through the use of modular chapters. Effective use of the problem method to expose students to both theory and practice issues. Writing in a readable, straightforward style that is sophisticated, but not intimidating. Offering an annual case supplement keyed To The book, which includes high-quality coverage of the 1933 and 1934 Acts, As well as, An introduction To The 1940's Acts. New material in the Fourth Edition responds to developments in the law and facilitates student understanding: New Chapter on Financial Reporting emphasizes the procedures and substantive standards added by Sabanes-Oxley and recent SEC actions and explores the critical role of auditors and 'generally accepted auditing standards' Exploration of the 'fairly presents' requirement that is now part of the executive certification requirements for reports filed with the SEC. Important discussion of the new Sarbanes-Oxley developments that were designed to enhance the integrity of the reporting system. Review of the extensive SEC rules adopted in the wake of Sarbanes-Oxley. Relocation of the chapter on Materiality To The middle of the book. Condensed introductory chapter that eliminates material on technology and globalization. New treatment of the burgeoning behavioral economics literature on investor heuristics in addressing risky and complex choices. Major new cases: In the matter of W.R. Grace & Co.., Caiola v. Citibank, N.A., Cendant Corporation Securities Litigation, Cedric Kushner Promotions, Ltd. V. King, Gallagher v. Abbott Laboratories, Inc., KPMG, LLP v. SEC, Razorfish, Inc. Securities Litigation, SEC v. ETS Payphones, Inc., SEC v. GLT Dain Rauscher, SEC v. Zandford.

Table of Contents

Preface	xxi
Acknowledgments	xxxiii
The Framework of Securities Regulation	1	(16)
Securities Transactions	1	(2)
Issuer Transactions	1	(1)
Trading Transactions	2	(1)
The Legal Framework of Securities Regulation	3	(14)
The Federal Securities Laws	3	(1)
The Securities Act of 1933	3	(2)
The Securities Exchange Act of 1934	5	(4)
Federal Regulation Beyond Disclosure: The Sarbanes-Oxley Act of 2002	9	(1)
The Regulation of Investment Advisers and Investment Companies	10	(1)
The Organizational Structure of the SEC	11	(1)
The Mediums Through Which the SEC Speaks	11	(2)
The SEC: Some Critical Perspectives	13	(1)
Blue Sky Laws	14	(1)
Self-Regulatory Organizations	15	(2)
The Definition of a Security	17	(72)
Introduction	17	(2)
The Development of a Framework for Defining an Investment Contract	19	(7)
Sec v. W.J. Howey Co.	19	(5)
Notes and Questions	24	(2)
Howey Applied	26	(16)
Investment Versus Consumption	26	(1)
United Housing Foundation, Inc. v. Forman	26	(4)
Notes and Questions	30	(1)
Problem	31	(1)
Common Enterprise and Profits Solely from the Efforts of Others	31	(1)
SEC v. Edwards	31	(4)
The Meaning of Common Enterprise	35	(2)
Problems	37	(1)
Profits from the Managerial Efforts of Others	38	(3)
Problems	41	(1)
Associational Formalities: Interests in Corporations, Partnerships, and LLCs as Securities	42	(12)
Stock as a Security	42	(2)
Notes and Questions	44	(1)
Problems	44	(1)
Partnership Interests as Securities	45	(1)
Steinhardt Group, Inc. v. Citicorp	46	(3)
Notes and Questions	49	(2)
Problem	51	(1)
LLC Interests as Securities	52	(1)
Problem	53	(1)
The Policy Question: Should Investment Contract Status Be Elective?	53	(1)
Real Estate as Securities	54	(8)
Hocking v. Dubois	56	(5)
Notes and Questions	61	(1)
Problem	61	(1)
Notes as Securities	62	(17)
Reves v. Ernst & Young	62	(1)
Reves v. Ernst & Young	62	(9)
Reves Applied	71	(1)
SEC v. Wallenbrock	71	(4)
Notes and Questions	75	(3)
Problems	78	(1)
Derivative Securities and Synthetic Investments	79	(6)
A Case Study on Derivatives: Caiola v. Citibank, N.A.	80	(4)
Notes and Questions	84	(1)
Separate Securities and Pass-Throughs	85	(4)
Markets and Their Efficiency	89	(20)
Markets and Investors	89	(9)
The Structure of Trading Markets	89	(4)
Globalization	93	(2)
Institutionalization	95	(2)
Derivative Markets	97	(1)
The Efficient Market Hypothesis: Implications and Limitations	98	(9)
The Meaning and Mechanisms of Market Efficiency	99	(2)
Notes and Questions	101	(2)
Problems	103	(1)
Noise	104	(3)
Behavioral Economics and Decisions by Individual Investors	107	(2)
The Public Offering	109	(146)
Underwriting and Underwriters	110	(19)
Methods of Underwriting	110	(1)
In re National Association of Securities Dealers, Inc., Exchange Act Release No. 17,371	110	(2)
Notes and Questions	112	(5)
Underwriters: Their Culture and Their Industry	117	(1)
Cultural Hierarchy	117	(2)
The Industry over Time	119	(2)
Underwriting Agreements: Contracting to Reduce Risk	121	(5)
Underwriters' Compensation	126	(1)
Review by the NASD	126	(2)
The Problems of Fixed Price Offerings	128	(1)
The Market for Initial Public Offerings	129	(7)
Irrational or Contrived Exuberance	129	(3)
Underpricing of Initial Public Offerings	132	(2)
Reforming the IPO Process	134	(2)
A Panoramic View of the Registration Statement	136	(4)
Registration of the Unseasoned Issuer	140	(13)
Preparing the Registration Statement for Filing	141	(1)
Schneider, Manko & Kant, Going Public: Practice, Procedure, and Consequences	142	(3)
Review by the SEC's Staff: The Letter of Comment	145	(1)
Poliakoff, SEC Review: Comfort or Illusion	145	(2)
Notes and Questions	147	(6)
Integrated Disclosure for the Seasoned Company	153	(5)
Adoption of Integrated Disclosure System, Securities Act Release No. 6383	154	(2)
Notes and Questions	156	(2)
Gun Jumping	158	(32)
The Prefiling Period	159	(1)
Conditioning the Market	160	(1)
Securities Act Release No. 3844	160	(6)
Securities Act Release No. 5009	166	(2)
Use of Electronic Media, Securities Act Release No. 7856	168	(2)
Investment Letters	170	(2)
Arrangements With and Among Underwriters	172	(1)
Problems	172	(2)
The Waiting Period	174	(1)
The Preliminary and Summary Prospectus	174	(1)
Hyperlinks to the Prospectus	175	(1)
Tombstone Ads and Identifying Statements	176	(1)
Selling Practices During the Waiting Period	177	(2)
Road Shows	179	(1)
Problems	179	(2)
The Posteffective Period	181	(1)
Rule 434	181	(2)
Electronic Delivery	183	(1)
Free Writing	183	(1)
Duration of Prospectus Delivery Requirement	184	(2)
Problems	186	(1)
SEC v. Manor Nursing Centers, Inc.	187	(3)
Conducting Public Offerings Through the Internet	190	(8)
Wit Capital Corp.	190	(8)
Shelf Registration Under Rule 415	198	(7)
Notes and Comments	202	(2)
Problems	204	(1)
Updating and Correcting the Registration Statement	205	(6)
Problem	205	(1)
Refusal Orders and Stop Orders	206	(2)
Post-effective Amendments	208	(2)
Undertakings to Update	210	(1)
Withdrawal of the Registration Statement	210	(1)
The Trading Practice Rules	211	(6)
Purchases During a Distribution	211	(1)
Notes and Questions	212	(1)
Problems	213	(1)
Stabilization	214	(1)
Problem	215	(1)
Notes and Questions	216	(1)
The International Public Offering	217	(24)
Accommodating Foreign Issuers' Offerings in the United States	218	(1)
Offerings Outside the United States	219	(1)
Regulation S	219	(3)
Regulation S, Securities Act Release No. 6863 (Apr. 24, 1990)	222	(6)
Statement of the Commission Regarding Use of Internet Web Sites to Offer Securities . . . Offshore, Securities Act Release No. 7516	228	(3)
Notes and Questions	231	(2)
Problems	233	(1)
Offerings Falling Outside Regulation S	234	(1)
Europe and Overseas Commodity Traders, S.A. v. Banque Paribas London	234	(1)
How the Public Offering Is Regulated Elsewhere: Contrasting Examples	235	(1)
The United Kingdom	236	(2)
Japan	238	(1)
The People's Republic of China	239	(1)
Poland	240	(1)
Registration Under State Blue Sky Laws	241	(4)
SEC Report on the Uniformity of State Regulatory Requirements for Offerings of Securities That Are Not ``Covered Securities''	242	(3)
Problem	245	(1)
The Debate over Mandatory Disclosure	245	(10)
Easterbrook & Fischel, Mandatory Disclosure and the Protection of Investors	247	(5)
Notes and Questions	252	(3)
Exempt Transactions	255	(82)
Introduction	255	(1)
The Intrastate Offering Exemption: Section 3(a) (11)	256	(13)
The Scope of the Exemption	257	(1)
Section 3(a) (11) Exemption for Local Offerings, Securities Act Release No. 4434	257	(4)
Notes and Questions	261	(3)
Problems	264	(1)
The Rule 147 Safe Harbor	265	(1)
Exchange Act Release No. 5450	265	(2)
Notes and Questions	267	(1)
Problems	268	(1)
The Private Offering Exemption: Section 4(2)	269	(15)
Mapping the Scope of the Exemption	270	(1)
SEC v. Ralston Purina Co.	271	(2)
Problem	273	(1)
The Relevance of Numbers	273	(1)
Offeree Qualification: Sophistication and Access to Information	274	(1)
Problem	274	(3)
Sec v. Kenton Capital, Ltd.	277	(2)
Notes and Questions	279	(4)
Problems	283	(1)
Resales of Securities Acquired in a Private Offering	283	(1)
Regulation D and the Limited Offering Exemptions	284	(32)
An Overview of Regulation D	285	(1)
Problem	286	(1)
Accredited Investors	286	(2)
Notes and Questions	288	(1)
Problems	289	(1)
The Sophistication Standard of Rule 506	290	(1)
Mark v. FSC Securities Corp.	290	(3)
Problems	293	(1)
Calculating the Number of Purchasers	294	(1)
Problems	294	(1)
Limitations on the Manner and Scope of an Offering	295	(1)
In General	295	(1)
In the Matter of Kenman Corp.	296	(2)
Problem	298	(1)
Activities by Broker-Dealers	298	(2)
Problem	300	(1)
Newsletters	300	(1)
Problems	300	(1)
Investment Databases	301	(1)
The Internet and General Solicitations	301	(3)
Problem	304	(1)
Rule 135C Notices	304	(1)
Is Reform Likely or Desirable?	305	(1)
Determining the Aggregate Offering Price in Offerings Under Rules 504 and 505	306	(1)
Calculating the Aggregate Offering Price	307	(1)
Relevant Amount and Time Period	307	(1)
Problems	308	(1)
Disclosure Obligations in Offerings Under Rules 505 and 506	309	(1)
Notes and Questions	310	(1)
Additional Regulation D Requirements and Features	311	(1)
Limitations on Resale	311	(1)
Rule 505 and the ``Bad Boy'' Disqualifiers	311	(1)
Question	312	(1)
Integration of Offerings: The Safe Harbor	312	(1)
Form D	312	(1)
Problem	313	(1)
Substantial Compliance	313	(1)
Securities Act Release No. 6825	313	(1)
Problem	314	(1)
Foreign Offerings, the Internet, and Regulation D	314	(1)
Problem	315	(1)
Employee Benefit Plans and Contracts Relating to Compensation: Rule 701	316	(4)
Securities Act Release No. 33-7645	316	(1)
Notes and Questions	317	(2)
Problems	319	(1)
Regulation A: Mini-Registration	320	(4)
An Overview of Regulation A	320	(3)
Regulation A and the Internet	323	(1)
Problems	324	(1)
Integration of Offerings	324	(9)
In the Matter of Kevin D. Kunz	326	(3)
Notes and Questions	329	(3)
Problems	332	(1)
State Exemptions	333	(4)
The Uniform Limited Offering Exemption (ULOE)	334	(1)
Nonuniform State Exemptions	335	(1)
Regulation CE: Coordinated Federal Exemption for Issues Exempt Under State Law (California)	336	(1)
Secondary Distributions	337	(50)
The Underwriter Concept and Sales for an Issuer	339	(6)
SEC v. Chinese Consolidated Benevolent Association	340	(3)
Notes and Questions	343	(1)
Problem	344	(1)
Purchase from an Issuer	345	(5)
Investment Intent	345	(1)
Notes and Questions	346	(2)
Problems	348	(1)
Distributions and Trading Transactions Contrasted	348	(2)
Problems	350	(1)
Control Person Distributions	350	(7)
United States v. Wolfson	352	(2)
Notes and Questions	354	(2)
Problems	356	(1)
Rule 144---Safe Harbor for Resales of Control and Restricted Securities	357	(12)
Adoption of Rule 144, Securities Act Release No. 5223	358	(5)
Notes and Questions	363	(4)
Problems	367	(2)
Facilitating an Institutional Market for Unregistered Securities with Rule 144A	369	(5)
Resale of Restricted Securities, Securities Act Release No. 6862	369	(3)
Notes and Questions	372	(2)
Problems	374	(1)
The Section 4(1 1/2) Exemption	374	(7)
Ackerberg v. Johnson	375	(3)
Notes and Questions	378	(2)
Problems	380	(1)
Resales Under the Blue Sky Laws	381	(6)
Isolated Nonissuer Resale	382	(1)
The Manual Exemption	383	(1)
Unsolicited Offer Exemption	383	(1)
Small Offering Exemption	384	(1)
Problem	385	(2)
Recapitalizations, Reorganizations, and Acquisitions	387	(36)
The ``For Value'' Requirement	387	(15)
Value Is Not Always What It Seems	387	(5)
Problems	392	(1)
Shells and Spinoffs: Creating ``Value''	393	(1)
Spinoffs and the '33 Act	393	(1)
SEC v. Datronics Engineers, Inc.	394	(2)
Notes and Questions	396	(1)
The Regulation of Spinoffs Under the '34 Act	397	(2)
Exchange Act Release No. 27,247	399	(2)
Problems	401	(1)
Mergers, Acquisitions, and Recapitalizations	402	(8)
Excerpt from the Release Adopting Regulation M-A, Securities Act Release No. 7760	404	(3)
Notes and Questions	407	(1)
Problems	408	(2)
Exchanges Under Section 3(a) (9)	410	(5)
Notes and Questions	412	(2)
Problems	414	(1)
Reorganizations Under Section 3(a) (10)	415	(8)
Nonbankruptcy Reorganizations	415	(3)
The Bankruptcy Act's Collision with the Securities Laws	418	(1)
Disclosure in Chapter 11 Reorganizations	418	(1)
Exemption for Sale and Exchange of Securities	419	(1)
Resales of Securities Received in a Chapter 11 Reorganization	420	(1)
Resales from Debtor's Portfolio	420	(3)
Exempt Securities	423	(48)
An Overview of Section 3	424	(5)
Municipal Securities	429	(16)
The Market and the Players	429	(1)
Disclosure Considerations	430	(1)
Gellis, Mandatory Disclosure for Municipal Securities: A Reevaluation	430	(3)
Credit-Enhancing Devices	433	(1)
Regulation of Offerings	433	(1)
The SEC and Rule 15c2-12	434	(3)
The MSRB and Rule G-17	437	(1)
SEC v. GLT Dain Rauscher	437	(3)
Notes and Questions	440	(1)
Problems	441	(1)
``Pay to Play'' Practices and Rule G-37	442	(1)
Public Financing for the Private Sector	442	(3)
Problem	445	(1)
Securities Issued or Guaranteed by a Bank	445	(5)
The Exemption in General	445	(1)
Collateralized and Pass-Through Securities	446	(3)
Problems	449	(1)
Bank Versus Insurance Company Guarantees and, More Generally, the Future of the Exemption for Banks	449	(1)
Commercial Paper	450	(5)
The Contours of Section 3(a) (3)	451	(3)
Problems	454	(1)
Securitization and Section 3(a) (3)	454	(1)
Securities of Nonprofit Issuers	455	(5)
SEC v. Children's Hospital	455	(2)
Notes and Questions	457	(2)
Problem	459	(1)
Insurance and Annuities	460	(11)
Insurance and Annuity Products as Securities	460	(1)
Variable Annuities	461	(1)
SEC v. Variable Annuity Life Insurance Co. of America	462	(2)
Beyond Variable Annuities	464	(1)
Rule 151	465	(1)
Otto v. Variable Annuity Life Insurance Co.	466	(3)
Notes and Questions	469	(2)
Liability Under the Securities Act	471	(58)
Section 11	471	(31)
Persons Bringing Suit	472	(1)
Hertzberg v. Dignity Partners, Inc.	473	(2)
The Defendants and Their Defenses	475	(2)
Escott v. BarChris Construction Co.	477	(12)
Notes and Questions	489	(6)
Problem	495	(1)
Damages	495	(1)
Akerman v. Oryx Communications Inc.	495	(3)
Notes and Questions	498	(3)
Problem	501	(1)
Section 12(a) (1)	502	(5)
Pinter v. Dahl	502	(4)
Notes and Questions	506	(1)
Problem	506	(1)
Section 12(a) (2)	507	(14)
By Means of a ``Prospectus or Oral Communication''	507	(1)
Gustafson v. Alloyd Co.	507	(7)
Notes and Questions	514	(3)
Problems	517	(1)
Liability	518	(2)
Notes and Questions	520	(1)
Problem	520	(1)
Section 17(a)	521	(8)
Aaron v. SEC	521	(1)
Notes and Questions	522	(2)
In re Washington Public Power Supply System Securities Litigation	524	(2)
Note: Private Rights of Action---The Theory	526	(3)
Financial Reporting: Mechanisms, Duties, and Culture	529	(32)
The Disclosure Requirements of Public Companies	530	(7)
The Origins and Metrics for Financial Information	530	(2)
The Exchange Act's Periodic Reporting Obligations	532	(1)
Domestic Issuers	532	(2)
Problem	534	(1)
Foreign Issuers	534	(2)
Compelling Honesty in Mandated Reports Through Private Actions	536	(1)
The ``Fairly Presents'' Requirement	537	(4)
United States v. Simon	537	(4)
Reliable Records and the Foreign Corrupt Practices Act	541	(7)
SEC v. World-Wide Coin	541	(5)
Notes and Questions	546	(1)
Problems	547	(1)
Strengthening the Integrity of Financial Reporting Process: The Marriage of the SEC and Governance	548	(6)
Audit Committees	548	(2)
Problem	550	(1)
Buttressing the Auditor's Independence	550	(2)
Problem	552	(1)
Executive Certifications and Directors' Signature Requirement	552	(1)
Reconstructing History with Pro Forma Financial Statements	553	(1)
Problem	553	(1)
The Management Discussion and Analysis Section of SEC Filings: Is Past Prologue?	554	(7)
Enron's Contribution to the MD&A	556	(1)
The SEC and the Environment	557	(1)
Prospective Information, Financial Reporting Release No. 36	558	(2)
Problem	560	(1)
Inquiries into the Materiality of Information	561	(68)
Materiality Orthodoxy	562	(3)
Notes and Questions	563	(2)
Problem	565	(1)
Speculative Information and Materiality	565	(9)
Basic Inc. v. Levinson	565	(6)
Notes and Questions	571	(3)
Problem	574	(1)
The ``Total Mix'' of Information and Market Efficiency	574	(9)
Truth on the Market	575	(1)
Wielgos v. Commonwealth Edison Co.	575	(3)
Notes and Questions	578	(2)
Problem	580	(1)
``Puffery''	581	(1)
Eisenstadt v. Centel Corp.	581	(1)
Notes and Questions	582	(1)
Forward-Looking Information	583	(20)
The ``Bespeaks Caution'' Doctrine	585	(1)
Kaufman v. Trump's Castle Funding	585	(4)
Notes and Questions	589	(2)
Statutory Safe Harbor for Forward-Looking Statements	591	(2)
Harris v. IVAX Corp.	593	(4)
Notes and Questions	597	(1)
Problem	598	(1)
Duty to Disclose Forward-Looking Information	599	(1)
Notes and Questions	600	(2)
Problems	602	(1)
The SEC and Corporate Governance	603	(26)
Disclosure Beyond the Bottom Line: Management Integrity	603	(1)
In the Matter of Franchard Corp.	603	(6)
Notes and Questions	609	(4)
Problems	613	(1)
The Interface of Materiality and Corporate Governance	614	(1)
In the Matter of W.R. Grace & Co.	614	(4)
Notes and Questions	618	(2)
Problems	620	(1)
The Materiality of Being a ``Bad'' Citizen: Violations of State or Federal Law	621	(1)
SEC v. Jos. Schlitz Brewing Co.	622	(2)
Notes and Questions	624	(4)
Problem	628	(1)
Fraud in Connection with the Purchase or Sale of a Security	629	(88)
Fraud ``In Connection With'' the Purchase or Sale of a Security	631	(6)
SEC v. Texas Gulf Sulphur Co.	631	(4)
Notes and Questions	635	(2)
Problem	637	(1)
Private Rights of Action Under Rule 10b-5	637	(11)
Creation and Controversy	637	(1)
H.R. Rep. No. 104-50	638	(3)
Standing to Sue	641	(2)
Cowin v. Bresler	643	(2)
Notes and Questions	645	(2)
Problem	647	(1)
Scienter: Hochfelder and Beyond	648	(11)
Defining Scienter	648	(3)
Problem	651	(1)
Pleading Scienter	651	(1)
Greebel v. FTP Software, Inc.	652	(3)
Notes and Questions	655	(3)
Problem	658	(1)
The Affirmative Duty to Disclose	659	(11)
In re Time-Warner Securities Litigation	659	(3)
Gallagher v. Abbott Laboratories, Inc.	662	(3)
Notes and Questions	665	(5)
Problem	670	(1)
Reliance and Causation	670	(24)
Reliance	670	(1)
Affiliated Ute Citizens v. United States	670	(1)
Notes and Questions	671	(1)
Causation	672	(1)
AUSA Life Insurance Co. v. Ernst & Young	672	(8)
Notes and Questions	680	(1)
The Fraud on the Market Theory	681	(1)
Basic Inc. v. Levinson	681	(5)
Notes and Questions	686	(4)
Problem	690	(1)
Fraud on the Market: Some Variations	690	(3)
The Reasonableness of the Reliance: Due Care	693	(1)
Problem	694	(1)
Damages	694	(10)
Face-to-Face Transactions	695	(1)
Rowe v. Maremont Corp.	696	(1)
Notes and Questions	697	(2)
Problem	699	(1)
Open Market Transactions	700	(2)
Proportionate Liability	702	(1)
Problem	703	(1)
Federalism and Rule 10b-5: The Problem of Corporate Mismanagement	704	(3)
Problem	707	(1)
Manipulation	707	(10)
Defining Manipulation	709	(1)
United States v. Mulheren	709	(4)
Notes and Questions	713	(1)
Problem	714	(1)
Issuer Repurchases	715	(2)
The Enforcement of the Securities Laws	717	(132)
More on the Private Enforcement of the Securities Laws	717	(53)
Champion of the Little Guy: The Class Action	719	(1)
In re Razorfish, Inc. Securities Litigation	719	(4)
Notes and Questions	723	(1)
The Incentive Structure	724	(3)
Securities Actions After the Private Securities Litigation Reform Act of 1995	727	(2)
Closing the Bypass: The Securities Litigation Uniform Standards Act	729	(1)
Problem	729	(1)
Who's Liable for Securities Fraud: Primary and Secondary Liability	730	(1)
Aiding and Abetting	731	(1)
Central Bank of Denver v. First Interstate Bank of Denver	732	(2)
Notes and Questions	734	(1)
Primary Participants	735	(1)
Wright v. Ernst & Young LLP	735	(3)
Notes and Questions	738	(3)
Problems	741	(1)
Control Person and Respondeat Superior Liability	742	(1)
Donohoe v. Consolidated Operating & Production Corp.	743	(3)
Notes and Questions	746	(5)
Problems	751	(1)
Rescission and Restitution of Contracts in Violation of the Securities Laws	752	(1)
Regional Properties, Inc. v. Financial & Real Estate Consulting Co.	752	(6)
Notes and Questions	758	(1)
Problem	759	(1)
Responsibility and Its Costs	760	(1)
Equitable Bars to the Plaintiff's Recovery	760	(2)
Bateman Eichler, Hill Richards, Inc. v. Berner	762	(1)
Indemnity and Contribution	763	(3)
Problem	766	(1)
Statutes of Limitations	767	(1)
Notes and Questions	767	(2)
Problem	769	(1)
Enforcement Actions by the SEC	770	(29)
Investigations	770	(1)
The Investigatory Process	770	(2)
Recommendations to the Commission	772	(2)
Commission Statement on the Relationship of Cooperation to Agency Enforcement Decisions, Securities Exchange Act Release No. 44969	774	(2)
Problem	776	(1)
Section 21(a) Reports	776	(2)
Sanctioning and Making Law Through Administrative Adjudications	778	(1)
The Administrative Enforcement Proceeding	778	(2)
The Expanding Panoply of SEC Enforcement Sanctions	780	(3)
KPMG, LLP v. SEC	783	(4)
Notes and Questions	787	(2)
Problems	789	(1)
A Case Study in Choices Facing the SEC Prosecutor	790	(2)
Injunctions and Other Enforcement Remedies in the Courts	792	(1)
Notes and Questions	793	(6)
The SEC's Power to Discipline Professionals	799	(3)
Problems	801	(1)
The Duties of the Securities Lawyer	802	(29)
A Historic Step Toward Socializing the Securities Lawyer	804	(1)
SEC v. National Student Marketing Corp.	804	(10)
Notes and Questions	814	(3)
Problem	817	(1)
The SEC's Rules of Professional Conduct for Attorneys	818	(1)
Implementation of Standards of Professional Conduct for Attorneys, Securities Act Release No. 8185	819	(6)
Notes and Questions	825	(4)
Problems	829	(2)
Enforcement of the Securities Laws in the Criminal Justice System	831	(18)
The Criminal Provisions of the Federal Securities Laws	832	(2)
United States v. Dixon	834	(2)
Problem	836	(1)
Notes and Questions	837	(1)
Mail and Wire Fraud	838	(2)
Carpenter v. United States	840	(3)
Racketeer Influenced and Corrupt Organizations Act	843	(2)
Notes and Questions	845	(2)
Problem	847	(2)
The Regulation of Insider Trading	849	(54)
Introduction	849	(2)
The Source of a Duty to Abstain or Disclose	851	(6)
Chiarella v. United States	851	(3)
Notes and Questions	854	(3)
``Outsider'' Trading: Corporate Connections	857	(1)
Problem	857	(1)
The Misappropriation Theory	858	(11)
United States v. O'Hagan	859	(7)
Notes and Questions	866	(3)
Problem	869	(1)
Tippers and Tippees	869	(13)
Tipper/Tippee Liability Defined	869	(1)
Dirks v. Sec	869	(6)
Notes and Questions	875	(2)
Problems	877	(1)
Selective Disclosure: Reg FD	877	(1)
Securities Act Release No. 33-7881	877	(3)
Notes and Questions	880	(2)
Problems	882	(1)
Rule 14e-3	882	(2)
Problem	884	(1)
Enforcement of the Insider Trading Prohibition	884	(3)
Problems	887	(1)
Insider Trading and Section 16	887	(13)
The Scope of Section 16(b)	889	(1)
Feder v. Frost	889	(3)
Notes and Questions	892	(2)
Problem	894	(1)
Executive Compensation	895	(1)
Pension Blackout Periods	895	(1)
Unorthodox Transactions: The Takeover Problem	896	(1)
Texas International Airlines v. National Airlines Inc.	896	(2)
Notes and Questions	898	(1)
Problem	899	(1)
Is There a Need for Reform?	899	(1)
Notes and Questions	900	(1)
Insider Trading Abroad	900	(3)
Shareholder Voting and Going-Private Transactions	903	(32)
The Election of Directors and Other Routine Matters	905	(5)
Mandatory Disclosure	905	(2)
Shareholder Proposals	907	(3)
Problem	910	(1)
The Reach of the Proxy Rules	910	(1)
``Solicitations''	911	(4)
Notes and Questions	913	(1)
Problem	914	(1)
Proxy Fraud	915	(8)
Gould v. American-Hawaiian Steamship Co.	915	(3)
Virginia Bankshares, Inc. v. Sandberg	918	(2)
Notes and Questions	920	(3)
Problem	923	(1)
The One-Share/One-Vote Controversy	923	(3)
Going-Private Transactions	926	(9)
In re Meyers Parking Systems Inc.	927	(4)
Notes and Questions	931	(1)
Problem	932	(3)
Corporate Takeovers	935	(38)
Introduction: The Policy Dilemma	935	(1)
The Early Warning System: Section 13(d)	936	(9)
Wellman v. Dickinson	938	(4)
Notes and Questions	942	(3)
Problem	945	(1)
Tender Offer Regulation: Controlling the Bidder	945	(21)
Problem	947	(1)
Disclosure by Bidders and the Antifraud Prohibition	947	(2)
Enforcement	949	(1)
Substantive Regulation	950	(1)
Duration	951	(1)
Withdrawal and Proration	952	(1)
``Mini Tender Offers''	952	(1)
The All-Holders/Best-Price Rule	952	(1)
Epstein v. MCA Corp.	952	(4)
Notes and Questions	956	(2)
Problem	958	(1)
``Tender Offer''	958	(1)
SEC v. Carter Hawley Hale Stores Inc.	959	(5)
Notes and Questions	964	(1)
Problem	965	(1)
The Williams Act and the Global Tender Offer	966	(1)
Tender Offer Defense: Controlling Target Management	966	(7)
Disclosure and Enforcement	966	(2)
Schreiber v. Burlington Northern Inc.	968	(2)
Notes and Questions	970	(1)
Purchases by (or for) the Issuer of Its Own Securities	971	(2)
Regulation of the Securities Markets and Broker-Dealers	973	(72)
The Structure of Regulation and the Evolution of the Securities Markets	974	(17)
The Old World: The Exchanges and the Over-the Counter Market	974	(2)
Market ``Fragmentation''	976	(1)
Exchange Act Release No. 38,672	977	(4)
Notes and Questions	981	(7)
Self-Regulation Reconsidered in an Era of Private ``For Profit'' Ownership of Markets	988	(3)
Regulation of the Broker-Dealer Industry: Structure and Oversight	991	(8)
Entry	991	(2)
Problems	993	(1)
Supervising the Conduct of Broker-Dealers and Their Associated Persons	993	(1)
Self-Regulation	993	(1)
Direct SEC Supervision of Brokers and Dealers	994	(2)
In the Matter of John Gutfreund et al.	996	(2)
Notes and Questions	998	(1)
The Responsibilities of Brokers to Their Customers	999	(38)
The Shingle Theory and Fiduciary Obligations	999	(2)
Problem	1001	(1)
``Know Your Security''	1002	(1)
Hanly v. SEC	1002	(3)
Notes and Questions	1005	(1)
Problem	1006	(1)
Investment Analysts and Their Conflicts of Interest	1007	(2)
Problem	1009	(1)
Suitability	1009	(1)
The Basic Obligation	1009	(1)
Brown v. E.F. Hutton Group Inc.	1009	(3)
Notes and Questions	1012	(4)
Problem	1016	(1)
Suitability, Risk Disclosure, and the Sophisticated Investor	1017	(1)
Banca Cremi, S.A. v. Alex. Brown & Sons, Inc.	1017	(3)
Notes and Questions	1020	(2)
Churning and Other ``Relational'' Frauds	1022	(1)
Merrill Lynch, Pierce, Fenner & Smith v. Arceneaux	1022	(2)
Notes and Questions	1024	(3)
Problem	1027	(1)
Price Protection: Markups and Other Matters	1027	(2)
Arbitration	1029	(3)
Broker-Dealers and Inside Information	1032	(1)
Bateman Eichler, Hill Richards, Inc. v. Berner	1032	(3)
Notes and Questions	1035	(2)
Problem	1037	(1)
Substantive Regulation: Credit and Financial Soundness	1037	(8)
Margin Requirements	1037	(2)
Short Selling	1039	(1)
The Financial Soundness of Broker-Dealers	1040	(5)
The Investment Advisers and Investment Company Acts of 1940	1045	(48)
The Regulation of Investment Advisers	1045	(18)
The Registration Requirement	1046	(2)
Substantive Regulation	1048	(1)
Conduct Regulation: Section 206	1049	(1)
SEC v. Capital Gains Research Bureau Inc.	1049	(4)
Notes and Questions	1053	(1)
Investment Advice, Investment Information, and the First Amendment	1054	(1)
Lowe v. SEC	1054	(5)
SEC v. Wall Street Publishing Institute	1059	(2)
Notes and Questions	1061	(1)
Problem	1062	(1)
Mutual Funds and Other Investment Companies	1063	(30)
The Terminology of the '40 Act	1066	(1)
The Structure and Governance of a Mutual Fund	1067	(1)
Investment Company Act Release No. 24,082	1067	(3)
Problem	1070	(1)
Sales and Redemptions of Mutual Fund Shares	1070	(1)
Prices and Distribution Charges	1070	(4)
Problem	1074	(1)
Sales Literature and Advertising	1074	(2)
The Compensation of Investment Company Affiliates	1076	(1)
Gartenberg v. Merrill Lynch Asset Management Inc.	1076	(4)
Notes and Questions	1080	(2)
Problem	1082	(1)
Self-Dealing by Investment Company Affiliates	1083	(1)
Principal Transactions	1083	(2)
Joint Transactions	1085	(1)
SEC v. Midwest Technical Development Corp.	1085	(2)
Notes and Questions	1087	(1)
Other Conflict Rules	1088	(2)
Problem	1090	(1)
The Definitional Problem	1090	(1)
Problem	1091	(1)
Hedge Funds	1091	(2)
Transnational Fraud and the Reach of U.S. Securities Laws	1093	(38)
The Extraterritorial Application of U.S. Securities Laws	1094	(33)
In General	1094	(1)
Kauthar SDN BHD v. Sternberg	1094	(6)
Jurisdiction Based on Effects	1100	(1)
Schoenbaum v. Firstbrook	1100	(3)
Notes and Questions	1103	(1)
Jurisdiction Based in Whole, or in Part, upon Conduct	1104	(1)
Bersch v. Drexel Firestone, Inc.	1105	(5)
Notes and Questions	1110	(2)
Problems	1112	(1)
The Restatement (Third) of Foreign Relations Law of the United States	1113	(1)
Europe and Overseas Commodity Traders, S.A. v. Banque Paribas London	1114	(4)
Problems	1118	(1)
Choice of Law Options: The Relevance of Foreign Law in Securities Litigation	1119	(1)
Bonny v. The Society of Lloyd's	1120	(4)
Notes and Questions	1124	(3)
Problem	1127	(1)
Enforcement Challenges Presented by an Internationalized Securities Market	1127	(4)
Unilateral Enforcement Efforts	1127	(1)
Discovery Sanctions	1127	(1)
The Reach for Assets	1128	(1)
Bilateral Enforcement Efforts	1129	(2)
Table of Cases	1131	(10)
Index	1141