Posts Tagged ‘securities litigation’

Banking and finance roundup

  • “American Express Settlement Collapses Amid Charges Of Collusion” [Daniel Fisher]
  • Some on Capitol Hill would like U.S. Treasury to return money seized from South Mountain Creamery in now-notorious structuring case [Washington Post, our earlier coverage]
  • CEO pay shaming theory has been tried and failed twice, but why not one more try? [Marc Hodak, earlier]
  • Another big courtroom reverse for SEC in use of in-house administrative law judges [Reuters]
  • Judge Easterbrook on competitive federalism, Delaware, and incorporation [Robert Goddard, Corporate Law and Governance quoting Corre Opportunities Fund, LP v. Emmis Communications Corp.]
  • How far will California go to tax one wealthy ex-resident? Consider saga of Gilbert Hyatt vs. Franchise Tax Board [Lloyd Billingsley, Daily Caller]
  • Apparently so: “Is Securities Litigation’s Future Secure?” [Nick Goseland, Above the Law]

Banking and finance roundup

  • “Fee-shifting: Delaware’s self-inflicted wound” [Stephen Bainbridge, more] Needed: a new Delaware [Reuters] Fordham lawprof Sean Griffith fights trial bar on shareholder suits [Bainbridge, more]
  • Goodbye, insurance (hugs). I think I’ll miss you most of all. [Bridget Johnson on anti-cinema, anti-stock-trading views of radical Islamist British activist and former lawyer Anjem Choudary]
  • Rare coalition of bankers, housing advocates urges limits on mortgage-related suits [W$J]
  • “The Administrative State v. The Constitution: Dodd-Frank at Five Years” hearing includes testimony from Mark Calabria of Cato (law delegates vast authority to bureaucracy, has failed to generate clear rules for regulated parties) and Neomi Rao of George Mason (unconstitutionality of Consumer Financial Protection Bureau) [Senate Judiciary Committee, related on a CFPB constitutional challenge]
  • Do-it-yourself Operation Choke Point: letter from one Illinois sheriff shut down adult-ad credit card payments [Maggie McNeill, Daniel Fisher]
  • “Obama DOJ Channels Bank Shakedown Money To Private Groups” [Dan Epstein, Investors Business Daily]
  • “The U.S. listing gap” [Doidge, Karolyi, & Stulz NBER paper via Tyler Cowen, MR]

Banking and finance roundup

  • “FATCA: An American Tax Nightmare” [Stu Haugen, New York Times via TaxProf]
  • Following Iceland’s model? “Neither [Krugman nor Yglesias] mentions that a major part of the Icelandic recipe was letting *foreign* deposit holders twist in the wind.” [Tyler Cowen]
  • Wasting a Crisis: Why Securities Regulation Fails, new book by Virginia law dean Paul Mahoney [Thaya Knight, Cato, with video of Cato event]
  • Seventh Circuit reverses $2.46 billion judgment against HSBC Holdings in Household International case [Reuters/Business Insider]
  • “I’ve been with them 40 years and then they have this? It’s a pain.” Banks close longtime local accounts as anti-money-laundering rules squeeze economy in border town Nogales, Ariz. [W$J]
  • Six regulatory agencies issue diversity guidelines for financial institutions, implementing Dodd-Frank mandate [FDIC]
  • Judge to Labaton Sucharow, Bernstein Litowitz: you might at least want to talk to those “confidential informants” your case relies on [Daniel Fisher, Forbes]

Banking and finance roundup

  • Cato Book Forum tomorrow (Wednesday, May 13): Paul Mahoney, “Wasting a Crisis: Why Securities Regulation Fails” [register or watch online]
  • “When The SEC Pays Your Lawyer For Informing On You, Is That A Good Thing?” [Daniel Fisher]
  • “Unfortunately for the CFPB’s ideological imperative, Ballard Spahr concludes otherwise: ‘In fact, the study confirms that arbitration does benefit consumers.'” [Kevin Funnell]
  • Which “established members of the business establishment” brought the AIG prosecution to Eliot Spitzer’s desk, and from what motives? [Ira Stoll]
  • Dodd-Frank “say on pay” failed to slow rise in CEO compensation, and it would help to understand why [Marc Hodak vs. James Surowiecki]
  • “One-Third of Americans Living Abroad Have Thought Actively About Renouncing Citizenship Due to Tax-Filing Requirements” [Matt Welch, followup, earlier on FATCA] Rand Paul bill would repeal the law, and there’s also a constitutional challenge in the works [TaxProf]
  • “What’s the point of the implied covenant of good faith? Other than generating fees for lawyers?” [Prof. Bainbridge]

Supreme Court roundup

  • In a new Cato podcast, I talk with Caleb Brown about the Court’s pending case on “disparate impact” liability in housing and finance, Texas Dept. of Housing vs. The Inclusive Communities Project [earlier, more]
  • Amicus briefs urge Court to recognize regulatory taking in raisin marketing order requisition case Horne v. Department of Agriculture [Trevor Burrus, Ilya Somin, earlier]
  • Organized campaign to disrupt Supreme Court sittings is sure to raise the concern of groups devoted to backing judicial independence. Right? [Orin Kerr, Legal Times, earlier on selective vision of some of the latter groups here, here, etc.]
  • Under the surface, routine decision in Perez indicates Justices’ changing attitudes toward Chevron, Auer, and agency deference in administrative law [Sasha Volokh]
  • Vong v. Aune, arising from Arizona cosmetology board ban on Asian “fish pedicure” techniques, could enable Court to examine economic rationality of regulation [Ilya Shapiro]
  • “Justices stick to middle of the road in Omnicare securities opinion” [Alison Frankel/Reuters, Bainbridge]
  • Sequel to Harris v. Quinn? In Center for Individual Rights’s Friedrichs v. California Teachers Association case Court could revisit Abood question of public sector agency shop [On Labor, Larry Sand/City Journal]

Hilary Kramer, TV stock picker, and her class action suits

A Reuters investigation: “No one has filed more challenges to M&A deals since 2011 than Hilary Kramer. She says she’s acting in the interest of shareholders, but they haven’t received a penny. Lawyers, though, have made millions.” The frequent media guest says her more than 40 class action lawsuits are one way she sticks up for investors, but hasn’t always been so ready to take credit: “Kramer doesn’t appear to have divulged her class actions to her subscribers, a Reuters review of her newsletters found.”

For real liability reform, try freedom of contract

Six months ago the Delaware Supreme Court upheld the right of an enterprise to include a loser-pays provision in its bylaws, specifying that losing shareholder-litigants would have to contribute reasonable legal fees to compensate what would otherwise be loss to other owners. Since then there’s been a concerted campaign to overturn the ruling, either in the Delaware legislature or if necessary elsewhere. But as I argue in a new Cato post, allowing scope for freedom of contract of this sort is one of the best and most promising ways to avert an ever-rising toll of litigation. Contractually specified alternatives to courtroom wrangling have played a vital role, and are under attack for that very reason, in curbing litigation areas like workplace and consumer arbitration, shrinkwrap and click-through disclaimers of liability, and risk disclaimers at ballparks and elsewhere. (& Stephen Bainbridge).

To the extent America has made progress in recent years in rolling back the extreme litigiousness of earlier years, one main reason has been the courts’ increased willingness to respect the libertarian and classical liberal principle of freedom of contract. Most legal disputes arise between parties with prior dealings, and if they have been left free in those dealings to specify who bears the risks when things go wrong, the result will often be to cut off the need for expensive and open-ended litigation afterward.

More on the Delaware bylaw controversy: D & O Diary (scroll), Andrew Trask on state of the merger class action, WSJ Law Blog first and second, Daniel Fisher, and ABA Journal in June, Alison Frankel/Reuters (forum selection bylaws).

Banking and finance roundup

  • “How Operation Choke Point Hurts the Unbanked” [former FDIC chairman William Isaac, American Banker]
  • A nation of snitches: “U.S. rules would expand white collar crime informers” [Reuters]
  • Courts should stop giving deference to agency interpretations of criminal law: “Justice Scalia’s shot across the SEC’s bow re insider trading” [Bainbridge] Judge Rakoff criticizes SEC for bringing so many enforcement proceedings to in-house adjudicators [Reuters, earlier]
  • Monitor envy: “The biggest U.S. banks have 100 or more on-site examiners from an array of regulators” and now New York’s financial regulator wants to get into the act [WSJ]
  • Seventh Circuit finds Bank of America entitled to ask loan applicants about expected continuing entitlement to disability benefits, but in the mean time bank agrees in DoJ settlement to cease such inquiries [Easterbrook opinion in Wigginton v. Bank of America, see last page]
  • Two SEC commissioners warn that campaigned-for “fair fund” to compensate investors in CR Intrinsic inside trading case “likely to benefit only class-action attorneys and the fund’s administrators” [Daniel Gallagher and Michael Piwowar, WSJ]
  • “U.S. veterans sue [major European] banks, claim they should pay for Iraq attacks” [Alison Frankel, Reuters]

An agenda for financial regulation

Steve Bainbridge has a wish list for reforms to financial and securities law in the new Congress, especially the damaging Dodd-Frank and Sarbanes-Oxley laws. Included: repeal of conflicts minerals disclosure, “say on pay,” and pay ratio disclosure; more leeway for public companies to opt out of various regulatory obligations to shareholders that their own shareholders have not contractually seen fit to impose; and litigation reform.

Meanwhile, my Cato colleague Mark Calabria points out that there “are numerous protectors of the status quo in both major political parties,” which may frustrate the relatively free-market instincts of the responsible committee chairs, Sen. Richard Shelby and Rep. Jeb Hensarling. “But at least financial regulation is unlikely to get any worse.”

“Should the SEC be prosecutor, judge, jury, and executioner?”

Prof. Bainbridge flags this disturbing Wall Street Journal piece:

The Securities and Exchange Commission is increasingly steering cases to hearings in front of the agency’s appointed administrative judges, who found in its favor in every verdict for the 12 months through September, rather than taking them to federal court.

Previously, the agency had tended to use the ALJs (administrative law judges) for relatively cut-and-dried enforcement actions, while taking more complex or cutting-edge disputes to federal court. Now, following the Dodd-Frank expansion of its powers, it prefers ALJs even for many complex and demanding cases arising from charges such as insider trading. Defendants enjoy a range of protections in federal court that are not provided in administrative litigation, including juries as well as the presence of federal judges who are independent of agency control, held to a more demanding ethical code, and drawn generally from higher and more sophisticated circles within the legal profession. Read the entire Bainbridge commentary, with followups linking Henry Manne (adjudicatory actions are ways to avoid the more demanding process of rulemaking) and Keith Bishop (current system open to constitutional challenge?).