Stock Exchanges and the New Markets for Securities Laws
This Article has benefited from the comments and suggestions of Professors Bobby Ahdieh, Douglas Baird, Margaret Blair, Bill Bratton, William Christie, Steven Davidoff, Gillian Hadfield, Paul Heald, Larry Helfer, Donald Langevoort, David Millon, Erin O’Hara, Bob Rasmussen, Hans Stoll, Bob Thompson, Joel Trachtman, and Todd Zywicki. The Article also benefited from faculty workshops at the University of Georgia, the University of Pennsylvania, the University of Southern California, and Northwestern University. I would also like to thank Murray Teitelbaum, James Duffy, and the staff of the New York Stock Exchange for their time and valuable insight.
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For nearly a decade, leading scholars have bemoaned the absence of what can be termed a market for securities laws. Unlike the federalist structure of US corporate law, which may incentivize some states to compete for corporate charters, no competition for firms animates the enactment of national securities laws. Instead, the federal government has enjoyed a virtual monopoly over the provision of securities laws. Ever since the passing of the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”), firms have generally had to comply with US securities laws when selling their stocks and bonds to American investors. And because US stock exchanges were the most liquid in the world, there was little danger of foreign multinationals going elsewhere to raise capital. As a result, federal regulators have had few incentives to formulate efficient regulatory policies. A revolutionary transformation of global equity markets is, however, currently underway.
The authors thank Deyaa Alriwishdi, Cody Corliss, Janka Deli, Assaf Harpaz, Jocelyn Getgen Kestenbaum, Lawrence Liu, Asaf Lubin, Natalie McCauley, Trang (Mae) Nguyen, Miyoko Pettit-Toledo, Charlie Trumbull, and Kate Yoon for very helpful comments and suggestions on the project. Thanks also to the Junior International Law Scholars Association for providing both the impetus for this project and a platform to receive feedback, and to the editors of the University of Chicago Law Review Online for their confidence in the project and thoughtful editorial guidance. All errors are the authors’ alone.
The U.S. government exerts powerful pressure on parties around the world through its use of unilateral economic sanctions. Oftentimes, this involves prohibiting U.S. corporate and natural persons from doing business with certain foreign jurisdictions, entities and individuals, or industries. A less noticed way the U.S. regulates conduct abroad is by prohibiting all transactions with sanctioned parties that simply pass through the U.S. financial system. This Essay examines the role of currency-based jurisdiction in U.S. sanctions practice by introducing a novel data set of enforcement actions and reveals that a controversial but largely overlooked jurisdictional basis in fact represents a cornerstone of current practice.
This Essay explores the future of legal prediction markets. Part I explains how markets work and what makes them hard to beat. Part II then turns to the largest legal prediction market to date: the outcome of Learning Resources. Finally, Part III considers whether markets are well-suited to forecasting legal outcomes, both in principle and in practice.
We thank Lucian Bebchuk, Alon Brav, Ryan Bubb, Ed Cheng, Quinn Curtis, Elisabeth de Fontenay, Jared Ellias, Jill Fisch, Joe Grundfest, Cam Harvey, Scott Hirst, Colleen Honigsberg, Marcel Kahan, Louis Kaplow, Jonathan Klick, Brian Leiter, Saul Levmore, Dorothy Lund, John Morley, Mariana Pargendler, Elizabeth Pollman, Roberta Romano, Paolo Saguato, Holger Spamann, George Vojta, and Michael Weber for valuable suggestions and discussions. This Article has benefited from comments by workshop participants at Columbia Law School, George Mason University Antonin Scalia Law School, Georgetown University Law Center, Harvard Law School, Stanford Law School, UC Berkeley School of Law, the University of Chicago Law School, the University of Oxford Faculty of Law, the University of Pennsylvania Carey Law School, the University of Toronto Faculty of Law, the University of Virginia School of Law, and the Washington University School of Law, as well as at the American Law and Economics Association Annual Meeting, the Corporate & Securities Litigation Workshop, the Labex ReFi-NYU-SAFE/LawFin Law & Banking/Finance Conference, and the Utah Winter Deals Conference. Robertson gratefully acknowledges the support of the Douglas Clark and Ruth Ann McNeese Faculty Research Fund. Katy Beeson and Levi Haas provided exceptional research assistance. All errors are our own.
We thank Lucian Bebchuk, Alon Brav, Ryan Bubb, Ed Cheng, Quinn Curtis, Elisabeth de Fontenay, Jared Ellias, Jill Fisch, Joe Grundfest, Cam Harvey, Scott Hirst, Colleen Honigsberg, Marcel Kahan, Louis Kaplow, Jonathan Klick, Brian Leiter, Saul Levmore, Dorothy Lund, John Morley, Mariana Pargendler, Elizabeth Pollman, Roberta Romano, Paolo Saguato, Holger Spamann, George Vojta, and Michael Weber for valuable suggestions and discussions. This Article has benefited from comments by workshop participants at Columbia Law School, George Mason University Antonin Scalia Law School, Georgetown University Law Center, Harvard Law School, Stanford Law School, UC Berkeley School of Law, the University of Chicago Law School, the University of Oxford Faculty of Law, the University of Pennsylvania Carey Law School, the University of Toronto Faculty of Law, the University of Virginia School of Law, and the Washington University School of Law, as well as at the American Law and Economics Association Annual Meeting, the Corporate & Securities Litigation Workshop, the Labex ReFi-NYU-SAFE/LawFin Law & Banking/Finance Conference, and the Utah Winter Deals Conference. Robertson gratefully acknowledges the support of the Douglas Clark and Ruth Ann McNeese Faculty Research Fund. Katy Beeson and Levi Haas provided exceptional research assistance. All errors are our own.
We thank Lucian Bebchuk, Alon Brav, Ryan Bubb, Ed Cheng, Quinn Curtis, Elisabeth de Fontenay, Jared Ellias, Jill Fisch, Joe Grundfest, Cam Harvey, Scott Hirst, Colleen Honigsberg, Marcel Kahan, Louis Kaplow, Jonathan Klick, Brian Leiter, Saul Levmore, Dorothy Lund, John Morley, Mariana Pargendler, Elizabeth Pollman, Roberta Romano, Paolo Saguato, Holger Spamann, George Vojta, and Michael Weber for valuable suggestions and discussions. This Article has benefited from comments by workshop participants at Columbia Law School, George Mason University Antonin Scalia Law School, Georgetown University Law Center, Harvard Law School, Stanford Law School, UC Berkeley School of Law, the University of Chicago Law School, the University of Oxford Faculty of Law, the University of Pennsylvania Carey Law School, the University of Toronto Faculty of Law, the University of Virginia School of Law, and the Washington University School of Law, as well as at the American Law and Economics Association Annual Meeting, the Corporate & Securities Litigation Workshop, the Labex ReFi-NYU-SAFE/LawFin Law & Banking/Finance Conference, and the Utah Winter Deals Conference. Robertson gratefully acknowledges the support of the Douglas Clark and Ruth Ann McNeese Faculty Research Fund. Katy Beeson and Levi Haas provided exceptional research assistance. All errors are our own.
For years, academic experts have championed the widespread adoption of the “Fama-French” factors in legal settings. Factor models are commonly used to perform valuations, performance evaluation and event studies across a wide variety of contexts, many of which rely on data provided by Professor Kenneth French. Yet these data are beset by a problem that the experts themselves did not understand: In a companion article, we document widespread retroactive changes to French’s factor data. These changes are the result of discretionary changes to the construction of the factors and materially affect a broad range of estimates. In this Article, we show how these retroactive changes can have enormous impacts in precisely the settings in which experts have pressed for their use. We provide examples of valuations, performance analysis, and event studies in which the retroactive changes have a large—and even dispositive—effect on an expert’s conclusions.