Jump to Navigation
|
Jump to Content
LOGIN
|
Join ABA
|
Media
|
Contact
Search:
Advanced Search
Topics A-Z
Home
Membership
Join the ABA
Renew Dues
Membership Benefits
Find: Sections, Divisions, Forums and Committees
myABA
Member Directory
Member Services
FAQ
Member Resources
myABA
Practice Resources & Tools
Find: Sections, Divisions, Forums and Committees
CLE Calendar
Professional Development
Technology Resources
Volunteer Opportunities
Discussion Boards & E-mail Lists
Career Center
Legislative and Governmental Advocacy
Ethics/Professional Conduct
Member Directory
Member Advantage
Public Resources
Public Education
Legal Topic Resources
Find Legal Help
Consumer Publications
About the Law
Lawyer Locator
Complaints Against a Lawyer
Approved Law Schools
Consumer Legal Topics
Rule of Law
Legal Education
Getting a Law Degree
Approved Law Schools
Law School Accreditation
Admissions to the Bar
Continuing Legal Education (CLE)
Careers in the Legal Profession
Consumer Legal Topics
Law Student Division
CLE
CLE Meetings
CLE Products
Online CLE Courses
Downloadable CLE
MCLE Information
Calendar
Upcoming Events & Activites
Upcoming CLE
Entire Calendar
Today
Store
New Releases
Best Sellers
Books
CLE
Periodicals
Topics
Publications
ABA Journal
ABA Periodicals
Ethics Opinions
About the ABA
Mission
Leadership
ABA Policies (Members Only)
Employment Opportunites
Charities
Related and Affiliated Organizations
Press Releases
Year in Review
President's Page
Governance Reports
Section Home
Committees
Calendar
Meetings Portal
Newsletters
Publications
Business Law Today
The Business Lawyer
Membership Directory
Contact Us
Print This
|
E-mail This
ABA Section of Business Law
Section Concierge:
Answers to your questions.
Do You Need to Find Legal Help?
Click
here
instead.
FROM:
Enter your e-mail address.
Required
to receive an answer.
TO:
Required
. Select a topic to help us direct your question to the appropriate staff.
-- select a topic --
Committees
Listserv
Meetings
Membership
Publications
The Business Lawyer Journal
Web Site
Other
QUESTION:
Required
. Please be as detailed as possible. Include your name and the URL if applicable.
Verify:
Required
. Enter in the security code shown above.
The Business Lawyer
THE BUSINESS LAWYER - May 2004, VOLUME 59, NUMBER 3 Credit Enhancement: Letters of Credit, Guaranties, Insurance and Swaps (The Clash of Cultures) Robert D. Aicher, Deborah L. Cotton, and TK Khan 59(3): 897974 (May 2004) Billions of dollars of publicly issued debt securities are supported by financial instruments issued by third parties. The use of these instruments, letters of credit, guaranties, insurance and swaps, has carried with it a set of business assumptions concerning their performance. The first decision arising out of the Enron debacle, PMorgan Chase Bank v. Liberty Mutual Ins. Co., 189 F. Supp. 2d 24 (S.D.N.Y. 2002), exposed the brutal fact that the legal principles underlying these instruments do not necessarily deliver the business results anticipated. This created a tremendous crisis of confidence in the public debt marketplace that remains unresolved. This Article is an attempt to compare these instruments side by side in the context of both their historical origins and their current use in the capital marketplace. The instruments' individual histories are used to explain why each instrument developed as it did, and that the legal principles that govern each instrument are entirely consistent with their respective historical roots. In addition, the Article makes specific recommendations regarding two relatively new instruments created by the insurance and investment banking industries: financial guaranty insurance and credit default swaps. Misrepresentations of Secondary Actors in the Sale of Securities: Does In re Enron Square with Central Bank? Aegis J. Frumento 59(3): 9751004 (May 2004) When should a secondary actor to a securities fraud-like an accountant or a lawyer- be liable to the same degree as the primary culprit? Ever since the Supreme Court abolished aider and abettor liability for violations of section 10(b) of the Securities Exchange Act of 1934, courts have struggled to answer that question, and the struggle has led to competing standards. In the case of misrepresentations in connection with the purchase or sale of securities, the Courts of Appeal have split between those imposing liability on secondary actors who "substantially participate" in making a misrepresentation, and those who also require, as a "bright line" test, that the misrepresentation be publicly attributed to the secondary actor before the plaintiff makes his or her investment decision. The court hearing the cases arising from the Enron debacle adopted yet a third alternative, the so-called "creation" test, imposing liability on a secondary actor who, alone or with others, "creates" a misrepresentation. This Article explores the problem of misrepresentations by secondary actors in securities frauds, analyzes the competing standards of liability, traces the roots of the creation test, and argues ultimately that the creation test and the substantial participation test share deficiencies that the bright line test avoids. Section 304 of the Sarbanes-Oxley Act of 2002: The Case for a Personal Culpability Requirement John Patrick Kelsh 59(3): 10051042 (May 2004) Section 304 of the Sarbanes-Oxley Act imposes on chief executive officers and chief financial officers of public companies an obligation to disgorge certain compensation (i.e. trading profits, bonuses and equity-based compensation) that is earned in the twelve-month period following the first public issuance or filing of a financial document that the public company is subsequently required to restate due to its material noncompliance, as a result of misconduct, with any financial reporting requirement under the securities laws. On its face, section 304 provides no guidance on the question whether chief executive officers and chief financial officers are required to disgorge even if they have no personal culpability for the "misconduct" that gives rise to the need to restate. This Article considers that question. After estimating the frequency with which this question might arise in the post Sarbanes-Oxley era and reviewing the limited legislative history of section 304, the Article considers the normative question of how section 304 should be interpreted. Relying on statutory, constitutional and policy arguments, the author concludes that section 304 should be interpreted to require chief executive officers and chief financial officers to disgorge only when they have personal culpability for the misconduct that gives rise to the need to restate. Windfall Awards Under PSLRA Richard A. Booth 59(3): 104356 (May 2004) Congress enacted the Private Securities Litigation Reform Act (PSLRA) to limit frivolous lawsuits under the federal securities laws. Among the many changes wrought by PSLRA was the imposition of a limit on damages in private securities fraud actions under the Exchange Act. Specifically, PSLRA limits damages in a case of bad news fraud to the difference between the purchase price and the average market price during the ninety-day period following corrective disclosure. As it turns out, this formula unduly encourages securities litigation in down markets by increasing the limitation on damage awards to the extent that the subject stock falls further after corrective disclosure either because of a general decline in the market or because of independent news about the company. Moreover, the PSLRA formula disproportionately enhances potential awards against growth companies whose stock prices tend to move by more than the market as a whole. In short, the PSLRA formula has increased the incentives for plaintiffs to sue particularly in down markets. Fortunately, because the Exchange Act also expressly limits awards to actual damages, the courts can avoid the ill effects of the PSLRA formula by adjusting the prices on which awards are calculated to filter out market events as well as independent company-specific news both before and after corrective disclosure. REPORTS Corporate Director's Guidebook, Fourth Edition Committee on Corporate Laws, ABA Section of Business Law 59(3): 10571120 (May 2004) SURVEY Introduction to the 2004 Annual Survey of Consumer Financial Services Law: Where Do We Go From Here? Lynne B. Barr, Alvin C. Harrell, Jeffrey I. Langer, and Fred H. Miller 59(3): 112124 (May 2004) Truth in Lending Developments Deborah Freye, Judith M. Scheiderer, Timothy P. Meredith, and Barbara S. Mishkin 59(3): 112536 (May 2004) Amendments to Regulation B and the Official Staff Commentary James A. Huizinga and Krista B. LaBelle 59(3): 113744 (May 2004) Recent Developments in Motor Vehicle Leasing and Litigation Thomas B. Hudson and Daniel J. Laudicina 59(3): 114560 (May 2004) Vicarious Liability of Motor Vehicle Lessors Kenneth J. Rojc and Kathleen E. Stendahl 59(3): 116178 (May 2004) State and Local Predatory Lending Issues and Developments Therese G. Franzιn and Leslie M. Howell 59(3): 117992 (May 2004) Federal Preemption and Federal Banking Agency Responses to Predatory Lending Julie L. Williams and Michael S. Bylsma 59(3): 11931206 (May 2004) Federal Preemption and the Future of Mortgage Loan Regulation Donald C. Lampe 59(3): 120714 (May 2004) Fair Credit Reporting Act Developments Michael F. McEneney and Karl F. Kaufmann 59(3): 121526 (May 2004) Update on State Consumer Financial Privacy Legislation and Regulation Elizabeth A. Huber and Elena A. Lovoy 59(3): 122740 (May 2004) Federal and State Telemarketing Developments Charles V. Gall and Margaret M. Stolar 59(3): 124150 (May 2004) Consumer Privacy Regulation and Litigation in the United States Stephen F. Ambrose, Jr. and Joseph W. Gelb 59(3): 125164 (May 2004) Arbitration Update: Green Tree Financial Corp. v. Bazzle Dazzle for Green Tree, Fizzle for Practitioners Alan S. Kaplinsky and Mark J. Levin 59(3): 126574 (May 2004) Consumer Protections Afforded by the Sarbanes-Oxley Act of 2002 Jacqueline B. Stuart 59(3): 127586 (May 2004) Customer Identification Requirements Under the USA PATRIOT Act Michael F. McEneney, David E. Teitelbaum, and Karl F. Kaufmann 59(3): 128798 (May 2004) Regulatory Developments for Banks and Thrifts Conducting Trust and Fiduciary Activities V. Gerard Comizio and Jeffrey L. Hare 59(3): 12991320 (May 2004) Consumer Bankruptcy Developments Ernest B. Williams IV and Alvin C. Harrell 59(3): 132134 (May 2004) Developments in Cyberbanking Mark T. Gillett, Obrea O. Poindexter, Veronica McGregor, and Martin Villongco 59(3): 133546 (May 2004)
Back to Top
Copyright American Bar Association. http://www.abanet.org