Competing Approaches to Director Liability in the Zone of Insolvency

When should directors be held liable for their company’s distressed financial condition? In a recent article, we show that the answer varies widely across legal regimes. We focus on the zone of insolvency, a phase in the company’s life when its financial condition is unstable and deteriorating, but it has yet to enter a formal bankruptcy proceeding (and theoretically may never enter such a proceeding).

There are two main approaches to dealing with directors’ actions when their company is in this zone. Under the American and Canadian approach, directors are generally held to the same corporate law standards that … Read more

When Should You Abstain? A Call for a Global Rule of Insider Trading

The core concepts of securities regulation tend to be similar across jurisdictions. However, there are differences that may seem small and insignificant at first glance but in fact generate the potential for arbitrage by the kind of sophisticated actors that engage in cross-border mergers and acquisitions.

In a recent paper, we shed light on significant differences in the rules governing the definition of what is material information with regard to unfolding events.

Both the U.S. and European jurisdictions treat information regarding “material” events as important to investors and apply insider trading prohibitions when material information remains nonpublic. Hence, “materiality” … Read more