Will It Float?: The Legitimacy of the SEC’s Authority for Climate Risk Disclosures

On March 21, 2022, the SEC formally launched one of the most significant initiatives ever taken in its nearly 90-year history: proposals for disclosure of climate-related risks. (SEC, The Enhancement and Standardization of Climate-Related Disclosures for Investors. Sec. Act. Rel. No. 11042 (March 21, 2022)). It is a masterpiece of understatement to observe that few firms, public or private, and certainly no investor, will be untouched by forces unleashed by climate change.  Among SEC registrants, the effects of climate change will be many, albeit the magnitude of their impacts on each will vary. Thus, the historical significance of this SEC … Read more

Thinking Holistically Before Dropping Quarterly Reporting

Robust capital markets are widely believed to signal economic vitality, and a reliable barometer of such vitality was historically a rising number of IPOs and listings.  Yet, as we are experiencing record setting economic expansion, that barometer has failed us.  There has been a 20-year slide in the number of listed companies and the tepid-to-non-existent growth in IPOs. The number of listed companies peaked in 1997; listings today are below their level in the early 1970s.  And the annual number of IPOs has never returned to their level in the 1990s.  These developments have caused conservative politicians predictably to blame … Read more

Giving Tippers a Pass: U.S. v. Newman

The Second Circuit, in U.S. v. Newman raises likely insurmountable burdens for prosecutors to pursue remote tippees. Newman causes even greater harm to the public interest in fair capital markets by making it impossible to pursue the true violator, the tipper. To understand this conclusion, consider the following hypothetical that is intended to illustrate the Supreme Court’s reasoning in Dirks v. Securities and Exchange Commission.

Kenneth Darke, a geologist with Texas Gulf Sulphur Company, rode into history as one of a large group of corporate insiders who purchased TGS shares on their advance knowledge of a unparalleled visual assay … Read more

The Mist of Halliburton II

The one point that is clear in Halliburton II is that fraud on the market is limited to securities traded in an “efficient market.” Unfortunately, it is not clear what significance to give this principle as the opinion sheds no light on what constitutes such a market or why an efficient market is a sine qua non for fraud on the market. For these reasons, Halliburton II perpetuates the debate that has been on-going since Basic Inc. v. Levinson was decided decades ago.

The issue that propels fraud on the market into securities litigation is the necessity in private litigation … Read more