Private Offerings and Public Ends: Reconsidering the Regime for Classification of Investors Under the Securities Act of 1933

To achieve a growing number of public, social, civic goals, we draw on the power of financial markets.  Parents who can afford to save for the cost of their children’s college education rely on the market when they put money into college savings plans like New York’s 529 College Savings Program, for example, and so do workers counting on pension funds to provide income in retirement.

As long as these investments produce the needed return, all is well, but when they do not, they undermine the public end they were supposed to serve. The riskiness of investments made in service … Read more

Student Debt and the Siren Song of Systemic Risk

What are we to make of growing levels of student indebtedness?

On the one hand, commentary in the popular media consistently extols[1] the virtues of investing in higher education, and serious economists back them up.[2] On the other hand, borrowing by students to pay for college has increased dramatically in recent decades, and that debt can be a crushing burden for some borrowers. A greater percentage of borrowers has gone into default in recent years, no doubt slammed by a more difficult economy and higher monthly payment obligations on larger balances. In the context of steadily increasing education … Read more

Hurdles of Different Heights for Securities Fraud Litigants of Different Types

The following post comes to us from Jonathan D. Glater, Assistant Professor of Law at the University of California Irvine School of Law. It is based on his recent paper, “Hurdles of Different Heights for Securities Fraud Litigants of Different Types,” which is available here.

When investors buy securities in a private offering, it is presumed that they have the sophistication and expertise to invest in the absence of the formal disclosure requirements that apply to public offerings. When investors claim to have been victims of fraud, they assert that they have fallen victim to deceit. When investors who purchased … Read more