Machine Learning, Algorithmic Trading, and Manipulation

By Megan Shearer, Gabriel Rauterberg, and Michael Wellman September 19, 2022 by renholding

Trading in financial markets is increasingly dominated by algorithms. They enable trading at speeds and levels of adaptiveness that are impossible for human beings. A key question for the legal system is whether these algorithms will disrupt the efficiency and …

Latham & Watkins Discusses Stricter SEC Requirements for the Rule 10b5-1 Affirmative Defense

By Joel H. Trotter, Stephen P. Wink, Naim Culhaci and Deric Behar January 24, 2022 by renholding

On December 15, 2021, the Securities and Exchange Commission (SEC) issued a set of proposed amendments (the Proposal) regarding the adoption of trading plans that qualify for the affirmative defense against liability for trading on the basis of material non-public …

SEC Commissioner Lee Speaks on Leveraging Regulatory Cooperation

By Allison Herren Lee May 24, 2021 by renholding

Good afternoon. It’s a privilege to welcome you all to the annual Section 19(d) Conference. I want to start by commending NASAA and SEC staff for their work in putting this event together. And thanks to our colleagues from NASAA

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The Phenomenon of the Television Ad as Investment Tip

By Jura Liaukonyte and Alminas Zaldokas May 15, 2020 by renholding

Amid the turbulence in stock markets, retail investors continue to look for investment ideas. With thousands of publicly-traded stocks available, many retail investors often resort to their recent personal experiences when deciding on which stocks to buy or sell. Maybe …

Man versus Machine: A Comparison of Robo-Analyst and Traditional Research Analyst Investment Recommendations

By Braiden Coleman, Kenneth Merkley and Joseph Pacelli January 31, 2020 by renholding

Advancements in financial technology (FinTech) are revolutionizing product offerings across the financial services industry. As of 2018, more than $50 billion had been invested in 2,500 companies that are redefining the way in which individuals participate in financial markets (Accenture, …

Commissioners Testify on SEC Oversight: Wall Street’s Cop on the Beat

By Jay Clayton September 26, 2019 by renholding

Chairwoman Waters, Ranking Member McHenry and Members of the Committee, thank you for the opportunity to testify before you today [September 24] about the work of the U.S. Securities and Exchange Commission (SEC or Commission or agency).[1]

Overview—The SEC’s

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Time Variation in the Relationship Between News and Returns

By Paul Glasserman, Fulin Li and Harry Mamaysky August 29, 2019 by renholding

How does the stock market respond to news reports about a company? Previous work has found that it takes a few days for prices to fully absorb news, and this underreaction has been attributed to investors’ limited ability to process …

Price Revelation from Insider Trading: Evidence from Hacked Earnings News

By Pat Akey, Vincent Gregoire and Charles Martineau July 10, 2019 by renholding

Cyber risk is a major concern to corporations and investors. Recent academic studies point out that firms suffer large negative returns when they disclose that they have suffered a data breach (e.g., Akey, Lewellen and Liskovich (2018) and Kamiya et …

SEC Investor Advocate Talks Investor Issues for 2019

By Rick A. Fleming April 22, 2019 by renholding

Good afternoon. I hope you are enjoying this year’s edition of SEC Speaks, which gives the public a good overview of all the work that is going on at the Commission.[1] In the Office of the Investor Advocate, we

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Short and Distort

By Joshua Mitts November 13, 2018 by renholding

Anonymous political speech has a celebrated history (Publius, 1787) and has long enjoyed strong protections under the U.S. Constitution.[1] But there is a dark side to pseudonymity: Fictitious identities can wreak havoc in financial markets. A large literature in …

Is Silence Golden? Negative Effects of Mandatory Disclosure

By Sudarshan Jayaraman and Joanna S. Wu July 30, 2018 by renholding

“When you talk, you are only repeating what you already know. But if you listen, you may learn something new.” – Dalai Lama XIV

Disclosure regulation is a cornerstone of modern securities markets. Its economic consequences have been extensively studied …

How Institutional Investors Gain an Information Advantage: Evidence From Option Backdating

By Wenli Huang, Hai Lu and Xiaolu Wang July 20, 2018 by renholding

Institutional investors are often viewed as informed traders, and individuals attempting to trade in the same market as institutions are likened to “tourists playing poker with professionals in the smoky backroom of a Las Vegas casino.”[1] So how do …

Post-Earnings Announcement Drift and Corporate Insider Trading

By Christina Dargenidou, Ian Tonks and Fanis Tsoligkas June 5, 2018 by renholding

Post-earnings announcement drift (PEAD) is a well-documented and puzzlingly persistent market anomaly. Companies that report earnings higher than expected typically experience an upward drift in their stock prices while those that report earnings below what was anticipated see a downward …

Cleary Gottlieb Discusses the SEC’s New Cyber Unit, Six Months On

By Jonathan S. Kolodner, Rahul Mukhi, Matthew C. Solomon and Anne Titus Hilby April 3, 2018 by renholding

On September 25, 2017, the U.S. Securities and Exchange Commission (“SEC” or the “Commission”) announced the creation of a Cyber Unit within the Enforcement Division in order to further the Division’s “substantial expertise in the detection and pursuit of fraudulent …

Latham & Watkins Discusses SEC Charges Against BitFunder and the State of Digital Asset Trading

By Wenchi Hu, Vivian Maese and John Sikora March 19, 2018 by renholding

The SEC continues to send messages to the nascent cryptocurrency market. The agency has recently brought enforcement actions and issued a public statement that illustrate the agency’s views on how the federal securities laws apply to crypto or digital asset …

SEC Warns About Online Platforms for Trading Digital Assets

By Divisions of Enforcement and Trading and Markets March 8, 2018 by renholding

Online trading platforms have become a popular way investors can buy and sell digital assets, including coins and tokens offered and sold in so-called Initial Coin Offerings (“ICOs”). The platforms often claim to give investors the ability to quickly buy

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Blue Sky Banter Podcast: Donald Langevoort on Insider Trading, Disclosure, and Disasters

By Reynolds Holding March 2, 2018 by renholding

Professor Donald Langevoort of Georgetown Law speaks with Reynolds Holding about how two duties — the obligation to disclose or abstain from trading on material information and the duty to reveal corporate secrets — evolved from the Second Circuit’s Texas …

Corporate Bond Trading on an Exchange

By Meni Abudy and Avi Wohl August 17, 2017 by renholding

An over-the-counter (OTC) market and an open limit order book (LOB) market are the two common mechanisms for organizing financial markets. An OTC is a decentralized market, where trades occur only through dealers. The dealers’ quotes are not fully transparent …

The Citadel Settlement, Off-Exchange Market Makers, and Giant Brokerages

By Stanislav Dolgopolov May 5, 2017 by renholding

The recent settlement between the U.S. Securities and Exchange Commission (“SEC”) and Citadel Securities[1] is a landmark in the market structure enforcement program. In a nutshell, the regulators targeted high-speed algorithms that opportunistically used different market data benchmarks and …

Columbia Launches New Special Study of Securities Markets

By Merritt B. Fox, Lawrence R. Glosten and Edward F. Greene April 14, 2017 by renholding

Over the last three decades, U.S. and global securities markets have undergone tremendous change, driven by globalization, advances in information technology, and regulatory choices at the federal and international levels. The days of adventuresome floor trading and concerns of safeguarding …

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The CLS Blue Sky Blog

Columbia Law School's Blog on Corporations and the Capital Markets

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