F. Hodge O'Neal Corporate and Securities Law Symposium

Do Institutions Matter? The Impact of the Lead Plaintiff Provision of the Private Securities Litigation Reform Act

Stephen J. Choi, Jill E. Fisch and A. C. Pritchard
When Congress enacted the Private Securities Litigation Reform Act in 1995 (“PSLRA”), the Act’s “lead plaintiff” provision was the centerpiece of its efforts to increase investor control over securities fraud class actions. The lead plaintiff provision alters the balance of power between investors and class counsel by creating a presumption that the investor with the largest financial stake in the case will serve as lead plaintiff. The lead plaintiff then…
F. Hodge O'Neal Corporate and Securities Law Symposium

Mutual Fund Expense Disclosures: A Behavioral Perspective

James D. Cox and John W. Payne
The last few years have not been kind to the mutual fund industry. To be sure, financial indices have improved with the collateral benefit of boosting investor optimism so that the net gain in assets under management by registered investment companies rose by more than ten percent in 2004 to reach $8.6 trillion at the end of the year. But the mutual fund scandals that were first unearthed in fall…
F. Hodge O'Neal Corporate and Securities Law Symposium

The Scope and Jurisprudence of the Investment Management Regulation

This Article reviews three periods of investment company regulation by the Securities and Exchange Commission (“Commission”). It focuses on the period of 1975 to 2000 in which the Commission granted exemptions on conditions, thus deregulating and reregulating, case-by-case and finally codifying the exemptions in an exemptive rule. The Article analyzes this form of rule-making and compares it to prosecution, settlements, and initial rule-making that typifies the recent years. The Article…
F. Hodge O'Neal Corporate and Securities Law Symposium

Private Litigation to Enforce Fiduciary Duties in Mutual Funds: Derivative Suits, Disinterested Directors and the Ideology of Investor Sovereignty

The aim of this paper is to critique some of the key judicial steps, with particular attention to private securities litigation that takes the form of a derivative action on behalf of a particular fund. My critique will not dwell on the pending cases directed against the late trading and market timing abuses in any great detail, although these surely are important. As New York Attorney General Elliot Spitzer emphasized…
F. Hodge O'Neal Corporate and Securities Law Symposium

Enhanced Corporate Governance for Mutual Funds: A Flawed Concept that Deserves Serious Reconsideration

Martin E. Lybecker
Mutual funds are the most popular retail investment in America, a testament to the simplicity and transparency of the mutual fund concept. A mutual fund investor owns a share of common stock issued by a company that invests in debt or equity securities issued by other operating companies. Like operating companies, a mutual fund distinguishes itself by its business objective—for example, to exceed the Standard & Poor’s 500 Index (an…
F. Hodge O'Neal Corporate and Securities Law Symposium

Comments on Martin Lybecker’s Enhanced Corporate Governance

Martin Lybecker’s article, Enhanced Governance for Mutual Funds: A Flawed Concept that Deserves Serious Reconsideration, raises significant issues regarding the Securities and Exchange Commission’s (“Commission” or “SEC”) exercise of its exemptive authority. Under that authority, the Commission amended a number of exemptive rules under the Investment Company Act of 1940 (“’40 Act”) to require that mutual funds relying on those rules conform to enumerated governance practices (“fund governance reforms”). Lybecker…
F. Hodge O'Neal Corporate and Securities Law Symposium

Common Themes and Unintended Consequences in Class Action Reform

Francis E. McGovern
The reform pendulum has been swinging in the direction of limiting the scope and flexibility of the class action procedural device. The Private Securities Litigation Reform Act (PSLRA), the Securities Litigation Uniform Standards Act (SLUSA), the Class Action Fairness Act (CAFA), Federal Rule of Civil Procedure 23 (Rule 23), various state statutes and rules, and a variety of state and U.S. Supreme Court decisions have included significant efforts to make…
F. Hodge O'Neal Corporate and Securities Law Symposium

Should Investment Companies Be Subject to a New Statutory Self-Regulatory Organization?

Joel Seligman
When one focuses on investment company accountability, one ultimately can pursue an internal or an external model or some combination of both. Professor Langevoort’s symposium article well describes the more limited role that investment company boards play in contrast to corporate boards and how much more robust market forces such as a market for corporate control are with respect to corporate boards. Indeed, some like Richard Phillips have gone further…
F. Hodge O'Neal Corporate and Securities Law Symposium

Class Actions and Limited Vision: Opportunities for Improvement Through a More Functional Approach to Class Treatment of Disputes

Jeffrey W. Stempel
Part I of this Article describes the evolution of the perception of the modern class action from populist darling to greedy lawyer pariah, including recent passage of CAFA. Part II examines the degree to which different types of cases present different potential benefits and detriments of class action treatment and explains why investor class actions, including those brought by institutional investors, are particularly likely to benefit from class treatment, are…

Health Care for Undocumented Immigrant Children: Special Members of an Underclass

Cindy Chang