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SEC IPO Rules of Securities Exchange Act of 1934 There are some important sections of Securities Exchange Act of 1934, which often be cited in opinions and orders of securities fraud cases. Section 10(b) Section 10(b) of Securities Exchange Act of 1934 provides that “It shall be unlawful … (a) To effect a short sale … of any security … in contravention of such rules and regulations as the commission may prescribe … (b) To use or employ, in connection with the purchase or sale of any security … any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the commission may prescribe.” Section 14 Section 14(a) of Securities Exchange Act of 1934 provides that “It shall be unlawful for any person, by use of the mails … or otherwise … to solicit or permit the use of his name to solicit any proxy or consent or authorization in respect of any security (other than an exempted security) registered pursuant to Section 12 of this title.” Section 20 Section...

代理投票顾问的兴起与争议 1.背景 根据1940年“投资顾问法”(the Advisor’s Act)第206(4)-6条，投资顾问必须采取合理设计的政策和程序，以确保代理人的投票符合其客户的最大利益。由于必须采取相应政策，行使每一位委托人的投票权，这给投资顾问带来了巨大的经济负担，他们不希望维持评估所有管理层和股东提案所需的人员编制水平或资源。将这项工作外包给第三方代理投票顾问公司被视为减少这种经济负担的最有效方法。 此外，投资顾问有一项信义义务，即制定不存在利益冲突的代理投票指引，而这种利益冲突通常发生在投资顾问对发行人产生影响的事项进行表决时，即投资顾问的客户可能持有经济利益，或者投资顾问为发行人同时提供其他咨询服务时。SEC发布了指引，允许投资顾问根据第三方代理投票顾问的投票指引履行职责，以避免冲突。 然而，随着代理投票顾问影响力的增加，围绕其在代理投票过程中具有决定性的影响力也产生了巨大争议。 批评者通常认为，代理投票顾问在投票过程中所扮演的重要角色，使得投资顾问过分依赖代理投票顾问公司的投票建议。另一些人则指责代理投票顾问没有投入足够的资源来提供他们的投票建议，他们使用错误或误导性的信息作为他们建议的依据。还有一些人担心，代理投票顾问经常陷入利益冲突，损害了投资顾问对客户的信托责任。 事实上，两家投票顾问公司ISS和Glass Lewis的确占据了这一行业的97%市场份额，这显然加剧了这些担忧。作为对这些担忧的回应，SEC在过去几年里一直在进行全面审查，研究联邦代理投票规则如何改进代理投票顾问的建议。 2.兴起与限制 2004年，SEC就投票顾问公司发出了两封无异议函（no-action letter），这两封信极大地推动了投票顾问公司的兴起。 第一封信于2004年5月27日发给一家叫Egan-Jones的投票顾问公司，第二封信于2004年9月15日发给ISS。概况来说，这些函件指出，投资顾问可以根据独立的第三方投票顾问公司的意见，履行其对客户的信托义务，以充分通知并不存在利益冲突的方式进行投票。 2004年5月SEC发给Egan-Jones的信件假设，第三方投票顾问公司可以被认为是独立的，尽管它可能就公司治理问题向发行人提供建议，并获得发行人（上市公司）的付费（显然存在利益冲突）。信中还列出了依赖投票顾问公司的投资顾问应该遵守的额外要求，例如从任何投票...

Schedule 13D the identity and background of the acquirer and any group member the source and the amount of funds for making the purchases the number of the target's shares held by the acquirer any arrangements the acquirer has with others concerning shares of the target the acquirer's purposes for the acquisition and his intentions with regard to the target Regulations of substantive term of tender offer The tender offer must be open to all shareholders of the same class for at least 20 business days. Rule 14d-10(a)(1), Rule 14e-1(a) The offer must remain open for an additional 10 business days after any change in the offering price or the percentage of securities being sought. Rule 14e-1(b) Shareholders can withdraw their shares (revoke their tenders) at any time while the tender offer is open. Rule 14d-7. The shareholder must be paid the best price paid to any other shareholder during the tender offer, and if the bidder offers consideration alternatives (such as a choice of c...

Registration of Public Offerings Securities Act §5 Prefiling period Prohibited Activities No Sales or Deliveries No Offers Permitted Activities Preregistration Communications Regularly Released Information Preliminary Negotiations Research Reports   Research reports by nonparticipants   Research reports on issuer’s non-offered securities   Research reports by participants Company Announcements WKSI Communications Waiting period Prohibited Activities No Sales or Deliveries No Prospectuses Permitted Activities Oral Communications Prospectus Under §10(b)   Preliminary prospectus.   Summary prospectus. Identifying Information   Tombstone ads.   Identifying statements (and solicitations of investor interest). Free Writing Prospectus Posteffective period Prohibited Activities No Prospectus, Unless Final Prospectus No Deliveries, Unless Accompanied by Final Prospectus Permitted Activities Expanded“Prospectus”Types Free Writing Confirmations Securities Deliver...

"Buried Facts" Doctrine "Bespeaks Caution"Doctrine PSLRA Safe Harbor No actual knowledge The plaintiff fails to prove the defendant had actual knowledge that the forward-looking statement was false. This safe harbor applies to oral or written forward-looking statements and immunizes reckless or negligent forwardlooking statements from private liability. Immateriality The forward-looking statement was immaterial. This safe harbor focuses attention on whether the forward-looking statement is too “soft” to be material and opens the door to the judicial “bespeaks caution” doctrine as a separate basis for immunity. Cautionary statements The forward-looking statement “is identified as a forwardlooking statement and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the forward-looking statement.” This safe harbor provides the clearest protection because it calls for ...

Rule 15c2-11 regulates the initiation or resumption of quotations in a quotation medium by a broker or dealer for certain over-the-counter securities. The Rule was designed primarily to prevent certain manipulative and fraudulent trading schemes that had arisen in connection with the distribution and trading of unregistered securities issued by shell companies. There are three types of Rule 145 transactions: recapitalizations, mergers, and certain transfers of assets. Regulation M-A Delaware General Corporation Law

Registration of Public Offerings Securities Act §5 Prefiling period Prohibited Activities No Sales or Deliveries No Offers Permitted Activities Preregistration Communications Regularly Released Information Preliminary Negotiations Research Reports   Research reports by nonparticipants   Research reports on issuer’s non-offered securities   Research reports by participants Company Announcements WKSI Communications Waiting period Prohibited Activities No Sales or Deliveries No Prospectuses Permitted Activities Oral Communications Prospectus Under §10(b)   Preliminary prospectus.   Summary prospectus. Identifying Information   Tombstone ads.   Identifying statements (and solicitations of investor interest). Free Writing Prospectus Posteffective period Prohibited Activities No Prospectus, Unless Final Prospectus No Deliveries, Unless Accompanied by Final Prospectus Permitted Activities Expanded“Prospectus”Types Free Writing Confirmations Securities Deliver...

"Buried Facts" Doctrine "Bespeaks Caution"Doctrine PSLRA Safe Harbor No actual knowledge The plaintiff fails to prove the defendant had actual knowledge that the forward-looking statement was false. This safe harbor applies to oral or written forward-looking statements and immunizes reckless or negligent forwardlooking statements from private liability. Immateriality The forward-looking statement was immaterial. This safe harbor focuses attention on whether the forward-looking statement is too “soft” to be material and opens the door to the judicial “bespeaks caution” doctrine as a separate basis for immunity. Cautionary statements The forward-looking statement “is identified as a forwardlooking statement and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the forward-looking statement.” This safe harbor provides the clearest protection because it calls for ...

Exchange Act §14(a) The Exchange Act authorizes the SEC to promulgate rules to curb management abuses in the solicitation of proxies identified during congressional hearings leading up to the Exchange Act. Rule 14a-3(a) Any person (including management) who solicits proxies from public shareholders must file with the SEC and distribute to shareholders (whether record or beneficial owners) specified information in a stylized proxy statement. Rule 14a-6 Definitive copies of proxy materials must be filed with the SEC when first mailed to shareholders. In addition, preliminary proxy materials must be submitted for SEC review at least 10 days before being sent to shareholders. Liability for Proxy Fraud Federal courts have laid out the elements of a federal proxy fraud case: Misrepresentation or omission There must be a misrepresentation or misleading omission of fact. Opinions are also actionable if they misstate the speaker's true beliefs and mislead about the subject matter of the sta...

Schedule 13D the identity and background of the acquirer and any group member the source and the amount of funds for making the purchases the number of the target's shares held by the acquirer any arrangements the acquirer has with others concerning shares of the target the acquirer's purposes for the acquisition and his intentions with regard to the target Regulations of substantive term of tender offer The tender offer must be open to all shareholders of the same class for at least 20 business days. Rule 14d-10(a)(1), Rule 14e-1(a) The offer must remain open for an additional 10 business days after any change in the offering price or the percentage of securities being sought. Rule 14e-1(b) Shareholders can withdraw their shares (revoke their tenders) at any time while the tender offer is open. Rule 14d-7. The shareholder must be paid the best price paid to any other shareholder during the tender offer, and if the bidder offers consideration alternatives (such as a choice of c...

The civil liability scheme of the Securities Act draws on and always motifies the elements for securities fraud and equitable rescission. The elements of securities fraud Misrepresentation of material fact The misrepresentation must be material. That is a reasonable person would attach importance to it in deciding whether to enter into the transaction. The legislation requires that the misrepresentation is affirmative and factual. However, failing to disclose material information is not actional unless the silent party has a fiduciary or similar relationship that triggers a duty to disclose. Scienter The maker of the misrepresentation must have been culpable. That is, he either knew or believed the facts were otherwise or lacked a reasonable basis for the representation. Under the Securities Act, incomplete or misleading half-truths were not actionable. Reliance The person who seek to recover must have actually and justifiably relied on the fraudulent misrepresentation. Causation The p...

 Fraud in Connection with the Purchase or Sale of Securities The principal tool for promoting the informational integrity of securities transactions is Rule 10b-5. Scienter The Supreme Court held in Ernst & Ernst v. Hochfelder, that private actions under Rule 10b-5 must show that the defendant acted with scienter in order to succeed. Fraud elements of private 10b-5 actions Although neither §10(b) nor Rule 10b-5 specifies the elements a plaintiff must show to be entitled to relief, the Supreme Court has understood a 10b-5 action to bear a strong resemblance to its forbearer—old-fashioned common law deceit. The plaintiff has the burden of showing the following elements Material misinformation The defendant affirmatively misrepresented a material fact, or omitted a material fact that made his statement misleading, or remained silent on the face of a fiduciary duty to disclosure a material fact. Scienter The defendant knew (or was reckless in not knowing) the true state of affairs ...

Market manipulation araise when a pool of investors holding securities in a particular stock accomplish real and sham transactions to create the appearance of rising price in that stock. When investors enticed by the price movement began to buy at the inflated price, the pool would sell. Eventually, the emptiness of the price rise would be exposed and the price would be collapse. The pool would obtain handsome profit (buy low, sell high), while the investors would bear loss (buy high, sell low).  The Exchange Act addresses market manipulation in a variety of ways: Specific prohibitions Exchange Act §9(a) The Exchane Act prohibits creating misleading appearances of active trading in all securities, and OTC securities amended by Dodd-Frank to include Express private action Exchange Act §9(e) The Exchange Act authorizes a private cation for persons injured by market manipulation prohibited by Exchange Act §9. The plaintiff must prove that the defendant acted willfully and that the pri...

US Securities Exempt Transactions The exemptions fall into two classes. Transaction exemptions provide an exemption only from the registration provisions of Section 5 of the 1933 Securities Act. Securities placed under one of these exemptions remain subject to both the Securities Act and the Exchange Act and, importantly, cannot be resold unless either they are registered or another exemption is available. Exempt securities, on the other hand, need not be registered, but also may be resold free of registration burdens. Determining that a security is exempt, however, does not negate application of the securities acts in their entirety, for exempt securities remain subject to the antifraud provisions of the Securities Act and the Exchange Act. The 2012 Jumpstart Our Business Startups Act (JOBS Act) expanded SEC exempting authority through a new Section 3(b)(2) directing SEC to develop a new exemption for offerings not exceeding an aggregate offering amount of 50 million. Private Placemen...

Requirements of Class Action by Federal Rule of Civil Procedure 23 The standard of proof governing class action described by the Second Circuit: (1) A district judge may certify a class only after making determinations that each of the Rule 23 requirements has been met; (2) Such determinations can be made only if the judge resolves factual disputes relevant to each Rule 23 requirement and finds that whatever underlying facts are relevant to a particular Rule 23 requirement have been established and is persuaded to rule, based on the relevant facts and the applicable legal standard, that the requirement is met; (3) The obligation to make such determinations is not lessened by overlap between a Rule 23 requirement and a merits issue, even a merits issue that is identical with a Rule 23 requirement; (4) In making such determinations, a district judge should not assess any aspect of the merits unrelated to a Rule 23 requirement The prerequisites of numerosity, commonality, typicality, and ...

The standard of proof governing class action described by the Second Circuit: (1) a district judge may certify a class only after making determinations that each of the Rule 23 requirements has been met; (2) such determinations can be made only if the judge resolves factual disputes relevant to each Rule 23 requirement and finds that whatever underlying facts are relevant to a particular Rule 23 requirement have been established and is persuaded to rule, based on the relevant facts and the applicable legal standard, that the requirement is met; (3) the obligation to make such determinations is not lessened by overlap between a Rule 23 requirement and a merits issue, even a merits issue that is identical with a Rule 23 requirement; (4) in making such determinations, a district judge should not assess any aspect of the merits unrelated to a Rule 23 requirement The prerequisites of numerosity, commonality, typicality, and adequacy of representation by Federal Rule of Civil Procedure 23(a)...

Insider Trading There are two critical issues for securities laws in relation to insider trading: what information constitute insider information not to be used for trading and who is insider which is required to be prohibited for trading. information In cases related to insider trading, SEC and courts do not establish quatity standard for insider trading, to avoid further fraud. insider Examples of Insiders Insiders Insiders who obtain material, nonpublic information because of their corporate position—directors, officers, employees, and controlling shareholders—have the clearest 10b-5 duty not to trade. Constructive (or temporary) insiders Outsiders with no relationship to the company in whose securities they trade also have an abstain-or-disclose duty when aware of material, nonpublic information obtained in a relationship or trust or confidence. See O’Hagan. The outsider’s breach of confidence to the information source is deemed a deception that occurs “in connection with” his secu...

There are some important sections of Securities Act of 1933, which often be cited in opinions and orders of securities fraud cases. Section 12(a) (2) Section 12(a) (2) of Securities Act of 1933, previously known as Section 12(2), allows a purchaser of a security to bring a private action against a seller that “offers or sells a security…by means of a prospectus or oral communication, which contains an untrue statement of material fact or omits to state a material fact necessary in order to make the statements … not misleading.” Section 13 Section 13 of Securities Act of 1933 sets forth the statute of limitations for Securities Act claims: No action shall be maintained to enforce any liability created under Section 77k [Section 11] or 77l (a)(2) [Section 12(a)(2)] of this title unless brought within one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence .. In no event sha...

      美國規範證券市場的法規，除聯邦制定的相關規定外，還有各州訂定的證券法令。此外各證券交易所以及證券市場自律組織的規章，在法規領域亦具重大意義。 立法背景       美國聯邦政府於 1933 年前對證券市場的管理法規尚未完備，當時證券市場的管理主要受各州民、刑事法規及各證券交易所的自律規章所規範。此後於 1929 至 1933 年間，股價暴跌約 85% 以上。因股市崩盤過程中，諸多舞弊情事造成重大損失，引起投資大眾極度不安，因此要求控制證券市場的呼聲日起。為重建投資人對證券市場的信心，政府對證券市場的操縱活動進行全面的調查，並於 1933 年、 1934 年分別制定 “1933 年證券法 ” 及 ”1934 年證券交易法 ” 。制定該法目的為：第一，   要求公開向大眾募資的公司，   需向投資人真實反映其營業狀況、其股份出售的情形及投資風險；第二，公平對待每位股東，且以投資人的利益為首要考慮目標。 聯邦證券法律 Securities Act of 1933 1933 年證券法 Securities Exchange Act of 1934 1934 年證券交易法 Trust Indenture Act of 1939 1939 年信託契約法 Investment Company Act of 1940 1940 年投資公司法 Investment Advisers Act of 1940 1940 年投資顧問法 Sarbanes-Oxley Act of 2002 薩班斯 · 奧克斯利法案 Dodd-Frank Wall Street Reform and ConsumerProtection Act of 2010 2010 年多德 - 弗蘭克華爾街改革和消費者保護法 Jumpstart Our Business Startups Act of 2012 2012 年 JOBS“ 約伯斯 ” 法案 Securities and Exchange Commission Rules and Regulations Part 200 Organization: Conduct and Ethics; and Information and R...