Marc I. Steinberg’s research while affiliated with Southern Methodist University and other places

Morrison v. National Australia Bank Ltd. drastically altered the landscape for transnational securities litigation and the way that courts determine proper application of a statute concerning a transnational claim. The Supreme Court’s characterization of extraterritoriality under the Securities Exchange Act as a merits-based inquiry has led to a reexamination of limitations under other federal statutes that were previously thought to be jurisdictional issues. Significantly, Morrison created a road map for courts to follow when the extraterritoriality of a statute is brought into question. The key to proper application of a statute is to decipher the minimum U.S. contacts required to state a transnational claim. The tests developed addressing this inquiry are critical in discerning the boundaries of U.S. law at a time when transnational dealings are prevalent.

This article focuses on the federal courts' restrictive interpretation of Section 11 of the Securities Act of 1933, the most investor-friendly express remedy that the "New Deal" Congress enacted. This judicial erosion has resulted in a cause of action that extends to fewer investors and is riddled with uncertainty at the pleading stage. The authors posit that recent federal court decisions that have added reliance as an element of Section 11 claims and rejected the use of statistical evidence to prove tracing are inconsistent with Section 11's text and legislative history. The article then explores the inconsistencies associated with pleading Section 11 claims that "sound in fraud" by asserting that these claims should be extended the longer statute of limitations available to such fraud-based claims under the Sarbanes-Oxley Act of 2002. The authors conclude that the federal courts' focus on impeding vexatious litigation has resulted in unduly restrictive judicial interpretations that have altered the very nature of Section 11.

This paper is the introductory chapter to Insider Trading (Oxford University Press 3d ed. 2010). This treatise analyzes the application of various laws to stock market insider trading and tipping. Among the federal laws are Exchange Act section 10(b), SEC Rule 10b-5, mail/wire fraud, SEC Rule 14e-3, Exchange Act section 16, and Securities Act section 17(a). The state law discussed is both state common law and a state law claim by the issuer.Another chapter addresses government enforcement of the insider trading/tipping prohibitions. A chapter on compliance programs deals with how firms can try to prevent illegal insider trading and tipping. Two chapters compare the harmful and allegedly beneficial effects of stock market insider trading and discuss the harm to individual investors from each specific insider trade.

This article focuses on the narrow “strike zone” that plaintiffs must overcome in private securities actions instituted in the Fourth Circuit. Based on empirical data generated over a fourteen-year span, there emerges a clear finding that during that time period defendants were victorious in almost all cases, either on the merits of the case or due to procedural obstacles. The authors posit that this pattern of difficulty for plaintiffs arises, at least in part, from the Fourth Circuit’s restrictive interpretation of various requisite elements of these causes of action, such as materiality and scienter, as well as the Fourth Circuit’s approach to the pleading standards mandated by the PSLRA and the Federal Rules of Civil Procedure. The authors examine in detail some of the leading securities cases that establish Fourth Circuit precedent in these areas, as well as notable cases from the survey period, to illustrate the confines of the narrow “strike zone” available to plaintiffs to establish a meritorious claim.

This article focuses on the Supreme Court’s recent enhancement of Rule 8(a)(2)’s pleading standard to approach the heightened fraud pleading standards under Rule 9(b) and the PSLRA. The authors posit that the introduction of a tacit “probability requirement” into the basic pleading standard impedes the heightened fraud pleading standards under Rule 9(b) and the PSLRA from fulfilling the policy rationales for which they were created. By elevating the basic requirements that must be met in any federal civil case for a complaint to be legally sufficient, the Supreme Court has caused an evident convergence of pleading standards that blurs the lines between pleading doctrines. The authors assert that this convergence produces incongruity in the federal civil litigation system by at times treating plaintiffs more leniently when bringing forward fraud claims than when alleging non-fraudulent claims under Rule 8(a)(2)’s new plausibility pleading standard.

This article analyzes the practical and theoretical underpinnings as well as recent regulatory developments impacting PIPEs. Specifically, the authors examine the traditional capital financing alternatives, primarily the registered offering and private placement option, the PIPE as a relatively new and emerging alternative to traditional avenues of capital formation, and the recent regulatory changes that are bound to have a tremendous impact on the long-term viability of the PIPE as a means for effectively raising capital. The authors conclude that, on balance, the PIPE, as a distinct capital financing mechanism, may be advantageous to both PIPE investors and affected issuers, particularly in light of current market conditions that continue to constrain many companies’ ability to access traditional sources of capital. However, the authors note that, while promising to revolutionize the way a number of affected companies raise capital, certain regulatory developments may impede the optimization of the cost and efficiency benefits inherent in the PIPE transactional structure. Whether these regulatory impediments merit kudos or criticism is explored herein.

In the wake of the corporate debacles that have occurred in the last decade, there has been an increasing legislative and judicial focus on the reform of corporate governance standards. Such reforms, including the Sarbanes-Oxley Act, sing the praises of independent directors in effectuating meaningful corporate governance. The Delaware courts as well have emphasized the importance of independent directors in the corporate governance framework. The Delaware Supreme Court’s decision in Disney seems to be a reaffirmance of the business judgment rule as applied to corporate directors; however, the court’s highly-publicized decision ignores a crucial component of the case: the Delaware Supreme Court implicitly holds that Michael Eisner, as CEO of Disney, had the authority to unilaterally terminate the number-two officer in the corporation and to authorize a severance payment of over $130 million without action from the board of directors. By expanding the unilateral power of the chief executive officer to bind the corporation to such extraordinary transactions, the Disney court’s holding thus slights independent director service on corporate boards. Indeed, under the court’s reasoning in Disney, the effect of independent directors on meaningful corporate governance is diminished.

Professors Marc I. Steinberg and William K.S. Wang have coauthored the Second Edition of their Insider Trading Treatise published by The Practsing Law Institute. The Treatise provides in depth analysis of the law of insider trading. An excerpt from Chapter One of the Treatise follows and is reprinted with permission of the Practising Law Institute.

This paper is the Introductory chapter to Insider Trading (PLI 2d ed. 2006). Insider Trading is a two-volume treatise that analyzes the application of various laws to stock market insider trading and tipping. Among the federal laws are Exchange Act section 10(b), SEC rule 10b-5, mail/wire fraud, SEC rule 14e-3, Exchange Act section 16, and Securities Act section 17(a). The state laws discussed are the common law, the Uniform Securities Act, and the California and New York securities statutes. Another chapter addresses government enforcement of the insider trading/tipping prohibitions. A chapter on compliance programs deals with how firms can try to prevent illegal insider trading and tipping. Two chapters compare the harmful and allegedly beneficial effects of stock market insider trading and discuss the harm to individual investors from each specific insider trade.

This Paper analyzes the enhanced responsibilities and liability concerns that corporate/securities attorneys have in the post-Enron era. State ethical rules, SEC pronouncements, and court decisions are addressed. The ramifications of the Sarbanes-Oxley Act with respect to its impact on legal counsel also are explored. The Paper also provides insight focusing on the business attorney's role as counselor and gatekeeper when faced with the prospect of client fraud.