Verified Document

Anti-Trust Are Investors' Legal Remedies Enough During Essay

Anti-Trust Are investors' legal remedies enough?

During the 1990s, a wave of legislation substantially deregulated the financial industry, effectively limiting the ability of investors to seek legal remedies in the wake of corporate fraud, and freeing corporations to take greater risks with 'other people's money.' The Private Securities Litigation Reform Act of 1995 (PSLRA) overturned the protections once provided by the 1934 Securities Exchange Act (Nations 2012). Then-President Clinton vetoed PSLRA, and as predicted, since its passage, "many citizens seeking redress for losses as a result of negligent or intentional misrepresentation, fraud, breach of fiduciary duty, or other misconduct in the purchase, sale, or offer for purchase or sale of securities have found their federal rights substantially reduced and have been forced to seek redress under state rather than federal law" (Nations 2012). PSLRA allowed corporations greater legal protection if they inserted a disclaimer that projected future profits were uncertain, increased investor's burden of proof in lawsuits against corporations and capped damages "recoverable in cases alleging a material misstatement or omission" (Nations 2012).

Investors must instead seek restitution based upon state laws, which vary widely. Some methods of recovering assets include negligent misrepresentation or common law fraud in which the defendant (the corporate CEO) deliberately disseminated known falsehoods or made claims of special knowledge about facts that would transpire in the future that failed to materialize (Nations 2012)....

However, given the use of disclaimers, it can be difficult to prove either negligent misrepresentation or common law fraud by a CEO. Another common method since the 1990s for investors is to sue based upon neglect of fiduciary duties, "the duties imposed by law on fiduciary relationships render those who owe fiduciary duties to investors viable targets in corporate-misconduct cases. Recent high-profile corporate-fraud cases, which have been accompanied by America's largest bankruptcies, have spawned a search for defendants other than the now-bankrupt securities sellers or corporations at the center of these cases. Potential defendants include corporate officers and directors, trustees, accountants, attorneys, brokers and brokerage houses, underwriters, investment bankers, appraisers, and market makers" (Nations 2012). However, because of the vague notion of what constitutes fiduciary duties, once again investors remain at a disadvantage.
Q2. Government regulation

One possible method of curtailing the type of rampant speculation that characterized the banking industry in recent years is to reinstate the 1933 Glass-Steagall Act "which barred commercial banks from underwriting or investing in stocks -- in effect, from owning investment banks" (Hiltzik 2012).Glass-Steagall was repealed in 1999, and the fact this was the year that so many of the practices began in the 1990s that were thought to have led to the 2008 credit crisis have caused many to demand the reinstitution of Glass-Steagall as a way of preventing further abuses. However, critics of the financial industry…

Sources used in this document:
References

Hiltzik, Michael. (2012). We need a stronger Glass-Steagall Act to regulate financial firms.

LA Times. Retrieved: http://articles.latimes.com/2012/may/30/business/la-fi-hiltzik-20120530

Nations, Howard. (2012). Remedies for wronged investors. The Nation Blog. Retrieved:

http://www.howardnations.com/reading/wrongedinvestors.html
Cite this Document:
Copy Bibliography Citation

Related Documents

Offshore Financial Centres and Their
Words: 22477 Length: 60 Document Type: Dissertation

Because the home country is not required to reimburse foreign depositors for losses, there is no corresponding financial penalty for lax supervision; there is, though, a benefit to the country with lenient regulatory policies because of increased revenues generated and the employment opportunities these services provide (Edwards 1999). Furthermore, banks seeking to conduct multinational business are attracted to countries where incorporation laws and the regulatory framework offer less regulatory oversight

Hostile Takeover -- the Modern
Words: 6689 Length: 24 Document Type: Term Paper

Types of Takeovers There are several consequences of whether a takeover is considered hostile or friendly. These consequences are more in the practical business realm than legal ones. Hostile takeovers are riskier for the acquirer than friendly ones. In a friendly takeover, the bidder will have a better chance to examine the company and its health. If the board is amicable to the situation, they will provide a full disclosure of

Securities Regulation of Nonprofit Organizations
Words: 12607 Length: 45 Document Type: Dissertation or Thesis complete

Securities Regulation SECURITIES REGULARIZATIONS IN NON-PROFIT ORGANIZATIONS The ensuring of the fact that an organization is working as per regulations and is following the code of conduct, while keeping the interest of the public first, are matters which are becoming more and more complicated with the passage of time. Therefore, it can be said with some emphasis, that today one of the most basic issues of many organizations is the issue of

International Development Law and Banking and Finance Law
Words: 9595 Length: 30 Document Type: Term Paper

English Right of Set-Off and Combination in the Circumstance of Insolvency The right of combination and set-off, as developed under English law offer a number of safeguards to banks and creditors in general. These rights were expanded under the principles that they were necessary to effect substantial justice and that they would stimulate economic growth and trade. In the following paper, I suggest that the judicial application of these rights

NAFTA Historical Beginning of NAFTA With Specific
Words: 24582 Length: 89 Document Type: Term Paper

NAFTA Historical Beginning of NAFTA (with specific bibliography) NAFTA Objectives What is NAFTA The Promise of NAFTA NAFTA Provisions Structure of NAFTA Years of NAFTA (NAFTA not enough, other plus and minuses).. Environmental Issues Comparative Statements (Debate) NAFTA - Broken Promises NAFTA - Fact Sheet Based Assessment NAFTA & Food Regulation NAFTA - The Road Ahead NAFTA in Numbers Goal Fulfillment Major Milestones Consolidated Bibliography This study set out to examine the inner workings of the North American Free Trade Agreement. The aim of this study is

Polish Companies Reacted to Ethical Issues and
Words: 22311 Length: 76 Document Type: Term Paper

Polish Companies Reacted to Ethical Issues and Changes in Business Standards Since the Fall of Communism in 1989? Poland's Economy Pre-Communism's Fall Poland's Natural Resources Minerals and Fuels Agricultural Resources Labor Force The Polish Economy Under Communism System Structure Development Strategy The Centrally-Planned Economy Establishing the Planning Formula Retrenchment and Adjustment in the 1960s Reliance on Technology in the 1970s Reform Failure in the 1980s Poland's Economy After the Fall of Communism Poland After the Fall of Communism Fall of Communism Marketization and Stabilization Required Short-Term Changes Section

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now