{"id":4729,"date":"2019-11-20T17:28:40","date_gmt":"2019-11-20T22:28:40","guid":{"rendered":"https:\/\/journals.law.harvard.edu\/hblr\/?page_id=4729"},"modified":"2025-02-18T18:29:36","modified_gmt":"2025-02-18T23:29:36","slug":"volume-9-issue-1","status":"publish","type":"page","link":"https:\/\/journals.law.harvard.edu\/hblr\/volume-9-issue-1\/","title":{"rendered":"Volume 9, Issue 1"},"content":{"rendered":"
SECURITIES & FINANCIAL REGULATION \u2022 TECHNOLOGY & INNOVATION<\/h5>\n

INFORMED TRADING AND CYBERSECURITY BREACHES<\/a><\/h3>\n
Joshua Mitts and Eric Talley
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Cybersecurity has become a significant concern in corporate and commercial settings, and for good reason: a threatened or realized cybersecurity breach can materially affect firm value for capital investors. This paper explores whether market arbitrageurs appear systematically to exploit advance knowledge of such vulnerabilities. We make use of a novel data set tracking cyber-security breach announcements among public companies to study trading patterns in the derivatives market preceding the announcement of a breach. Using a matched sample of unaffected control firms, we find significant trading abnormalities for hacked targets, measured in terms of both open interest and volume. Our results are robust to several alternative matching techniques, as well as to both cross-sectional and longitudinal identification strategies. All told, our findings appear strongly consistent with the proposition that arbitrageurs can and do obtain early notice of impending breach disclosures, and that they are able to profit from such information. Normatively, we argue that the efficiency implications of cybersecurity trading are distinct\u2014and generally more concerning\u2014than those posed by garden-variety information trading within securities markets. Notwithstanding these idiosyncratic concerns, however, both securities fraud and computer fraud in their current form appear poorly adapted to address such concerns, and both would require nontrivial reimagining to meet the challenge (even approximately).<\/p>\n

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INVESTING & ASSET MANAGEMENT<\/h5>\n

THE FIDUCIARY RULE CONTROVERSY AND THE FUTURE OF INVESTMENT ADVICE<\/a><\/strong><\/h3>\n
Quinn Curtis
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One of the signature rulemaking initiatives of the Obama administration was the Fiduciary Rule, which redefined the relationship between retirement investors and their brokers by imposing broad fiduciary obligations on financial professionals who had previously escaped classification as fiduciaries. The Rule was enormously controversial and was eventually struck down by the Fifth Circuit. Despite its demise, the Fiduciary Rule offers important lessons for regulating investment advice. This paper offers an assessment of the Rule in light of the academic literature. It argues that, while the Fiduciary Rule was a well-intentioned and plausible means to confront the well-documented problem of conflicted investment advice, it promised only modest benefits when all relevant costs were considered, and even those benefits were jeopardized by the risk of rising costs related to compliance and liability. A reform agenda aimed at reducing the demand for costly professional advice is likely to deliver greater returns than regulating how that advice is delivered.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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BUSINESS & CORPORATIONS \u2022 LEGAL & REGULATORY COMPLIANCE<\/h5>\n

RISING TO THEIR FULL POTENTIAL: HOW A UNIFORM DISCLOSURE REGIME WILL EMPOWER BENEFIT CORPORATIONS<\/a><\/h3>\n
Brent J. Horton
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Today\u2014perhaps more than at any other time in history\u2014investors want to achieve two things: a positive financial return on their investment and the \u201cwarm glow\u201d that comes from doing good. And the number of investors looking for that \u201cwarm glow\u201d is increasing.<\/p>\n

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SECURITIES & FINANCIAL REGULATION \u2022 BANKING<\/h5>\n

NONBANK CREDIT<\/a><\/h3>\n
Christina Parajon Skinner
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Investment funds increasingly substitute for banks in supplying credit to the economy. Regulators have paid considerable attention to the potential financial stability risks of this migration to nonbank credit. This Article, however, argues that certain private investment funds (and the asset management institutions that house them) can enhance financial stability by promoting economic resilience. Specifically, it argues that certain private funds are incentivized and structured to supply the economy with a countercyclical source of credit\u2014turning on their credit spigots precisely when banks are likely to turn theirs off. In doing so, these private funds have the potential to keep the economy buoyant in periods of economic downturn or distress.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

SECURITIES & FINANCIAL REGULATION \u2022 TECHNOLOGY & INNOVATION INFORMED TRADING AND CYBERSECURITY BREACHES Joshua Mitts and Eric Talley Cybersecurity has […]<\/p>\n","protected":false},"author":109,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-4729","page","type-page","status-publish","hentry"],"jetpack_shortlink":"https:\/\/wp.me\/PgKEUK-1eh","jetpack-related-posts":[{"id":5259,"url":"https:\/\/journals.law.harvard.edu\/hblr\/securities-financial-regulation\/","url_meta":{"origin":4729,"position":0},"title":"Securities & Financial Regulation","author":"wgu","date":"February 15, 2025","format":false,"excerpt":"VOLUME 15 \u2022 COLUMNS THE DUAL CLASS DILEMMA AND THE SUNSET-CLAUSE SOLUTION\u00a0 Adrian Brown The desirability of dual-class stock has been a source of substantial controversy. 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