{"id":5347,"date":"2025-03-04T21:59:34","date_gmt":"2025-03-05T02:59:34","guid":{"rendered":"https:\/\/journals.law.harvard.edu\/hblr\/?page_id=5347"},"modified":"2025-11-13T11:28:39","modified_gmt":"2025-11-13T16:28:39","slug":"volume-15-issue-1","status":"publish","type":"page","link":"https:\/\/journals.law.harvard.edu\/hblr\/volume-15-issue-1\/","title":{"rendered":"Volume 15, Issue 1"},"content":{"rendered":"\n
SECURITIES & FINANCIAL REGULATION<\/h5>\n\n\n\n

CAN SECTION 11 BE SAVED?: \u201cTRACING\u201d A PATH TO ITS SURVIVAL<\/a><\/h3>\n\n\n\n
John C. Coffee, Jr. & Joshua Mitts1<\/a><\/sup>John C. Coffee, Jr. is the Adolf A. Berle Professor of Law at Columbia University. Joshua Mitts is the David J. Greenwald Professor of Law at Columbia University. We thank Professor Marc Steinberg for his very helpful suggestion pertaining to the potential expanded use of SEC Rule 173. We are grateful to Ryan Thier for exceptional research assistance. Professor Mitts advises on the analysis of trading data in connection with high-frequency market manipulation and securities violations, testifies as an expert witness in connection with Section 11 and tracing issues, and has developed a patent-pending methodology to conduct the tracing analysis described in this Article, as described in Appendix A herein.<\/span><\/h6>\n\n\n\n

Last term, a unanimous Supreme Court held in Slack Techs. v Pirani that purchasers of securities must \u201ctrace\u201d their shares to the registration statement that contains the alleged misstatement or omission in order to be able to assert a claim under Section 11 of the Securities Act of 1933. Lawyers and law firms on both sides of the case agreed (with differing emotions) that the decision eclipsed Section 11, which had been the federal securities laws\u2019 strongest litigation remedy for investors. We disagree with this conclusion that Section 11 is doomed, but we recognize the danger. Both in an amicus brief we filed with the Court and now in this article, we show how tracing can be performed and thus Section 11 preserved.<\/p>\n\n\n\n

\n\n\n\n
CORPORATE LAW & GOVERNANCE<\/h5>\n\n\n\n

LOCAL FIRM GOVERNANCE<\/a><\/h3>\n\n\n\n
Anne M. Choike2<\/a><\/sup>Visiting Associate Clinical Professor of Law, Notre Dame Law School, and Associate Clinical Professor of Law, Michigan State University College of Law (\u201cMSU Law\u201d). I am grateful to Kathleen Engel, Martha Fineman, Mihailis Diamantis, Joan MacLeod Heminway, Stephen Mitchell, Tami Parr, Gabriel Rauterberg, Daniel Rosenbaum, Nadav Shoked, Richard Squire, Sarah Swan, Andrew Verstein, Joseph Yockey, and participants at the 2023-2024 MSU Law Faculty Workshop Series, the 2024 Annual Meeting of the Canadian Law and Economics Association, the 2024 Annual Meeting of the American Association of Law Schools Business Associations Works-In-Progress session, the 2023 State and Local Government Works-In- Progress Conference, and the 2023 Chicagoland Junior Scholars Conference for their comments. I also thank the MSU Law Library for its research assistance\u2014including Library Director Jane Meland and research assistant Julia Luttig\u2014and MSU Law for its summer research support to write this Article. Lastly, heartfelt thanks to the editors of the Harvard Business Law Review\u2014 particularly Raj Ashar and Jamie Corbett\u2014for their meticulous edits. All errors are my own.<\/span><\/h6>\n\n\n\n

Since the turn of the millennium, diverse cities\u2014large and small, red and blue\u2014have undertaken initiatives aimed at the governance of firms. These novel initiatives aim to constrain executive compensation, require board diversity, promote stakeholder governance, support the establishment of worker cooperatives, and beyond. These developments mean we must add localities to the conventional framework of firm governance. As that framework has been traditionally conceived, entities and their governance are based primarily in state law, which is supplemented by federal law, the law of foreign jurisdictions, and the rules of self-regulatory bodies and professional organizations. Within this complex and multidimensional tapestry, there has been little meaningful role for local government\u2014until now. Localities have seized their formal and informal power to push through the margins of how firms are formed and governed.<\/p>\n\n\n\n

\n\n\n\n
CONSUMER PROTECTION<\/h5>\n\n\n\n

“PRICE DISCRIMINATION” DISCRIMINATION<\/a><\/h3>\n\n\n\n
Talia B. Gillis3<\/a><\/sup>Associate Professor, Columbia Law School. The author would like to thank Ian Ayres, Nikita Aggarwal, Neil Bhutta, Matthew Bruckner, Jessica Bulman-Pozen, Raul Carrillo, Kelly Cochran, Luke Herrine, Howell Jackson, Madhav Khosla, Ela Leshem, Wenli Li, Dorothy Lund, Justin McCrary, Lev Menand, Vitaly Meursault, Haggai Porat, Jeff Sovern, Eric Talley, Rory Van Loo, and participants in the Cardozo Law Symposium on Automating Bias, the Wharton FinReg Conference 2022, the Alabama Law Faculty Colloquium, the Wayne State Faculty Workshop, the NYU Public Law Workshop and the NYU Colloquium on Innovation Policy for thoughtful comments. Brent Allen, Elena Carroll-Maestripieri, Susie Emerson, Sean Kwon, DanLan Luo, Ryan Sandler, Sahil Soni, and Reece Walter provided excellent research assistance.<\/span><\/h6>\n\n\n\n

Credit price personalization, where lenders set prices based on individual borrower and loan characteristics, is a common practice across many loan types, with conventional accounts of its harms focusing on the ways in which risk-based pricing, or setting prices based on borrowers\u2019 credit risk, can lead to disparities for protected groups like racial minorities and women. This Article examines an often-overlooked yet potentially harmful form of price personalization\u2014charging borrowers different rates based on their willingness-to-pay, known as price discrimination\u2014and argues that this practice can exploit vulnerable borrowers, including protected groups like racial minorities and women, by imposing higher costs unrelated to their credit risk, resulting in what I term \u201cprice discrimination\u201d discrimination. Beyond entrenching financial disparities, price discrimination can exacerbate default risks, especially as the use of big data and artificial intelligence can make price discrimination more pervasive.<\/p>\n\n\n\n

\n\n\n\n
TECHNOLOGY & INNOVATION<\/h5>\n\n\n\n

ENDING THE CRYPTO TAX HAVEN<\/a><\/h3>\n\n\n\n
Noam Noked4<\/a><\/sup>Associate Professor, Faculty of Law, The Chinese University of Hong Kong (noam. noked@cuhk.edu.hk). I thank Zachary Marcone, Omri Marian, Bob Michel, Paul Millen, Vincent Ooi, and Sarah Sonnenfeld for their helpful comments. This Article benefited from insightful feedback received at the Annual Conference of the Tax Research Network, the GREIT Lisbon Summer Course, the International Roundtable on Taxation and Tax Policy, and the UC Irvine Symposium on Taxation, and seminars of the International Fiscal Association Hong Kong Branch and the Hebrew University Faculty of Law. The work described in this article was fully supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. CUHK 14609022).<\/span><\/h6>\n\n\n\n

There is growing global concern regarding the use of crypto for tax evasion and financial crimes. To address this problem, over sixty jurisdictions have recently committed to implement the Crypto-Asset Reporting Framework (CARF). CARF transposes the Common Reporting Standard (CRS)\u2014designed for the traditional financial industry\u2014onto the crypto industry. Under CARF, certain crypto intermediaries are treated like traditional financial institutions: they must identify and report crypto owners who are tax residents of other jurisdictions.<\/p>\n\n\n\n

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

INSIDER TRADING BY OTHER MEANS<\/a><\/h3>\n\n\n\n
Sureyya Burcu Avci, Cindy A. Schipani, H. Nejat Seyhun, & Andrew Verstein5<\/a><\/sup>Sureyya Burcu Avci, Visiting Scholar, University of Michigan; Cindy A. Schipani, Merwin H. Waterman Collegiate Professor of Business Administration and Professor of Business Law, University of Michigan; H. Nejat Seyhun, Jerome B. & Eilene M. York Professor of Business Administration and Professor of Finance, University of Michigan; Andrew Verstein, Professor of Law, UCLA School of Law. We are grateful for the support of our tireless research assistants: Drew Downing, Amy Jiang, Jacob Ottone, Lance Tianna, and Steve Verhoff. Likewise, Kevin Gerson, Henry Kim, and Ben Nyblade were diligent and creative in supporting our research. For helpful comments, we thank Jesse Fried, Louis Kaplow, Fernan Restrepo, Holger Spamann, Kathy Spier, Steven Shavell, Roberto Tallarita, and the participants in the UCLA-USC Business Law Workshop, the Harvard Law School Law & Economics Workshop, the 2025 Stanford Law and Economics Seminar, the 2023 American Law and Economics Association Annual meeting, and the 7th International Conference on Multidisciplinary Scientific Studies, Turkey, 2024. We also wish to thank the Mitsui Life Financial Research Center at the Stephen M. Ross School of Business for financial support of this project.<\/span><\/h6>\n\n\n\n

For more than thirty years, perhaps the most prevalent strategy for insider trading has gone undetected and unaddressed. This Article uncovers the techniques by which executives and directors sell overvalued stock worth more than $100 billion per year, shifting losses to ordinary investors. The basic idea is that insiders conceal their suspicious trades by publicly reporting them (as they are required to do) in ways that confuse or discourage investigators. We develop a taxonomy of concealment strategies, complete with suggestive examples. We then empirically test our taxonomy using a database of essentially all stock trades since 1992. We find that insiders who trade using the subterfuges we describe outperform the market by up to 20% on average. Worse yet, we find evidence that this simple subterfuge works. Essentially no one has ever been prosecuted for undertaking one of these suspicious trades. Nor do journalists or scholars seem to appreciate them. Accordingly, we call for scholars and prosecutors to cast a wider net in their studies and market surveillance, then discuss implications for the design of insider-trading reporting requirements and related legal rules.<\/p>\n","protected":false},"excerpt":{"rendered":"

SECURITIES & FINANCIAL REGULATION CAN SECTION 11 BE SAVED?: \u201cTRACING\u201d A PATH TO ITS SURVIVAL John C. Coffee, Jr. & […]<\/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-5347","page","type-page","status-publish","hentry"],"jetpack_shortlink":"https:\/\/wp.me\/PgKEUK-1of","jetpack-related-posts":[{"id":5315,"url":"https:\/\/journals.law.harvard.edu\/hblr\/","url_meta":{"origin":5347,"position":0},"title":"HOME","author":"wgu","date":"February 16, 2025","format":false,"excerpt":"FEATURED ESSAY \u2022 SECURITIES & FINANCIAL REGULATION CAN SECTION 11 BE SAVED?: \u201cTRACING\u201d A PATH TO ITS SURVIVAL John C. 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