Securities Law

2 posts

An Appointment with Time: Defining the Scope of a Timely Challenge After Lucia v. SEC

By Dustin G. Graber

In its Appointments Clause jurisprudence, the Supreme Court has articulated a “timely challenge” requirement for litigants contesting the appointment of Officers of the United States. Most recently, the Court recited this language in Lucia v. SEC, a case in the October 2017 term, where it granted the petitioner a new hearing before a Securities and Exchange Commission Administrative Law Judge after finding a violation of the Appointments Clause. However, the Court has yet to provide a concrete definition for the phrase.

This Note seeks to fill this gap by providing a comprehensive framework to assess the timeliness of these constitutional challenges. It begins by tracing the doctrinal evolution from its origin in Ryder v. United States to its present iteration. Coupled with Court’s discretionary approach to nonjurisdictional constitutional issues raised in the first instance on appeal, this Note argues that review by a constitutionally valid officer is necessary to extinguish the timeliness of a challenge. This reasoning draws upon the Court’s treatment of the de facto officer and de facto validity doctrines in the Appointments Clause context and tests it in the context of a hypothetical SEC proceeding.

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Socially Accountable Investing: Applying Gartenberg v. Merrill Lynch Asset Management

By Zachary Barker

In the past several years, the investment management industry has seen the tremendous growth of mutual funds that invest according to principles of socially responsible investment (SRI). What is missing from this growing sector, however, is any oversight as to whether these funds actually accomplish their socially conscious mission. With the Securities and Exchange Commission reluctant to police “social disclosure,” the unregulated promises of these SRI funds present a significant consumer protection risk.

This Note proposes that existing securities laws provide a potential avenue to effective SRI fund regulation without the need for new regulatory action. The rules of fiduciary obligation for mutual fund directors imposed by § 36(b) of the Investment Company Act and the landmark decision Gartenberg v. Merrill Lynch Asset Management, which until now have largely been applied to funds’ financial performance, could easily be adapted by SRI fund investors to ensure a modicum of oversight for those funds’ social performance. State laws governing the management of public benefit corporations, which impose on directors a duty to disclose and compare corporate social performance, can provide potential principles for evaluating social performance.

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