Transnational takeover talk - Regulations relating to tender offers and insider trading in the United States, the United Kingdom, Germany, and Australia

University of Cincinnati Law Review

Volumn 66, Issue 4, 1998, Pages 1133-1176

  Karmel, Roberta S ^a,b  

^a BROOKLYN LAW SCHOOL   (United States)

^b Kelley Drye and Warren LLP ^*  (United States)

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EID: 22444452147     PISSN: 00096881     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (250)

1. See Arthur R. Pinto, Corporate Takeovers Through the Public Markets in the United States, 42 AM. J. COMP. L. 339, 340-41, 351-53 (1994).
2. Pub. L. No. 90-439, 82 Stat. 454 (1968) (codified as amended at 15 U.S.C. §§ 78m(d)-(e), n(d)-(f) (1994)).
3. See Jill E. Fisch, Imprudent Power: Reconsidering U.S. Regulation of Foreign Tender Offers, 87 Nw. U. L. REV. 523, 525-26 (1993).
4. See id. at 526.
5. See Exchange Act § 13(d), 15 U.S.C. § 78m(d) (1994).
6. See 17 C.F.R. § 240.13d-101 (1997).
7. See id.
8. See id. § 240.14d-100.
9. See id. § 240.14d-2(b).
10. See Tender Offers, Exchange Act Release No. 34-12676, 41 Fed. Reg. 33,004 (1976).
11. The rule proposed was Proposed Rule 14d-1(b)(1). See Tender Offers, Exchange Act Release No. 34-16385, 44 Fed. Reg. 70,349 (1979).
12. See THOMAS LEE HAZEN, 1 THE LAW OF SECURITIES REGULATION § 11.13, at 617 (3d ed. 1996).
13. See id. at 619.
14. See, e.g., Wellman v. Dickinson, 475 F. Supp. 783 (S.D.N.Y. 1979).
15. See Hanson Trust PLC v. SCM Corp., 774 F.2d 47 (2d Cir. 1985).
16. See Exchange Act § 14(d), 15 U.S.C. § 78n(d); 17 C.F.R. § 240.14d-10 (1997).
17. 15 U.S.C. § 78n(e) (1994).
18. 17 C.F.R. § 240.14e-3 (1997).
19. See CTS Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 79 (1987); Santa Fe Indus., Inc. v. Green, 430 U.S. 462 (1977).
20. 472 U.S. 1, 8 (1985).
21. See DENNIS J. BLOCK ET AL., THE BUSINESS JUDGMENT RULE 52-55, 124-26 (4th ed. 1993).
22. See Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1985).
23. See BLOCK ET AL., supra note 21, at 233-708.
24. See Roberta S. Karmel, The Duty of Directors to Non-Shareholder Constituencies in Control Transactions - A Comparison of U.S. and U.K. Law, 25 WAKE FOREST L. REV. 61, 66-68 (1990);
25. Roberta Romano, The Political Economy of Takeover Statutes, 73 VA. L. REV. 111 (1987).
26. See PETER XUEREB, THE RIGHTS OF SHAREHOLDERS 10-11 (1989).
27. See 4 RICHARD M. BUXBAUM & KLAUS J. HOPT, LEGAL HARMONIZATION AND THE BUSINESS ENTERPRISE 190 (1988).
28. th ed. 1989) [hereinafter City Code on Takeovers and Mergers].
29. See id. at Rule 10.
30. See id. at Rules 9.1-9.3, 10.
31. See id. at Rule 9.3
32. See id. at Rule 17.1.
33. Companies Act, 1985, §§ 185-210 (4th ed. Halsbury's Statutes of England and Wales 1991) (Eng.).
34. See Edward F. Greene et al., Toward a Cohesive International Approach to Cross-Border Takeover Regulation, 51 U. MIAMI L. REV. 823, 838 (1997).
35. City Code on Takeovers and Mergers, supra note 27, General Principles.
36. See id. at Rule 2.2.
37. See id. at Rule 24.
38. See id. at Rule 30.1.
39. See id. at Rule 3.1.
40. See id. at Rule 30.2. Detailed disclosure requirements for this document, similar to those imposed upon the bidder, are also specified. See id. at Rule 25.
41. See id. at Rule 31.1. If there is an increase in offering price or another material change, the offer must be kept open for at least an additional 14 days. See id. at Rule 31.4. The offer is generally conditioned upon the bidder obtaining at least 50% of the target's voting rights; this condition must be satisfied within 60 days of the date on which the initial offer was made. See id. at Rule 35. In addition, the offer cannot continue if it has not become unconditional as to acceptances within 60 days. In either case, if the offer lapses without meeting these requirements, the bidder and persons acting in concert with it cannot make a new offer for a period of 12 months without the consent of the Panel. See id. at 35.1.
42. See id. at Rule 34.
43. See id.
44. See Simon MacLachlan & William MacKesy, Acquisitions of Companies in Europe - Practicality, Disclosure, and Regulation: An Overview, 23 INT'L LAW. 373, 387-88 (1989).
45. City Code on Takeovers and Mergers, supra note 27, General Principles.
46. See 4 BUXBAUM & HOPT, supra note 26, at 181-82; New Dreams at Deutsche Bank, ECONOMIST, June 22, 1991, at 79.
47. See Greene et al., supra note 33, at 835; see also David J. Berger, A Comparative Analysis of Takeover Regulation in the European Community, LAW & CONTEMP. PROBS., Autumn 1992, at 53, 68-74.
48. See Takeover Code of the Exchange Export Commission at the Federal Ministry of Finance, July 14, 1995, translated in the New German Takeover Code, Cleary, Gottlieb, Steen & Hamilton, Annex 1 (1996), at 7.
49. See id. at 835.
50. See Companies (Acquisition of Shares) Act, 1980 (Austl.), Austrailasian Legal Information Institute: Commonwealth Numbered Acts (last modified Mar. 11, 1997) 〈http://www.austlii.edu.au/au/legis/cth/ num_act.html〉 [hereinafter National Takeovers Code]; J.P. Hambrook, Australia, in 10C INTERNATIONAL CAPITAL MARKETS AND SECURITIES REGULATION § 10.11(3) (Harold S. Bloomenthal & Samuel Wolff eds., 1997).
51. See National Takeovers Code, supra note 49, § 18(1); Hambrook, supra note 49, § 10.11(5).
52. See National Takeovers Code, supra note 49, § 22(1); Hambrook, supra note 49, § 10.11(5).
53. See National Takeovers Code, supra note 49, § 16(2); Hambrook, supra note 49, § 10.11(5).
54. See Hambrook, supra note 49, § 10.11(6).
55. See id. § 10.11(5).
56. See National Takeovers Code, supra note 49, §§ 42(1), (2); Hambrook, supra note 49, § 10.11(10).
57. See National Takeovers Code, supra note 49, § 43(3); Hambrook, supra note 49, § 10.11(11).
58. See Securities and Exch. Comm'n v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir. 1968).
59. See Council Directive 89/592 of 13 November 1989 Coordinating Regulations on Insider Dealing, 1989 O.J. (L. 334) 30, available in LEXIS, Intlaw Library, ECLaw File [hereinafter EU Insider Trading Directive].
60. 17 C.F.R. § 240.14e-3 (1997).
61. 445 U.S. 222 (1980).
62. See id. at 243, 245.
63. See Tender Offers, Exchange Act Release No. 34-17120, 45 Fed. Reg. 60,410 (1980).
64. 947 F.2d 551 (2d Cir. 1991) (en banc).
65. See id. at 561.
66. See id.
67. 117 S. Ct. 2199 (1997).
68. Id. at 2217 (quoting 15 U.S.C. § 78n(e) (1994)).
69. See id. at 2218 n.19.
70. Id. at 2219.
71. Id. at 2217 n. 17; see also infra note 238 and accompanying text.
72. See 15 U.S.C. §§ 78u(d)(1), (d)(3), 78u-2, 78u-3 (1994).
73. See id. § 78u(d)(1).
74. See id. § 78u-1(a)(3); see also Donald C. Langevoort, The Insider Trading Sanctions Act of 1984 and Its Effect on Existing Law, 37 VAND. L. REV. 1273, 1280-81 (1984).
75. See 15 U.S.C. § 78t-1(a).
76. See id. § 78u-1(e).
77. See id. § 78ff(a).
78. See id. § 78b(1).
79. See supra note 58 and accompanying text. The Single European Act of 1986, 1987 O.J. (L 169), art. 13, set a goal of achieving complete regulatory harmony and economic unity by December 31, 1992. See Manning G. Warren III, The Regulation of Insider Trading in the European Community, 48 WASH. & LEE L. REV. 1037, 1037 n.2 (1991).
80. See Amy E. Stutz, Note, A New Look at the European Economic Community Directive on Insider Trading, 23 VAND. J. TRANSNAT'L L. 135, 155-61 (1990).
81. France was the first European country to ban insider trading and it did so in 1967. See id. at 164-65. When the EU Insider Trading Directive was passed, insider trading was a criminal offense in the United Kingdom, see id., but not violative of any statute in Germany. See Ursula C. Pfeil, Comment, Finanplatz Deutschland: Germany Enacts Insider Trading Legislation, 11 AM. U. J. INT'L L. & POL'Y 137, 137 (1996).
82. EU Insider Trading Directive, supra note 58, art. 1, § 1.
83. Id. art. 2, § 1.
84. Id.
85. Id. art. 3.
86. Id. art. 4.
87. See Thomas Lee Hazen, Defining Illegal Insider Trading - Lessons from the European Community Directive on Insider Trading, LAW & CONTEMP. PROBS., Autumn 1992, at 231, 236.
88. See Thomas Lee Hazen, LAW & CONTEMP. PROBS., 1992, at 231 id.
89. See EU Insider Trading Directive, supra note 58, art. 6. The Directive states, in part, that "[e]ach Member State may adopt provisions more stringent than those laid down by this Directive or additional provisions, provided that such provisions are applied generally." Id.
90. Id. art. 13.
91. See JACQUELINE A.C. SUTER, THE REGULATION OF INSIDER DEALING IN BRITAIN 3 (1989).
92. See HAROLD S. BLOOMENTHAL & SAMUEL WOLFF, 3E SECURITIES AND FEDERAL CORPORATE LAW § 15.08(6)(b) (1997).
93. See id. It was then amended by the Financial Services Act of 1986.
94. See Mark Stamp & Carson Welsh, United Kingdom, in INTERNATIONAL INSIDER DEALING 91, 92 (Mark Stamp & Carson Welsh eds., 1996).
95. See id. at 122. The London Stock Exchange monitors trading in securities listed on the exchange and investigates apparent cases of insider trading. See id. at 118. Because the sanctions by the Exchange may only be imposed against its members, its enforcement reach is significantly restricted. See id. at 121-22.
96. Criminal Justice Act, 1993, § 52 (4th ed. Halsbury's Statutes of England and Wales 1991) (Eng.); see also Stamp & Welsh, supra note 93, at 92.
97. See Criminal Justice Act, 1993, §§ 56, 60(4).
98. Stamp & Welsh, supra, note 93, at 97.
99. See id. at 101.
100. See Criminal Justice Act, 1993, § 53; Stamp & Welsh, supra note 93, at 110.
101. See id. at 111.
102. See id. at 112.
103. See id. at 112-13.
104. See id. at 113.
105. See id. at 114.
106. See id. at 116.
107. See id. at 92.
108. The law, known as the Securities Trading Act, is divided into 7 sections: (1) States the scope of application and definition of key terms; (2) Establishes a federal supervisory authority for securities trading and its dudes, obligations and powers; (3) Sets forth the scope of insider trading, defines insiders, prohibits insider trading, requires the disclosure of material information. This part implements the insider trading prohibitions including the requirements of the EU Insider Trading Directive. The first section of Part 3, § 12 defines "insider securities," a critical definition because the insider trading prohibition applies only to information relating to "insider securities" or to issuers of "insider securities"; (4) Establishes notification and publication obligations upon changes in the voting participation in listed companies (to 5%, was formerly 25%) and with respect to potentially material information; (5) Establishes rules of conduct for investment services firms (including brokers); (6) Prescribes criminal penalties and administrative fines; (7) Sets forth transitional provisions relating to the disclosure requirements in Part 4. The author has utilized the English translation of the Securities Trading Act by Marlene Van Dyke and Chistoy von Dryarder of Cleary, Gottlieb, Steen & Hamilton. Their translation is printed along with explanations in a booklet distributed by the Deutshe Börse AG, and entitled INSIDER TRADING AND AD HOC DISCLOSURE PURSUANT TO THE GERMAN SECURITIES TRADING ACT 30-56 (1994) (copy on file with the University of Cincinnati Law Review).
109. The EU Insider Trading Directive required Member States to adopt insider trading laws by June 1992. See Stephen J. Leacock, In Search of a Giant Leap: Curtailing Insider Trading in International Securities Markets By the Reform of Insider Trading Laws Under European Union Council Directive 89/592, 3 TULSA J. COMP. & INT'L L. 51, 55 (1995). When Germany had not responded, the European Commission instituted infringement proceedings in October of 1992. The insider law was finally passed on July 8, 1994. See id. at 62-63.
110. The Insider Trading Guidelines were first published in 1970 and revised in 1976 and again in 1988. See id. at 61. The Guidelines amounted to no more than a moral code to which people could voluntarily bind themselves by contract. See id. at 66-67. The sole remedy was disgorgement of trading profits, unless a party refused to disgorge, in which case a suit for breach of contract was available. See id. The Guidelines created a Board of Inquiry, but without a filed complaint, there was generally no Board power to investigate. See id. Further, because the compliance system usually required corporations to bring actions against their own management, complaints were rarely filed. See id. Finally, resources were limited to the point that the Board lacked effectiveness. See id. at 61, 65-67; see also Pfeil, supra note 80, at 141.
111. INSIDER TRADING PROHIBITIONS AND AD HOC DISCLOSURE PURSUANT TO THE GERMAN SECURITIES TRADING ACT, supra note 107, § 13(1), at 40.
112. Id. § 14(2), at 40.
113. Id. § 13(1), at 40.
114. See id. § 13(2), at 40.
115. See id. § 14(1), at 40.
116. See id. Pt. 2, §§ 3-11, at 33-38. Power also resides at the Lander or state and exchange levels. All credit institutions with headquarters in Germany, their foreign branch offices, and other market participants must disclose their securities and derivative transactions (as defined in the law) on a daily basis. The Federal Supervisory Authority for Securities Trading (FSA) is responsible for verifying whether the disclosure requirements have been met. If the FSA suspects insider trading activity, it may proceed further with an investigation. See id. § 9(1), at 36. Two common motivations for a heightened investigation are: (1) to ascertain specific individuals involved in the suspected trading activity, and (2) to address inquiries of issuers of securities. Penalties may be assessed for intentional or negligent failure to comply with reporting requirements, and for failure to comply with the FSA's requests for additional information. Once a suspicion is confirmed, the matter is turned over to a state attorney's office for prosecution.
117. See id. § 15, at 40-41.
118. See Harmut Krause, The German Securities Trading Act (1994): A Ban on Insider Trading and an Issuer's Affirmative Duty to Disclose Material Nonpublic Information, 30 INT'L LAW. 555, 576-77 (1996).
119. See R. TOMASIC ET AL., CORPORATION LAW, PRINCIPLES, POLICY AND PROCESS § 12.24 (2d ed. 1992).
120. Roman Tomasic & Brendan Pentony, Insider Trading, LEGAL SERV. BULL., Feb. 1989, at 3, 4.
121. See Marie McDonald, Australia, in INTERNATIONAL INSIDER DEALING, supra note 93, at 439-40.
122. See id. at 442.
123. The Corporations Law, § 1002G(1) (Austl.), The Corporations Law (last modified Feb. 17, 1998) 〈http://scaleplus.law.gov.au/html/histact/2/1056/top.htm〉 [hereinafter Corporations Law].
124. See id. § 1002G(2).
125. Id. § 1002E(a).
126. See id. § 1002E(b).
127. Id. § 1002M.
128. See id. § 1002G(3).
129. See id. § 1000T(2)(a).
130. See id. § 1000T(2)(b).
131. See id. § 1000S. The statute appears to create an exemption for investment banks so that they can assist clients in establishing a position in the case of a tender offer. However, that use appears to be undermined if the exception may not be used where a broker or investment bank has given advice on the specific securities.
132. See McDonald, supra note 120, at 457.
133. The maximum fine for corporations under the old law was Au$50,000.
134. The maximum fine for individuals under the old law was Au$20,000.
135. See Corporations Law, supra note 122, §§ 1005, 1013.
136. See id.
137. Id. § 130(1)(d).
138. 117 S. Ct. 2199 (1997). For further discussion of this case, see supra text accompanying notes 66-70.
139. Id. at 2217 n.17.
140. See, e.g., Carpenter v. United States, 484 U.S. 19 (1987) (columnist's duty to his newspaper); Securities and Exch. Comm'n v. Materia 745 F.2d 197 (2d Cir. 1984) (employee's duty to his employer and its clients); United States v. Newman, 664 F.2d 12 (2d Cir. 1981) (investment banker's duty to his firm).
141. 737 F. Supp. 269 (S.D.N.Y. 1990).
142. See id. at 271.
143. Id. at 274.
144. 947 F.2d 551 (2d Cir. 1991) (en banc). For further discussion of this case see supra text accompanying notes 63-65.
145. See id. at 555.
146. See id. at 564.
147. See id. at 570.
148. See supra text accompanying notes 64-65.
149. See Criminal Justice Act, 1993, §§ 56, 57, 60(4) (4th ed. Halsbury's Statutes of England and Wales 1991) (Eng.).
150. See Matthew White, The implications for securities regulation of new insider dealing provisions in the Criminal Justice Act 1993, 16 COMPANY LAW. 163, 166 (1995).
151. See Stamp & Welsh, supra note 93, at 101-03.
152. Id.
153. INSIDER TRADING PROHIBITIONS AND AD Hoc DISCLOSURE PURSUANT TO THE GERMAN SECURITIES TRADING ACT, supra note 107, § 13(1)(3), at 40.
154. Tony Hickinbotham & Christoph Vaupel, Germany, in INTERNATIONAL INSIDER DEALING, supra note 93, at 129, 136.
155. See Tony Hickinbotham Christoph Vaupel, INTERNATIONAL INSIDER DEALING, id. 129
156. See McDonald, supra note 120, at 443.
157. See Ampolex Ltd. v. Perpetual Trustee Co. Ltd., BC 9601889, 1996 NSW LEXIS 2827, at *26 (Supreme Court of New South Wales, May 23, 1996).
158. Corporations Law, supra note 122, § 1002G(1)(a).
159. Id. § 1002A(1).
160. Ampolex, 1996 NSW LEXIS 2827 at *26-27 (analyzing § 1002C).
161. American Banana Co. v. United Fruit Co., 213 U.S. 347, 357 (1909); accord Foley Bros., Inc. v. Filardo, 336 U.S. 281, 285 (1949).
162. 15 U.S.C. §§ 77(b)(7), 78c(a)(17) (1994).
163. Id. § 78dd(b). The Securities and Exchange Commission (SEC) has never passed any rules to implement this section.
164. See Bersch v. Drexel Firestone, Inc., 389 F. Supp. 446, 453-55 (S.D.N.Y. 1974), rev'd in part, 519 F.2d 974 (2d Cir. 1975).
165. 405 F.2d 200 (2d Cir. 1968).
166. See id. at 205.
167. See id. at 210.
168. See id. at 204, 206.
169. Id. at 206. More recently, the "silence" of Congress on the issue of extraterritoriality has been noted. Alfadda v. Fenn, 935 F.2d 475, 478 (2d Cir. 1991).
170. See, e.g., Robinson v. TCI/U.S. West Communications, Inc., 117 F.3d 900, 906 (5th Cir. 1997); Zoelsch v. Arthur Andersen & Co., 824 F.2d 27, 33 (D.C. Cir. 1987); Bersch v. Drexel Firestone, Inc. 519 F.2d 974, 993 (2d Cir. 1975); Leasco Data Processing Equip. Corp. v. Maxwell, 468 F.2d 1326 (2d Cir. 1972). Some circuits require a lesser quantum of conduct - that the domestic conduct be significant to the fraud, rather than a direct cause of it. See, e.g., Securities and Exch. Comm'n v. Kasser, 548 F.2d 109 (3d Cir. 1977); Continental Grain (Australia) Pty. Ltd. v. Pacific Oilseeds, Inc., 592 F.2d 409, 420-21 (8th Cir. 1979); Butte Mining PLC v. Smith, 76 F.3d 287, 290-91 (9th Cir. 1996).
171. 54 F.3d 118 (2d Cir. 1995), cert. denied sub nom. Berkley v. Itoba Ltd., 516 U.S. 1044 (1996).
172. 871 F.2d 252 (2d Cir.), modified, 890 F.2d 569 (2d Cir. 1989).
173. See id. at 262-63.
174. See Consolidated Gold Fields, 890 F.2d at 569.
175. See Consolidated Gold Fields, 871 F.2d at 263.
176. See Jeremy G. Epstein, Takeover Panel Regains Control in B.A.T. Ruling, N.Y.L.J., Dec. 4, 1989, at 41. The City Code enjoins target companies from taking action to frustrate a bid. See supra note 44 and accompanying text.
177. RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES (1987).
178. Id. § 403. Section 403 of the Restatement provides: Limitations on Jurisdiction to Prescribe (1) Even when one of the bases for jurisdiction under § 402 is present, a state may not exercise jurisdiction to prescribe law with respect to a person or activity having connections with another state when the exercise of such jurisdiction is unreasonable. (2) Whether exercise of jurisdiction over a person or activity is unreasonable is determined by evaluating all relevant factors, including, where appropriate: (a) the link of the activity to the territory of the regulating state, i.e., the extent to which the activity takes place within the territory, or has substantial, direct, and foreseeable effect upon or in the territory; (b) the connections, such as nationality, residence, or economic activity, between the regulating state and the person principally responsible for the activity to be regulated, or between that state and those whom the regulation is designed to protect; (c) the character of the activity to be regulated, the importance of regulation to the regulating state, the extent to which other states regulate such activities, and the degree to which the desirability of such regulation is generally accepted; (d) the existence of justified expectations that might be protected or hurt by the regulation; (e) the importance of the regulation to the international political, legal, or economic system; (f) the extent to which the regulation is consistent with the traditions of the international system; (g) the extent to which another state may have an interest in regulating the activity; and (h) the likelihood of conflict with regulation by another state. (3) When it would not be unreasonable for each of two states to exercise jurisdiction over a person or activity, but the prescriptions by the two states are in conflict, each state has an obligation to evaluate its own as well as the other state's interest in exercising jurisdiction, in light of all the relevant factors, Subsection (2); a state should defer to the other state if that state's interest is clearly greater.
179. See id. § 403(2)(d), (f)-(h).
180. See REPORT OF THE STAFF OF THE U.S. SECURITIES AND EXCHANGE COMMISSION, INTERNATIONALIZATION OF THE SECURITIES MARKETS, VII-21 to VII-23 (July 27, 1987);
181. see also Daniel L. Goelzer et al., The Draft Revised Restatement: A Critique from a Securities Regulation Perspective, 19 INT'L LAW. 431, 472-75 (1985).
182. See AMERICAN LAW INSTITUTE, FEDERAL SECURITIES CODE § 1905 (1980).
183. See RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES § 416. Section 416 provides: Jurisdiction to Regulate Activities Related to Securities (1) The United States may generally exercise jurisdiction to prescribe with respect to (a)(i) any transaction in securities carried out in the United States to which a national or resident of the United States is a party, or (ii) any offer to enter into a securities transaction, made in the United States by or to a national or resident of the United States; (b) any transaction in securities (i) carried out, or intended to be carried out, on an organized securities market in the United States, or (ii) carried out, or intended to be carried out, predominantly in the United States, although not on an organized securities market; (c) conduct, regardless of where it occurs, significantly related to a transaction described in Subsection (1)(b), if the conduct has, or is intended to have, a substantial effect in the United States; (d) conduct occurring predominantly in the United States that is related to a transaction in securities, even if the transaction takes place outside the United States; or (e) investment advice or solicitation of proxies or of consents with respect to securities, carried out predominantly in the United States. (2) Whether the United States may exercise jurisdiction to prescribe with respect to transactions or conduct other than those addressed in Subsection (1) depends on whether such exercise of jurisdiction is reasonable in the light of § 403, in particular (a) whether the transaction or conduct has, or can reasonably be expected to have, a substantial effect on a securities market in the United States for securities of the same issuer or on holdings in such securities by United States nationals or residents; (b) whether representations are made or negotiations are conducted in the United States; (c) whether the party sought to be subjected to the jurisdiction of the United States is a United States national or resident, or the persons sought to be protected are United States nationals or residents.
184. See Goldsmith Not Required to Comply with U.S. Securities Laws in B.A.T. Takeover, 21 SEC. REG. & L. REPT. (BNA) 1389, 1399 (1989).
185. See Problematic Practices Under Regulation S, Securities Act Release No. 33-7190, 60 Fed. Reg. 35,663 (1995); Offshore Offers and Sales, Securities Act Release No. 33-6863, 55 Fed. Reg. 18,306 (1990). A discussion of the Securities registration provisions applicable to foreign issuers is beyond the scope of this article.
186. See Concept Release on Multinational Tender and Exchange Offers, Securities Act Release No. 33-6866 n.2, 55 Fed. Reg. 23751 (1990) [hereinafter Concept Release].
187. See id.
188. See Greene et al., supra note 33, at 825-27, 833-34.
189. 890 F. Supp. 235 (S.D.N.Y. 1995).
190. Id. at 245.
191. See Greene et al., supra note 33, at 825-26.
192. See Concept Release, supra note 184, at 23,753; see, e.g., PacifiCorp Offer for The Energy Group PLC, SEC No-Action Letter, 1997 SEC No-Act. LEXIS 724 (June 25, 1997).
193. See International Tender and Exchange Offers, Exchange Act Release No. 34-29275, 56 Fed. Reg. 27,582 (1991).
194. See id. at 27,585.
195. See id.
196. See Multijurisdictional Disclosure and Modification to the Current Registration and Reporting System for Canadian Issuers, Exchange Act Release No. 34-29354, 56 Fed. Reg. 30,036 (1991).
197. See id. at 30,047.
198. See id. at 30,072.
199. Id. at 30,069-82.
200. See, e.g., Securities and Exch. Comm'n v. Unifund SAL, 910 F.2d 1028 (2d Cir. 1990); Securities and Exch. Comm'n v. Banca Della Svizzera Italiana, 92 F.R.D. 111 (S.D.N.Y 1981).
201. See Securities and Exch. Comm'n v. Wang, 699 F. Supp. 44, 46 (S.D.N.Y. 1988).
202. See Securities and Exch. Comm'n v. Wang, 44 S.E.C. 377; Litigation Release No. 12191, SEC Docket (Aug. 2, 1989).
203. See, e.g., Lawrence Collins, Problems of Enforcement in the Multinational Securities Market: A United Kingdom Perspective, 9 U. PA. J. INT'L. BUS. L. 487, 505-506 (1987);
204. Arthur R. Pinto, The Internationalization of the Hostile Takeover Market: Its Implications for Choice of Law on Corporate and Securities Law, 16 BROOK. J. INT'L L. 55, 60 (1990).
205. See Criminal Justice Act, 1993, § 62 (4th ed. Halsbury's Statutes of England and Wales 1991) (Eng.).
206. See Hickinbotham & Vaupel, supra note 153, at 140.
207. See id. at 140-41.
208. McDonald, supra note 120, at 450.
209. See supra text accompanying note 170.
210. See supra notes 176-81 and accompanying text.
211. See, e.g., Richards v. Lloyd's of London, [current] Fed. Sec. L. Rep. (CGH) ¶ 90, 134 (February 3, 1998) (en banc); Bonny v. Society of Lloyds, 3 F.3d 156 (7th Cir. 1993); Roby v. Corporation of Lloyds, 996 F.2d 1353 (2d Cir. 1993).
212. See Merritt B. Fox, Securities Disclosure in a Globalizing Market: Who Should Regulate Whom?, 95 MICH. L. REV. 2498 (1997).
213. See id. at 2532-50.
214. See id. at 2608-09.
215. See Merritt B. Fox, Insider Trading in a Globalizing Market: Who Should Regulate What? 5 LAW & CONTEMP. PROBS., Autumn 1992, at 263.
216. See Fisch, supra note 3, at 525.
217. Id.
218. See generally Greene et al., supra note 33; see also Edward F. Greene et al., Hegemony or Deference. U.S. Disclosure Requirements in the International Capital Markets, 50 BUS. LAW. 413 (1995); Pinto, supra note 201 at 76.
219. See Roberta S. Karmel, Discussion Paper, National Treatment, Harmonization and Mutual Recognition: International Bar Association, Capital Markets Forum (1993) (on file with the University of Cincinnati Law Review).
220. See Steven R. Salbu, Regulation of Insider Trading in a Global Marketplace: A Uniform Statutory Approach. 66 TUL. L. REV. 837, 838 (1992).
221. See James D. Cox, Rethinking U.S. Securities Laws in the Shadow of International Regulatory Competition LAW & CONTEMP. PROBS., Autumn 1992, at 157, 158-64.
222. See James D. Cox, LAW & CONTEMP. PROBS., id. at 165-69.
223. See James D. Cox, LAW & CONTEMP. PROBS., id. at 177-82.
224. See James D. Cox, LAW & CONTEMP. PROBS., id. at 185.
225. See Brian J. Lane, The Current Regulatory Perspective on International Offerings - Recent Developments and Contemplated Initatives, in INTERNATIONAL SECURITIES MARKETS 1, 21-22 (Beller & Mann eds., 1997).
226. There is an excellent summary of transnational enforcement efforts in insider trading cases and the Memoranda of Understanding negotiated by the SEC to assist in the investigation and prosecution of such cases in WILLIAM K.S. WANG AND MARC. I. STEINBERG, INSIDER TRADING §§ 14.4 (1996).
227. See Greene et al., supra note 33, at 852-53.
228. See TREATY ESTABLISHING THE EUROPEAN COMMUNITY, Mar. 25, 1957, art. 54(3)(g).
229. See supra text accompanying note 78.
230. Proposal for a Thirteenth Council Directive on Company Law Concerning Takeover and Other General Bids, 1989 O.J. (C64) 8.
231. See Ingrid Depser, Amended EC Proposal for a 13th Council Directive on Company Law Concerning Takeover and other General Bids, INT'L BUS. LAW., Nov. 1991, at 483, 484.
232. See Ingrid Depser, INT'L BUS. LAW., id. 1991, 483
233. See Ingrid Depser, INT'L BUS. LAW., id.
234. 89/C 240/09, Sept. 14, 1990.
235. See Lois Moore, The EC's Proposed Takover Directives, N.Y.L.J., May 28, 1991, at 1. Takeover activity has continued to increase.
236. See Merger Monday, ECONOMIST, Oct 18, 1997, at 61.
237. See Amended Commission Proposal for a Thirteenth Council Directive on Company Law Concerning Takeover and Other General Bids, art. 6(a), 1989 O.J. (L395) 2, 6.
238. See id. art. 6(3).
239. See 97/C 378/11, Dec. 13, 1997.
240. See Euro-takeovers, FIN. TIMES, Jan. 14, 1997, at 17.
241. See Roberta S. Karmel, Outsider Trading on Confidential Information - A Breach In Search of a Duty, 20 CARDOZO L. REV. (forthcoming 1998).
242. Probably in recognition of this rarely articulated premise behind Rule 14e-3, the Supreme Court in O'Hagan reserved judgment on whether "warehousing," that is, purchasing of target company stock by confederates of the bidder, is insider trading. 117 S. Ct. 2199, 2217 n.17 (1997).
243. 29 I.L.M. 309 (1990).
244. See Harvey L. Pitt & David B. Hardison, Games Without Frontiers: Trends in the International Response to Insider Trading, LAW & CONTEMP. PROBS., AUTUMN 1992, at 199, 201-07.
245. See Larry R. Lavoie, The Insider Trading and Securities Fraud Enforcement Act of 1988, 22 SEC. & COMMODITIES REG. (Standard & Poor's) 1, 1 (Jan. 11, 1989); White, supra note 149, at 164; TOMASIC ET AL., supra note 118, § 12.25, at 845-46.
246. See O'Hagan, 117 S. Ct. at 2210 (1997); White, supra note 149, at 163; Justin Mannolini, Insider Trading - The Need for Conceptual Clarity, 14 COMPANY & SEC. L.J. 151, 155 (1996).
247. See Leacock, supra note 108, at 63-64.
248. See INSIDER TRADING PROHIBITIONS AND AD HOC DISCLOSURE PURSUANT TO THE GERMAN SECURITIES TRADING ACT, supra note 107, at 9, 13.
249. Public choice theory suggests that regulations will tend to favor (subsidize) relatively small and well-organized groups that have a high per capita stake in the regulations, at the expense of relatively large poorly organized groups with a lower per capita stake in the program. In the case of the SEC, approximately 10,000 corporations prepare disclosure documents that support financial analysts, portfolio managers, and other securities market professionals. See SUSAN M. PHILLIPS & J. RICHARD ZECHER, THE SEC AND THE PUBLIC INTEREST 21-23 (1981).
250. Similarly, state laws in the United States are sympathetic to corporate managers who wish to resist hostile takeovers. See supra text accompanying notes 19-24.