Syllabus
Registration via LPIS
| Day | Date | Time | Room |
|---|---|---|---|
| Wednesday | 10/16/24 | 10:30 AM - 01:30 PM | D4.0.127 |
| Friday | 10/18/24 | 10:00 AM - 01:00 PM | D3.0.222 |
| Monday | 10/21/24 | 10:00 AM - 01:00 PM | D3.0.222 |
| Wednesday | 10/23/24 | 10:30 AM - 01:30 PM | D4.0.127 |
| Friday | 10/25/24 | 10:30 AM - 01:30 PM | D4.0.019 |
| Monday | 10/28/24 | 10:00 AM - 01:00 PM | D3.0.222 |
| Wednesday | 10/30/24 | 10:00 AM - 01:00 PM | D4.0.039 |
| Thursday | 10/31/24 | 10:00 AM - 01:00 PM | D4.0.039 |
The decision to become a public company by offering securities for sale to the public transforms the company. The capital raised provides an opportunity for the company to strategically develop its business by, for example, expanding market share, funding product research or building a new manufacturing facilities. Moreover, unlike bank financing, which requires acceptable collateral with a ready market value, a securities offering may raise millions of Euros without the need to own or encumber assets. Accessing public capital markets, however, mandates another type of transformation: a public company must operate under a complex legal framework of securities regulation, established primarily by government mandates. The reach of this securities regulation framework extends beyond a public company’s obligation to comply. It significantly shapes how the public securities markets function and to what degree they function efficiently.
This course examines this securities regulation framework from two perspectives. First, it focuses on the key legal requirements imposed on public companies under EU law and, for comparative purposes, US law. This comparative approach encourages analysis of different legislative approaches and their respective benefits and costs. Second, the course focuses on how these approaches affect the operation of securities markets. Fortunately, these two perspective provide a springboard for public policy analysis and consideration of alternative regulatory models. The course is divided into eight lectures that roughly track the sequence of regulatory challenges facing a new public company.
First Lecture: Introduction to Financial Markets, Capital Formation and Securities Regulation
Second Lecture: Initial Public Offering of Company Securities and Other Offering Schemes
Third Lecture: Summary of Market Structure and Listing Securities on a Regulated Market
Fourth Lecture: Public Company Disclosure, Insider Trading and the Role of Information in Pricing Securities
Fifth Lecture: Gatekeepers, Credit Rating Agencies and Whistleblowers
Sixth Lecture: Selected Prohibitions, Regulatory Devices and the Role of Private and Governmental Enforcement
Seventh Lecture: Corporate Governance and the Role of Shareholders (Agency Theory)
Eighth Lecture: The Role of Securities in Change of Control Transactions: Acquisitions and Hostile Takeovers
After completing this course, a student should have an understanding of the basic legal requirements mandated for public companies (particularly EU law requirements), the policy and economic rationales that support these requirements and potential alternative approaches to these current requirements.
Attendance is mandatory. Students must be present at least 80% of class time.
A student’s grade for this course is based on three components. Frist, class participation counts for 35% of the course grade. Second, students will form small groups and present to the class a legal analysis of an assigned securities regulation topic. A list of potential topics will be provided. This presentation component accounts for 30% of the course grade. Third, each student will submit a short research paper (5-7 pages) comparing two member state regulatory approaches to the same securities regulation issue. The student may select the topic or request assistance in selecting a topic. The short research papers must identify the relevant EU Regulation or Directive and Member State legal authority. This short research paper component accounts for 35% of the course grade.
Registration via LPIS will follow the usual first-come, first-served principle.
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No prior knowledge of securities regulation or finance is required for this course.
U.S. Securities & Exchange Commission (“SEC”) Disclaimer:
The U.S. Securities & Exchange Commission disclaims responsibility for any private publication or statement of any Commission employee or Commissioner. This course expresses the views of Brian Carroll, a Commission employee, and does not necessarily reflect those of the Commission, the Commissioners or other members of the Commission staff.
Use of this syllabus, course materials and lecture content for any purpose without the written authorization from the author / lecturer (Brian Carroll) is forbidden.
During course lectures, students are expected to be able to access information that is not an assigned reading. Therefore, students are required to bring to class a laptop computer or other device that can access information during class.
As appropriate, the lecture presentation will include select amendments to assigned provisions of Regulations and Directives, as well as certain proposed amendments.
This syllabus is subject to change.
| Unit | Date | Contents |
|---|---|---|
| 1 | Lecture No. 1: Introduction to Financial Markets, Capital Formation and Securities Regulation Assigned Reading:
EU Securities Regulation Fact Sheets on the European Union, May 31, 2023, click and read “European System of Financial Supervision (“ESFS”)” – “Legal Basis,” “Background and objectives,” and “Framework.” www.europarl.europa.eu.
Financial Service Action Plan (“FSAP”), May 11, 1999, COM (1999) 232. Read “Summary” and “Wholesale Market.” www.eur-lex.europa.eu.
European Commission, Directorate-General for Financial Stability, Financial Services and Capital Markets Union, go to “Capital markets union and financial markets,” go to “Capital market union,” and click and read “What is the capital markets union?” and “Capital market union 2020 action plan.” www.finance.ec.europa.eu.
U.S. Securities Regulation “Who Regulates Whom? An Overview of the U.S. Financial Regulatory Framework” Updated March 10, 2020, United States Congressional Research Service, read “Securities Regulation,” pp. 16-19.
Comparative Securities Regulation “Securities Regulation in Germany and the U.S” by Marvin Fechner & Travis Tipton, 2016 Comparative Corporate Governance and Financial Regulation 5, pp. 1-7.
Private Placement of Securities “Raising the Profile and Use of Private Placements in Europe” appearing in “Bridging the Growth Gap” Association of Financial Markets in Europe (“AFME”), February 2015, pp. 47-53. |
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| 2 | Lecture No. 2: Initial Public Offering of Company Securities and Other Offering Schemes Assigned Reading:
The Prospectus Prospectus Regulation (2017/1129/EU), 14 June 2017: The Prospectus, Recitals 1-7, Article 6 (1) - (3) and Annex 1 Prospectus; The Prospectus Summary, Recitals 28-33 & Article 7 (1) - (7); The Base Prospectus, Recitals 35-38 & Article 8 (1) - (2); The Universal Registration Document, Recital 39 & Article 9 (1) - (2) & (11); Simplified Disclosure Regime for Secondary Issuances, Recitals 48-50 & Article 14 (1) - (2); EU Growth Prospectus, Recital 51 & Article 15 (1) and No Prospectus Required, Recitals 12-17.
Initial Public Offering and Direct Listing Offering “Primary and Secondary Equity Markets in the EU - Final Report” by Oxera Consulting LLP, European Commission, Directorate-General for Financial Stability, Financial Services and Capital Markets, Directorate B-Horizontal policies, Unit B1 – Capital markets union, B-1049 Brussels, November 2020, pp. 126-143. www.oxera.com.
Special Purpose Acquisition Company (“SPAC”) “SPACs: Prospectus Disclosure and Investor Protection Considerations” ESMA Public Statement, July 15, 2021, ESMA32-384-5209, pp.1-7. |
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| 3 | Lecture No. 3: Summary of Market Structure and Listing Securities on a Regulated Market Assigned Reading:
Market Structure Markets in Financial Instruments Directive (2014/65/EU), 15 May 2014 (“MiFID II”): Introduction, Recitals 4- 6; Regulated Market, Recitals 13-14, Articles 4 (21), 44 - 47; Multilateral Trading Facility, Articles 4 (22), 18 & 19; SME Growth Market, Recitals 132-135, Articles 4 (12) & 132 and Systematic Internalisers [sic], Recitals 17 & 112.
“OECD Business and Finance Outlook 2016 – Chapter 4. Changing Business Models of Stock Exchanges and Stock Market Fragmentation,” pp. 119-139. www.oecd.org.
“Primary and Secondary Equity Markets in the EU - Final Report” by Oxera Consulting LLP, November 2020, European Commission, Directorate-General for Financial Stability, Financial Services and Capital Markets, Directorate B-Horizontal policies, Unit B1 – Capital Markets Union, B-1049 Brussels, pp. 53-79 & pp. 146-153. www.oxera.com.
Listing Securities on a Regulated Market Listing Directive (2001/34/EC), 28 May 2001: Recitals 9-11 and Articles 20, 21 & 25 (Review Schedule A of Annex 1).
Vienna Stock Exchange, website, www.wienerborse.at, read “Listings.” |
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| 4 | Lecture No. 4: Public Company Disclosure, Insider Trading and the Role of Information in Pricing Securities Assigned Reading:
Public Company Disclosure Market Abuse Directive (2014/596/EU), 16 April 2014: Inside information, Article 7 (1) (a) & (d) & (2)-(4) and Public disclosure of inside information, Article 17 (1), (4) (7) & (8).
Transparency Directive (2004/109/EC), 15 December 2004: Recitals 1, 2, 9-11 & 13; Annual financial reports, Article 4 (1) & (2); Half-yearly financial reports, Article 5 (1), (2) & (4) and Interim management statements, Article 6 (1) & (2).
Harmonisation [sic] of Transparency Requirements Directive (2013/50/EU), 23 October 2013: Recital 4.
“Disclosure of Inside Information” by Jennifer Payne, ECGI Working Paper Series in Law, Working Paper No. 422/2018, August 2019, pp. 1-14.
“MAR Guidelines: Delay in the disclosure of inside information,” ESMA, 20/10/2016 ESMA/2016/1478 EN pp. 1-5. esma.europa.eu
Insider Trading Market Abuse Directive (2014/596/EU), 16 April 2014: Insider dealing, Article 8; Unlawful disclosure of insider information, Article 10 and Prohibition of insider dealing and unlawful disclosure of inside information, Article 14.
“Comparing Insider Trading in the United States and in the European Union: History and Recent Developments” by Marco Ventoruzzo, pp. 574-586.
Information and Pricing Securities “The Essential Role of Securities Regulation” by Zohar Goshen and Gideon Poarchomovsky, 55 Duke Law Journal No. 4 (Feb. 2006) pp. 720-732. |
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| 5 | Lecture No. 5: Gatekeepers, Credit Rating Agencies and Whistleblowers Assigned Reading:
Gatekeepers “Beyond Liability: Rewarding Effective Gatekeepers” by Lawrence A. Cunningham, 92 Minn. L. Rev. 323 (2007), pp. 1-16.
“The Market for Securities and Its Regulation through Gatekeepers” by Casten Gerner-Beuerle, Temple International & Comparative Law journal, Vol. 23, No. 2 (2009), pp. 351-356 (“German Law”).
Credit Rating Agencies Credit Rating Agencies Regulation (2009/1060/EC), 16 September 2009: Recitals 1-2, 6 & 11. Credit Rating Agencies Regulation (2011/513/EU), 11 May 2011: Recitals 6 & 9.
“Regulatory Implementation of the Statement of Principles Regarding the Activities of Credit Rating Agencies – Final Report,” OICU-IOSCO, Technical Committee of the International Organization of Securities Commissions, FR04/11, Feb. 2011, pp. 8-10; pp. 20-23; 26-28 & 30-33. www.iosco.org.
ESMA website, go to and click “Esma’s Activities,” go to and lick “Investors and Issuer” go to, click and read “Credit Rating Agencies.” www.esma.europa.eu.
Whistleblowers Protections for Person Who Report Breaches (2019/1937/EU), 23 October 2019: Recitals 1-2, 5 & 7; Material scope, Article 2 (1) (a); Reporting through internal reporting channels, Article 7 (1); Reporting through external reporting channels, Article 10; Public disclosures, Article 15 (1), and Prohibition of retaliation, Article 19. |
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| 6 | Lecture No. 6: Selected Prohibitions, Regulatory Devices and the Role of Private and Government Enforcement Assigned Readings:
Short Selling Short Selling Regulation (2012/236/ EU), 14 March 2012: Recitals 1-5 & 31-34; Definition, Article 2 (1) (b) & Short and Long Positions, Article 3 (1).
Market Manipulation Market Abuse Regulation (2014/596/EU), 16 April 2014: Market manipulation, Article 12 and Prohibition of market manipulation, Article 15, and Annex I.
Criminal Sanctions Criminal Sanctions for Market Abuse Directive (2014/57/EU), 16 April 2014: Recitals 6-7; Subject matter and scope, Article 1 (1) & (2) and Market manipulation, Article 5 (1) & (2).
“Strengths and Weakness in Securities Market Regulation: A Global Analysis” by Ana Carvajal and Jennifer Elliott, IMF Working Paper, 2007, pp. 4-7.
“The Challenge of Enforcement in Securities Markets: Mission Impossible?” by Ana Carvajal and Jennifer Elliot, IMF Working Paper, 2009, pp. 23-32.
“The EU’S Struggles with Collective Action for Securities Fraud: An American Perspective,” by Dan Morrissey, 7 Tex. A&M L. Rev. 125 (2019), pp. 138-152. |
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| 7 | Lecture No. 7: Corporate Governance and the Role Shareholders (Agency Theory) Assigned Reading:
The Role of Shareholders Shareholder Rights Directive II (Long-Term Shareholder Engagement) (2017/828/EU), 17 May 2017: Recitals 1-4, 15-23, 28-29, 25-26, 32 and 42-44; Engagement policy, Article 3g (1); Investment strategy of institutional investors and arrangement with asset managers, Article 3h (1) & (2); Transparency of proxy advisors, Article 3j (1) & (2); Right to vote on the remuneration policy, Article 9a (1)-(3) & (6); Information to be provided in and right to vote on the renumeration report, Article 9b (1) and Transparency and approval of related party transactions, Article 9c (2)-(3).
Corporate Governance “Proposal for a Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and Amending Directive (EU) 2019/1937,” Feb. 23, 2022, COM (2022) 71: Recitals 63-64; Subject matter, Article 1 (1); Definitions, Article 3 (n); Directors’ duty of care, Article 25 and Setting up and overseeing due diligence, Article 26.
“Corporate Governance: Long-Term Shareholder Engagement – Corporate Governance Statement,” European Parliament, Legislative Train 08.2023, 16 Legal Affairs – Juri, pp. 1-3. www.europarl.europa.eu
“Shareholder engagement and identification,” European Company Law Experts (Peter Bockli, Paul Davies, Eilis Ferran, Guido Ferrarini, Jose Garrido, Klaus J. Hopt, Alain Pietrancosta, Markus Roth, Rolf Skog, Stanislaw Soltysinski, Jaap Winter and Eddy Wymeersch), Feb. 2015 (posted March 1, 2015), pp.1-9. papers.ssrn.com. |
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| 8 | Lecture No. 8: The Role of Securities in Change of Control Transactions: Acquisitions and Hostile Takeovers Assigned Reading:
Takeover Bids Directive (2004/25/EC), 21 April 2004: Recitals 2, 12, 13, 15, 16, 17-19, 24; General Principles, Article 3 (1); Protection of minority shareholders, mandatory bid and the equitable price, Article 5 (1), (4) & (5); Information concerning bids, Article 6 (1) - (3); Obligations of the board of the offeree company, Article 9; Breakthrough, Article 11 (2)-(7); The right of squeeze-out, Article 15 (2)-(5) and The right of sell-out, Article 16 (2).
“Europe’s Thirteenth Directive and U.S. Takeover Regulation: Regulatory Means and Political Economic Ends” by Marco Ventoruzzo, 41 Tex. Int’l L.J. 171 (2006), pp. 180-184 & 191-213.
“Chapter 4: European Company Law and the Takeover Bids Directive – The Need for a Change” by Severine Picard, European Union Technical Institute, pp. 87-92.
Austrian Takeover Commission, website www.takeover.at., read “The Takeover Commission.” |
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