Amidst all the recent publicity surrounding government action in combating corporate wrong-doing (passage of the Sarbanes-Oxley Act and the prosecution of the top brass at Enron and other scandal-ridden companies) little attention has been focused on the dramatic reform of the securities regulations that was enacted in late 2005. This article attempts to survey and assess the merits of that reform.

The new regulations essentially provide that most companies no longer have to comply with basic restrictions on the securities offering process that have been the cornerstone of the securities regulatory regime since its inception in 1933. Chief among these restrictions are those pertaining to communications. Where communications have traditionally been widely curtailed during a new offering of securities to the public, the new reforms now allow most companies to communicate with the public relatively freely. Further, the heightened liability that attached to communications prior to the reforms will not apply to the new free communications. In the name of efficiency the restrictions and heightened liability have been eliminated. At the same time, I will argue, investors actually are being left more vulnerable to potential manipulations of corporate wrongdoers. In addition, the article will directly call into question whether the SEC has in fact exceeded its rule making authority by altering so dramatically the very character of the regulatory regime that the Securities Act sought to construct.

This article focuses on the commercial activities exception of the Foreign Sovereign Immunities Act (FSIA). That exception is at the heart of the FSIA and basically states that if a foreign sovereign engages in private commercial activities like a private party then it should not be immune from suit in the United States. Unfortunately, the special guidelines set forth in the FSIA for applying the commercial activities exception to foreign sovereigns are confusing and have resulted in split opinions among the federal circuit courts.

My article argues that those guidelines should be thrown away. My proposal would first have courts assess whether foreign sovereigns are in fact engaging in private commercial activities. If the answer is yes, then the FSIA should direct courts to simply treat the foreign sovereign in the same way that it would treat a foreign private party for purposes of establishing jurisdiction. Namely, the courts should undertake the same minimum contacts due process analysis it has undertaken for decades with respect to foreign private parties. This solution avoids the complicated rubric established by the FSIA and accomplishing exactly what the FSIA had wanted to accomplish. It treats foreign sovereigns like private parties when and if they behave like them.

Catching the Culprits: Is Sarbanes-Oxley Enough discusses the fact that three major events occurred in the mid to late 1990s to make the securities fraud regulatory regime more lax. Those three events were: the elimination of a private right of action for aiding and abetting securities fraud, the passage of the Private Securities Litigation Reform Act of 1995 (the PSLRA) and the passage of Securities Litigation Uniform Standards Act of 1998 (the SLUSA). My conclusion is that while the Sarbanes-Oxley Act does create certain safeguards for investors, it does not undo the harm that those three events of the 1990s caused. My article argues that what is needed is for aiding and abetting liability to be revived and for the harsh anti-liability provisions of the PSLRA and the SLUSA to be rescinded.