Hell Hath No Fury Like an Investor Scorned: Retribution, Deterrence, Restoration, and the Criminalization of Securities Fraud Under Rule 10b-5

Abstract:     
This brief article focuses attention on the ineffectual nature of prosecutions of corporations and their insiders - generally, officers and directors - for securities fraud under Rule 10b-5. Specifically, the article begins by briefly summarizing the nature of enforcement actions and related penalties under Rule 10b-5. Next, the article argues that, as currently conceived and executed, criminal enforcement actions under Rule 10b-5 are ineffective as a means of achieving retribution, as deterrents of undesirable behavior, and as enforcement vehicles that vindicate the policies underlying Rule 10b-5. As a means of addressing these criticisms, the article suggests possible enhancements to Rule 10b-5 prosecutions, including more victim involvement in the proceedings. These enhancements, rooted in victims' rights initiatives and restorative justice principles, may better serve societal and regulatory aims.

Number of Pages in PDF File: 23

Keywords: securities fraud, Rule 10b-5, theories of punishment, retribution, deterrence, restorative justice, victims' rights, allocution

JEL Classification: K14, K22, K40, K41, K42, M14

Accepted Paper Series