Russian Capital Markets and Shareholder Litigation: Quo Vadis?
Global Securities Litigation and Enforcement, eds. Martin Gelter & Pierre-Henry Cognac, Cambridge University Press, 2018, Forthcoming
28 Pages Posted: 21 Nov 2017 Last revised: 22 Jan 2018
Date Written: January 21, 2018
To an international observer, Russian capital markets and securities law may appear ostensibly ordinary, albeit placed within an unstable socioeconomic milieu. Securities law and disclosure rules seem somewhat similar to those in the U.S., while corporate law provisions, such as the mandatory bid rule or the Corporate Governance Code, and litigation fundamentals are an amalgam of U.S.-U.K.-West European principles. At the same time, a number of hidden trends affect capital markets, the heart of any economy. Those trends upend this fluid Westernized amalgam and may even be linked to the communist past of the country.
The Article reviews the essential prerequisites necessary for a healthy securities market. The first mechanism, typically, is market infrastructure and various intermediaries. The second is public enforcement. The third is private enforcement, usually in the form of class actions. Public and private enforcement should be accompanied by reporting rules, which enable investors and regulators to act upon the information. This Article examines all four elements in motion and discusses not only the Russian securities statutes but also case law and market data. The research underscores the interaction between the common traits one would normally expect of securities markets and law and the domestic elements that interfere with the application of Westernized black letter law.
The Article proceeds as follows. Part II examines various monitoring mechanisms and corporate ownership patterns. Part III sets forth the principal underpinnings of securities law and enforcement. Part IV covers shareholder litigation. In conclusion, the Article urges Russian policymakers to take, first, a more pro-shareholder and pro-plaintiff view on private litigation, public enforcement, and corporate governance, and, second, a more pro-private-exchange policy stance.
Keywords: shareholder litigation, securities litigation, class actions, exchange ownership, market development, enforcement actions
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