Russian Capital Markets and Shareholder Litigation: Quo Vadis?

Abstract

This Article examines Russian securities law, case law, and market data. 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., whereas corporate law provisions 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 capital market portico is typically propped up by robust market infrastructure, public enforcement, private actions, and disclosure rules. Reporting rules enable investors and regulators to act upon the information and improve market monitoring. Out of the four elements, it appears that only the Russian reporting requirements are of adequate quality. Does this single pillar provide sufficient support to the Russian capital markets? It is unlikely that without better shareholder monitoring and more efficient market infrastructure, the mandatory disclosure regime will single-handedly prop up the capital market machinery. 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