In the wake of Enron, MCI-Worldcom, Adelphia, and other corporate implosions, securities law and regulation has become an area of exciting new developments and debates. Among the most important issues are how far to extend criminal liability to executives for corporate malfeasance, what accounting standards publicly-traded corporations must employ, and the extent to which corporations must disclose and correct earnings projections. Beyond these global issues, Congress, the SEC and the states continue to grapple with the statutory and enforcement mechanisms that will preserve confidence in the public markets. We at the U.C. Davis Business Law Journal are proud to publish four articles and three interviews that survey a number of important issues in securities law.

In response to corporate scandals, Congress has enacted reforms under the Sarbanes-Oxley Act that are intended to facilitate SEC and Department of Justice investigations into alleged corporate wrong-doing. These mechanisms are at the heart of Andrew Stanger's article, which examines the new statutes restricting document-destruction. A clear reaction against the paradigmatic act of the Enron case, Mr. Stanger considers whether requiring corporations to preserve huge amounts of data might prove too costly, while simultaneously exposing executives to prosecution for innocent acts.

Also in this vein, Jeremy Burns examines a proposal in Congress that would permit the SEC to negotiate access to information normally protected by attorney-client privilege and work-product protection. Mr. Burns suggests such "selective waiver," which would not extend to parties other than the SEC, may hamper competing and sometimes more aggressive investigations by states' attorneys general such as Eliot Spitzer of New York.

Indeed, as Marilyn Cane and Peter Ferola note, the states have begun to reassert themselves in the securities fray, long an area of federal dominance. They discuss how federal securities law has favored the right of brokers and issuers to insert arbitration clauses that often govern in securities purchase and sales contracts. They suggest that some recent state statutes and court decisions may enable some investors once again to take their securities grievances to state and federal courts.

Furthermore, despite all the recent focus on corporate scandals, one of the most important securities law questions continues to be among the oldest: in what case a plaintiff may resort to federal securities law to challenge a particular transaction. This issue of what constitutes a security is at the heart of Ryan Borneman's article. Mr. Borneman examines the Howey Test for determining whether a transaction meets the definition of an "investment contract" under federal securities law. Referring to one prong of this test, Mr. Borneman suggests that the Supreme Court needs to adopt a national standard for determining whether a "common enterprise" exists among investors ("horizontal commonality") or between an investor and his investment agent ("vertical commonality").

In order to complement our articles, we have also conducted three interviews on securities law with distinguished members of the legal, business, and academic communities. As the Director of Corporate Affairs at Intel Corporation, Cary Klafter describes the challenges and obstacles facing legal departments at large corporations following the passage of the Sarbanes-Oxley Act. On a similar note, Paul Vallone, Vice President for the investment bank of Montgomery & Company, highlights the impact of Sarbanes-Oxley with respect to small and medium-sized businesses. Finally, Professor Anupam Chander discusses the introduction of "Diaspora Bonds" and their unique relationship with US securities regulations.

Altogether, we hope these articles and interviews will elucidate major developments in the field of securities law and enable our readers to understand the potential trade-offs regarding current and proposed reforms.

Andrew Jacobson, Senior Articles Editor
John Ly, Senior Interview Editor