LAW & ECONOMICS WORKSHOP SERIES

presents

Alicia Davis Evans
University of Michigan Law School

Are Investors' Gains and Losses from Securities Fraud Equal Over Time?  Some Preliminary Evidence

Wednesday, September 10, 2008
12:30 - 2:00
Solarium (room FA2)
Faculty of Law, University of Toronto
84 Queen's Park

For a number of years, leading securities regulation scholars have argued that compensating securities fraud victims is inefficient.  They maintain that because diversified investors are as likely to gain from trading in fraud-tainted stocks as they are to suffer harm from doing so, these investors should have no expected net losses from fraud.  In this article, I describe a study designed to test this assertion.  Using observational data and computer simulated trading data on 14 ivnestor prototypes, the study reveals not only that the undiversified individual investor prototypes suffer significant net losses from securities fraud over a 10-year period, but also that large numbers of diversified institutional investor prototypes do as well.  These results call into question the claims of fraud compensation opponents who assert that institutional investors suffer little or no fraud-related harm over the long-term and that individual investors can protect themselves fully through proper diversification.  

Alicia Davis Evans teaches Enterprise Organization and Mergers & Acquisitions, and her current research includes projects in the securities regulation area.  Prior to joining the Michigan Law faculty in fall 2004 as an assistant professor, Evans practiced law at Kirkland & Ellis LLP in Washington, D.C., where she represented public and private companies and private equity firms in mergers and acquisitions and leveraged buyout transactions.  Her experience also includes five years as an investment banker, first with Goldman, Sachs & Co. in New York, where her clients included Fortune 100 companies pursuing equity and debt financings, and then with Raymond James & Associates in St. Petersburg, Florida, where she most recently served as a vice president and represented public and private companies in middle market mergers and acquisitions transactions.  She is a member of the bars of Florida and the District of Columbia.  Evans earned her B.S. in Business Administration, summa cum laude, from Florida A&M University, her MBA from Harvard Business School, and her J.d. from Yale Law School.

A light lunch will be provided.

For more workshop information, please contact Nadia Gulezko at n.gulezko@utoronto.ca.