An Alternative Paradigm for Valuing Breach of Registration Rights and Loss of Liquidity

Authors

Royce de R. Barondes, University of Missouri School of LawFollow

Document Type

Article

Publication Date

Winter 2005

Abstract

This Article looks to another paradigm to motivate an answer--the exotic financial instruments created on Wall Street. Over the last few decades, a market has developed in assorted sophisticated financial instruments created by unbundling and repackaging various components of traditional securities. Financial engineering, for example, allows the creation of “synthetics.” One court has described “synthetic” securities as follows: “A synthetic transaction is typically a contractual agreement between two counterparties, usually an investor and a bank, that seeks to economically replicate the ownership and physical trading of shares and options.” This Article similarly formulates synthetic rights that, when coupled with the rights possessed by the holder of an illiquid asset, produce the equivalent of a liquid asset.

Recommended Citation

Royce de R. Barondes, An Alternative Paradigm for Valuing Breach of Registration Rights and Loss of Liquidity, 39 U. Rich. L. Rev. 627 (2005)