June 2007 Vol. 105 No. 8 THE REVIEW

The Use of Effficient Market Hypothesis: Beyond SOX

Dana M. Muir & Cindy A. Schipani

This Article focuses on the regulatory use of finance theory, particularly the efficient market hypothesis (“EMH”), in two areas where securities pricing is at issue: shareholder appraisal cases and the use of employer stock in benefit plans. Regarding shareholder appraisal cases, the Article finds that the Delaware courts seem to implicitly respect the principles of EMH when ascertaining the fair value of stock, but recognize that markets cannot operate efficiently if information is withheld. Regarding employer stock in benefit plans, it concentrates on the explicit adoption of EMH by the Department of Labor to exempt directed trustees from traditional duties of inquiry regarding the prudence of investment directions.

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