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Articles 1 - 11 of 11
Full-Text Articles in Finance and Financial Management
Deterring Algorithmic Manipulation, Gina-Gail S. Fletcher
Deterring Algorithmic Manipulation, Gina-Gail S. Fletcher
Faculty Scholarship
Does the existing anti-manipulation framework effectively deter algorithmic manipulation? With the dual increase of algorithmic trading and the occurrence of “mini-flash crashes” in the market linked to manipulation, this question has become more pressing in recent years. In the past thirty years, the financial markets have undergone a sea change as technological advancements and innovations have fundamentally altered the structure and operation of the markets. Key to this change is the introduction and dominance of trading algorithms. Whereas initial algorithmic trading relied on preset electronic instructions to execute trading strategies, new technology is introducing artificially intelligent (“AI”) trading algorithms that …
Regulation Of Securities Offerings In California: Is It Time For A Change After A Century Of Merit Regulation?, Neal H. Brockmeyer
Regulation Of Securities Offerings In California: Is It Time For A Change After A Century Of Merit Regulation?, Neal H. Brockmeyer
Loyola of Los Angeles Law Review
The California securities law originated in 1913 from a populist movement that embodied a paternalistic attitude toward the protection of investors. It was characterized by the registration of offerings of securities with few exemptions and exclusions, a qualitative review of the merits of those offerings and an administrator with broad authority to implement and enforce the law. While the California securities law is still based on merit review, exclusions and exemptions have been added and expanded over the years by the California legislature and securities regulators. More recently, Congress has preempted state registration and merit review of various securities and …
The New Bond Workouts, William W. Bratton, Adam J. Levitin
The New Bond Workouts, William W. Bratton, Adam J. Levitin
All Faculty Scholarship
Bond workouts are a famously dysfunctional method of debt restructuring, ridden with opportunistic and coercive behavior by bondholders and bond issuers. Yet since 2008 bond workouts have quietly started to work. A cognizable portion of the restructuring market has shifted from bankruptcy court to out-of-court workouts by way of exchange offers made only to large institutional investors. The new workouts feature a battery of strong-arm tactics by bond issuers, and aggrieved bondholders have complained in court. The result has been a new, broad reading of the primary law governing workouts, section 316(b) of the Trust Indenture Act of 1939 (“TIA”), …
What Exactly Is Market Integrity? An Analysis Of One Of The Core Objectives Of Securities Regulation, Janet Austin
What Exactly Is Market Integrity? An Analysis Of One Of The Core Objectives Of Securities Regulation, Janet Austin
William & Mary Business Law Review
One of the main objectives of securities regulation around the world is to protect the integrity or fairness of the markets. This, together with protecting investors, improving the efficiency of markets, and protecting the markets from systemic risk, form the four fundamental goals of securities regulation.
However, what exactly is envisaged by this concept of market integrity or fairness? Are these simply norms of behaviour incapable of further definition? Despite their importance, relatively little attention has been given to these concepts in the literature. Do they, for example, require securities regulators to just work towards eliminating dishonest trading practices such …
Why Do Retail Investors Make Costly Mistakes? An Experiment On Mutual Fund Choice, Jill E. Fisch, Tess Wilkinson-Ryan
Why Do Retail Investors Make Costly Mistakes? An Experiment On Mutual Fund Choice, Jill E. Fisch, Tess Wilkinson-Ryan
All Faculty Scholarship
There is mounting evidence that retail investors make predictable, costly investment mistakes, including underinvestment, naïve diversification, and payment of excessive fund fees. Over the past thirty-five years, however, participant-directed 401(k) plans have largely replaced professionally managed pension plans, requiring unsophisticated retail investors to navigate the financial markets themselves. Policy-makers have struggled with regulatory interventions designed to improve the quality of investment decisions without a clear understanding of the reasons for investor mistakes. Absent such an understanding, it is difficult to design effective regulatory responses.
This article offers a first step in understanding the investor decision-making process. We use an internet-based …
Who Calls The Shots?: How Mutual Funds Vote On Director Elections, Stephen J. Choi, Jill E. Fisch, Marcel Kahan
Who Calls The Shots?: How Mutual Funds Vote On Director Elections, Stephen J. Choi, Jill E. Fisch, Marcel Kahan
All Faculty Scholarship
Shareholder voting has become an increasingly important focus of corporate governance, and mutual funds control a substantial percentage of shareholder voting power. The manner in which mutual funds exercise that power, however, is poorly understood. In particular, because neither mutual funds nor their advisors are beneficial owners of their portfolio holdings, there is concern that mutual fund voting may be uninformed or tainted by conflicts of interest. These concerns, if true, hamper the potential effectiveness of regulatory reforms such as proxy access and say on pay. This article analyzes mutual fund voting decisions in uncontested director elections. We find that …
Burning Down The House Or Simply Rolling The Dice: A Comment On Section 621 Of The Dodd-Frank Act And Recommendation For Its Implementation, Joshua R. Rosenthal
Burning Down The House Or Simply Rolling The Dice: A Comment On Section 621 Of The Dodd-Frank Act And Recommendation For Its Implementation, Joshua R. Rosenthal
Fordham Journal of Corporate & Financial Law
Section 621 of the Dodd-Frank Wall Street Reform and Consumer Protection Act modifies the Securities Act of 1933 to prohibit the underwriter, placement agent, initial purchaser, or sponsor, or any affiliate or subsidiary of any such entity of an asset-backed financial product from betting against that very product for one year after the product’s initial sale. The rule prohibits anyone who structures or sells an asset-backed security or a product composed of asset-backed securities from going short, in the specified timeframe, on what they have sold, and labels such transactions as presenting material conflicts of interest. This Comment discusses traces …
A Floating Nav For Money Market Funds: Fix Or Fantasy?, Jill E. Fisch, Eric D. Roiter
A Floating Nav For Money Market Funds: Fix Or Fantasy?, Jill E. Fisch, Eric D. Roiter
All Faculty Scholarship
The announcement by the Reserve Primary Fund, in September 2008, that it was “breaking the buck,” triggered a widespread withdrawal of assets from other money market funds and led the U.S. Government to adopt emergency measures to maintain the stability of the short term credit markets. In light of these events, the SEC heightened the regulatory requirements to which money market funds – a three trillion dollar industry -- are subject. Regulators and commentators continue to press for further regulatory change, however. The most controversial reform proposal would eliminate the ability of money market funds to purchase and sell shares …
The End Of The Internal Compliance World As We Know It, Or An Enhancement Of The Effectiveness Of Securities Law Enforcement? Bounty Hunting Under The Dodd-Frank Act's Whistleblower Provision, Justin Blount, Spencer Markel
The End Of The Internal Compliance World As We Know It, Or An Enhancement Of The Effectiveness Of Securities Law Enforcement? Bounty Hunting Under The Dodd-Frank Act's Whistleblower Provision, Justin Blount, Spencer Markel
Fordham Journal of Corporate & Financial Law
In the wake of Bernard Madoff’s $65 billion Ponzi scheme and the recent economic crisis stemming largely from loosely regulated subprime lending and mortgage-backed securities, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act on July 21, 2010, signaling loudly and clearly that change is coming to Wall Street. But Wall Street is not the only one receiving a message. Buried deep within the 2,319 pages of the Dodd-Frank Act, companies can find Section 922, the whistleblower provision, which provides a bounty for whistleblowers who report securities violations to the Securities and Exchange Commission.These bounty provisions and …
Insurance Against Misinformation In The Securities Market, Tom Baker
Insurance Against Misinformation In The Securities Market, Tom Baker
All Faculty Scholarship
Prepared at the request of the Task Force to Modernize Securities Legislation in Canada, this study describes and evaluates evaluate a new capital markets insurance concept: securities misinformation insurance. This new insurance would compensate investors for losses caused by securities law violations. The most powerful objection to this new concept is that investors do not need a new insurance program for securities misinformation losses. Individual and institutional investors already can spread securities misinformation losses by holding a diversified portfolio. Nevertheless, a securities misinformation insurance program has the potential to provide systemic benefits: improved compliance with securities laws (resulting from cost …
Municipal Securities Market: Same Problems -- No Solutions, Ann Judith Gellis
Municipal Securities Market: Same Problems -- No Solutions, Ann Judith Gellis
Articles by Maurer Faculty
This article examines the existing regulations of the municipal securities market, focusing on what activities prompted the regulatory changes and analyzing the direction and efficacy of these regulations in terms of the deficiencies in the market. Part One gives a background sketch of the market and its participants from the time of the New York City fiscal crises to today. Part Two discusses whether the existing regulation is sufficient to produce disclosure, focusing on the Orange County crises. Part Three offers a critique of the current regulatory scheme and makes some suggestions for reform.