Law Commons^™

Carrying A Good Joke Too Far, Peter A. Alces, Jason M. Hopkins

Peter A. Alces

No abstract provided.

Bank Liability For Fiduciary Fraud, Marion W. Benfield Jr., Peter A. Alces

Peter A. Alces

No abstract provided.

State, Dep’T Of Bus. & Indus. V. Titlemax, 135 Nev. Adv. Op. 44 (Sept. 26, 2019), Alexis Taitel

Nevada Supreme Court Summaries

In an en banc opinion, the Nevada Supreme Court answered whether title lender TitleMax’s Grace Period Deferment Agreement (“GPPDA”), which applied to short-term, high-interest loans offered to Nevada consumers in 2014 and 2015, qualified as a true grace period under NRS 604A.210. The Court concluded that the GPPDA was not a true grace period, but was instead an impermissible extension of the 210-day loans. The Court reasoned that the GPPDA was an extension because TitleMax charged borrowers additional interest during the extended period and thus violated NRS 604A.445, a statute enacted by the Nevada Legislature in part to protect consumers …

Jpmorgan Chase London Whale H: Cross-Border Regulation, Arwin G. Zeissler, Andrew Metrick

Journal of Financial Crises

As a global financial service provider, JPMorgan Chase (JPM) is supervised by banking regulatory agencies in different countries. Bruno Iksil, the derivatives trader primarily responsible for the $6 billion trading loss in 2012, was based in JPM’s London office. This office was regulated both by the Office of the Comptroller of the Currency (OCC) of the United States (US) and by the Financial Services Authority (FSA), which served as the sole regulator of all financial services in the United Kingdom (UK). Banking regulators in the US and the UK have entered into agreements with one another to define basic parameters …

Jpmorgan Chase London Whale G: Hedging Versus Proprietary Trading, Arwin G. Zeissler, Andrew Metrick

Journal of Financial Crises

In December 2013, the primary United States financial regulatory agencies jointly adopted final rules to implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is often referred to as the “Volcker Rule”. Section 619 prohibits banks from engaging in activities considered to be particularly risky, including proprietary trading and owning hedge funds or private equity funds. Banking regulators designed the final rule against proprietary trading in part to prevent losses like the $6 billion London Whale loss that took place in 2012 at JPMorgan Chase. Given the controversial nature of the Volcker Rule, it is …

Jpmorgan Chase London Whale F: Required Securities Disclosures, Arwin G. Zeissler, Giulio Girardi, Andrew Metrick

Journal of Financial Crises

On April 13, 2012, JPMorgan Chase (JPM) Chief Financial Officer Douglas Braunstein took part in a conference call to discuss the bank’s first quarter 2012 earnings. Coming just a week after media reports first questioned the risks taken by JPM derivatives trader Bruno Iksil, Braunstein made a series of assertions about the trades. On May 10, JPM finalized its first quarter financial results, which included some disclosures regarding Iksil’s trading that were substantially different from Braunstein’s statements of April 13. At issue is whether the regulatory filings on April 13 and May 10, as well as verbal comments by Braunstein …

Jpmorgan Chase London Whale E: Supervisory Oversight, Arwin G. Zeissler, Andrew Metrick

Journal of Financial Crises

As a diversified financial service provider and the largest United States bank holding company, JPMorgan Chase (JPM) is supervised by multiple regulatory agencies. JPM’s commercial bank subsidiaries hold a national charter and therefore are regulated by the Office of the Comptroller of the Currency (OCC). Since the bank’s Chief Investment Office (CIO) invested the surplus deposits of JPM’s commercial bank units, the OCC was also CIO’s primary regulator. During the critical period from late January through March 2012, when CIO traders undertook the failed derivatives strategy that ultimately cost the bank $6 billion, JPM did not provide the OCC with …

Jpmorgan Chase London Whale C: Risk Limits, Metrics, And Models, Arwin G. Zeissler, Andrew Metrick

Journal of Financial Crises

Value at Risk (VaR) is one of the most commonly used ways to measure and monitor market risk. At JPMorgan Chase (JPM), very large derivative positions established by Bruno Iksil in the Synthetic Credit Portfolio (SCP) caused the bank’s Chief Investment Office (CIO) to exceed its VaR limit for four days in a row in January 2012. In response, the CIO changed to a new VaR model on January 30, which appeared to immediately reduce VaR by half. However, JPM soon discovered that this new VaR model had not been properly implemented and the bank went back to using the …

Jpmorgan Chase London Whale B: Derivatives Valuation, Arwin G. Zeissler, Andrew Metrick

Journal of Financial Crises

After consistently producing positive results through 2011, the JPMorgan Chase (JPM) traders who oversaw the bank’s Synthetic Credit Portfolio (SCP) grew alarmed by a consistent string of losses beginning in January 2012. (The SCP was maintained by JPM to help hedge default risk and was the source of the 2012 London Whale trading loss.) To minimize the losses reported to their superiors until such time that market prices hopefully turned in their favor, the SCP traders began valuing their largest derivative positions in a manner that was not consistent with Generally Accepted Accounting Principles (GAAP) and JPM policy. The fair …

Jpmorgan Chase London Whale A: Risky Business, Arwin G. Zeissler, Daisuke Ikeda, Andrew Metrick

Journal of Financial Crises

In December 2011, the Chief Executive Officer and Chief Financial Officer of JPMorgan Chase (JPM) instructed the bank’s Chief Investment Office to reduce the size of its Synthetic Credit Portfolio (SCP) during 2012, so that JPM could decrease its RiskWeighted Assets as the bank prepared to adopt the impending Basel III bank capital regulations. However, the SCP traders were also told to minimize the trading costs incurred to reduce Risk-Weighted Assets, while still maintaining the opportunity to profit from unexpected corporate bankruptcies. In an attempt to balance these competing objectives, head SCP derivatives trader Bruno Iksil suggested in January 2012 …

The Temporary Liquidity Guarantee Program: A Systemwide Systemic Risk Exception, Lee Davison

Journal of Financial Crises

In the fall of 2008, short-term credit markets were all but frozen, creating liquidity issues for banks and bank holding companies that could not rollover their debt at reasonable rates. Fearing that the situation would worsen if something was not done, the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board invoked, and the Secretary of the Treasury approved, the use of the “systemic risk exception” (SRE) under the Federal Deposit Insurance Corporation Improvement Act of 1991, to provide unprecedented broad-based relief to struggling banks. The SRE permitted the FDIC to depart from its “least-cost” requirement when addressing failing …

Domestic Asset Protection Trusts: Ushering In The Klackaba Era, Cheyenne Vankirk

Seattle University Law Review

The growth in the U.S. economy has allowed Americans to increase their savings--but how? A novel approach has emerged in seventeen states: domestic asset product trusts (DAPTs). DAPTs are self-settled spindthrift trusts that allow the settlor to retain a beneficial interest in the trust while removing it from the reach of future creditors. Through the lens of the favorable ruling in Klackaba v. Nelson, this Note addresses why DAPTs should be regarded as an effective method of protecting a settlor’s money and argue for more states to follow suit.

Securities Law Research Guide, Adeen Postar

Adeen Postar

No abstract provided.

Securities And Commerical Law Research, Adeen Postar

Adeen Postar

No abstract provided.

Book Review (Reviewing Leonard Orland's A Final Accounting), Adeen Postar

Adeen Postar

Leonard Orland is the Oliver Ellsworth Professor of Law at the University of Connecticut. He has written a fine, if a bit unwieldy, book that traces the sad history of money and other assets deposited in supposedly sacrosanct Swiss banks by European Jews during the Nazi era to its long overdue resolution by the American justice system. The book provides background and perspective on how and why the $12.1 billion in pre-war dollars (about $250 trillion today) of financial assets of Holocaust victims disappeared into thin air in the years following World War II. These assets were given over to …

The Increasing Reliance On Educational Loans By University Of Michigan Law School Graduates, David L. Chambers

Bibliography of Research Using UMLS Alumni Survey Data

Among graduates of the University of Michigan Law School in the classes of 1970 through 1979, about half borrowed to pay for their college or legal education. By the early 1980s the portion who borrowed had risen to about 80 percent and has remained at that level through the classes of early twenty-first century. Even greater growth has occurred in the average debt of those who incurred debt. In actual dollars, average debts among those with debt have increased twenty-fold from the 1970s to the early 2000s. Even in CPI-adjusted dollars, average debts have tripled. By the classes of 2000-2001, …

Still Standing, Barely: Bank Of America Corp. V. City Of Miami And The Impact On Fair Lending Litigation, Trevor C, Hoffberger

Maryland Law Review

No abstract provided.

The 'Too Big To Fail' Problem, Saule T. Omarova

Saule T. Omarova

“Too big to fail” – or “TBTF” – is a popular metaphor for a core dysfunction of today’s financial system: the recurrent pattern of government bailouts of large, systemically important financial institutions. The financial crisis of 2008 made TBTF a household term, a powerful rhetorical device for expressing the widely shared discontent with the pernicious pattern of “privatizing gains and socializing losses” it came to represent in the public’s eye. Ten years after the crisis, TBTF continues to frame much of the public policy debate on financial regulation. Yet, the analytical content of this term remains remarkably unclear.

Taking a …

The New Global Financial Regulatory Order: Can Macroprudential Regulation Prevent Another Global Financial Disaster?, Behzad Gohari, Karen E. Woody

Karen Woody

This Article posits that the success of macroprudential regulation will depend on four factors. First, the economic philosophy of the central banker in charge of the domestic institution with jurisdiction over macroprudential regulation will prove crucial in the implementation of adopted regulation. If, like Chairman Greenspan, the banker is averse to the exercise of the Central Bank's regulatory oversight authority, then no amount or volume of policy or regulation will prevent or mitigate systemic risks and the accompanying shocks. Second, a sufficiently deep level of international cooperation is required to mitigate regulatory arbitrage, without being so broad that the ensuing …

Leidos And The Roberts Court's Improvident Securities Law Docket, Matthew C. Turk, Karen E. Woody

Karen Woody

For its October 2017 term, the U.S. Supreme Court took up a noteworthy securities law case, Leidos, Inc. v. Indiana Public Retirement System. The legal question presented in Leidos was whether a failure to comply with a regulation issued by the Securities and Exchange Commission (SEC), Item 303 of Regulation S-K (Item 303), can be grounds for a securities fraud claim pursuant to Rule 10b-5 and the related Section 10(b) of the 1934 Securities Exchange Act. Leidos teed up a significant set of issues because Item 303 concerns one of the more controversial corporate disclosures mandated by the SEC—an …

Justice Kavanaugh, Lorenzo V. Sec, And The Post-Kennedy Supreme Court, Matthew C. Turk, Karen E. Woody

Karen Woody

This Article analyzes a recent Supreme Court case, Lorenzo v. Securities and Exchange Commission, and explains why it provides a valuable window into the Court's future now that Justice Kennedy has retired and his seat filled by Justice Brett Kavanaugh. Lorenzo is an important case that raises fundamental interpretative questions about the reach of federal securities statutes. But most significant is its unique procedural posture: when the Supreme Court issues its decision on Lorenzo in 2019, Justice Kavanaugh will be recused while the other eight Justices rule on a lower court opinion from the D.C. Circuit in which he wrote …

Private Wealth And Public Goods: A Case For A National Investment Authority, Robert C. Hockett, Saule T. Omarova

Robert C. Hockett

Much American electoral and policy debate now centers on how best to reignite the nation’s economic dynamism and rebuild its competitive strength. Any such undertaking presents an extraordinary challenge, demanding a correspondingly extraordinary institutional response. This Article proposes precisely such a response. It designs and advocates a new public instrumentality--a National Investment Authority (“NIA”)--charged with the critical task of devising and implementing a comprehensive long-term development strategy for the United States.

Patterned in part after the New Deal-era Reconstruction Finance Corporation, in part after modern sovereign wealth funds, and in part after private equity and venture capital firms, the NIA …

Money's Past Is Fintech's Future: Wildcat Crypto, The Digital Dollar, And Citizen Central Banking, Robert C. Hockett

Robert C. Hockett

This Essay argues that crypto-currencies will soon go the way of the ‘wildcat’ banknotes of the mid-19th century. As central banks worldwide upgrade their payments systems, the Fed will begin issuing a ‘digital dollar’ that leaves no licit function for what the Author calls ‘wildcat crypto.’ But the imminent change heralds more than a shakeout in fintech. It will also make possible a new era of what the Author calls ‘Citizen Central Banking.’ The Fed will administer a national system of ‘Citizen Accounts.’ This will not only end the problem of the ‘unbanked,’ it will also simplify monetary policy. Instead …

Equal Protection Supreme Court Appellate Division Third Department

Touro Law Review

No abstract provided.

Nonprofit Governance: The Basics, Lawrence J. Trautman, Janet Ford

Akron Law Review

Nonprofit organizations are prevalent in today’s economy, and many are governed by individuals who have been chosen on the basis of their advocacy of or contributions to various nonprofit causes rather than on the basis of business experience or acumen. Yet effective nonprofit governance, while presenting concerns unique to nonprofits, also presents many of the same concerns as does governance of for-profit entities. This article seeks to provide a primer for nonprofit organizations that need to recruit effective governance talent. First, we discuss the nature of nonprofits, their impact on the business landscape, and their similarities to and differences from …

Imposing A Deadline On The Irs: Artificial Intelligence Tries To Beat 'Starcraft' While The Irs Tries To Regulate Virtual Currency, Paul C. Nylen

Akron Law Review

Virtual currencies demanded serious attention in 2017 due to public interest, media attention, and investor appetite. With this increased attention on virtual currencies comes significant business, legal, and tax risks. This article serves as a launching pad for those tax risks, and attempts to predict how the IRS will react. By focusing on the IRS’s treatment of virtual currency as property, as well as discussing other tax issues like Foreign Bank Account Reporting (FBAR) compliance and like-kind exchanges under Internal Revenue Code section 1031, this article highlights the difficulty the IRS will have in regulating the ever-expanding world of virtual …

An Empirical Investigation Of Third Party Consumer Litigant Funding, Ronen Avraham, Anthony J. Sebok

Articles

This is the first large-scale empirical study of consumer third-party litigation funding in the United States. Despite being part of the American legal system for more than two decades there has been almost no real data-driven empirical study to date. We analyzed funding requests from American consumers in over 100,000 cases over a twelve year period. This proprietary data set was provided to us by one of the largest consumer litigation funder in the United States.

Our results are striking and important. We find that the funder plays an important role in the American legal system by screening cases. Our …

Defying Mcculloch? Jackson’S Bank Veto Reconsidered, David S. Schwartz

Arkansas Law Review

On July 10, 1832, President Andrew Jackson issued the most famous and controversial veto in United States history. The bill in question was “to modify and continue” the 1816 “act to incorporate the subscribers to the Bank of the United States. This was to recharter of the Second Bank of the United States whose constitutionality was famously upheld in McCulloch v. Maryland. The bill was passed by Congress and presented to Jackson on July 4. Six days later, Jackson vetoed the bill. Jackson’s veto mortally wounded the Second Bank, which would forever close its doors four years later at the …

Overruling Mcculloch?, Mark A. Graber

Arkansas Law Review

Daniel Webster warned Whig associates in 1841 that the Supreme Court would likely declare unconstitutional the national bank bill that Henry Clay was pushing through the Congress. This claim was probably based on inside information. Webster was a close association of Justice Joseph Story. The justices at this time frequently leaked word to their political allies of judicial sentiments on the issues of the day. Even if Webster lacked first-hand knowledge of how the Taney Court would probably rule in a case raising the constitutionality of the national bank, the personnel on that tribunal provided strong grounds for Whig pessimism. …

M'Culloch In Context, Mark R. Killenbeck

Arkansas Law Review

M’Culloch v. Maryland is rightly regarded as a landmark opinion, one that affirmed the ability of Congress to exercise implied powers, articulated a rule of deference to Congressional judgments about whether given legislative actions were in fact “necessary,” and limited the ability of the states to impair or restrict the operations of the federal government. Most scholarly discussions of the case and its legacy emphasize these aspects of the decision. Less common are attempts to place M’Culloch within the ebb and flow of the Marshall Court and the political and social realities of the time. So, for example, very few …