Banking and Finance Law Commons^™

The Structure Of Secondary Copyright Liability, Felix T. Wu

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Secondary copyright liability and secondary patent liability largely parallel each other. And yet, secondary copyright cases are often quite different from secondary patent cases. Whereas most secondary patent infringers act in a way that targets a particular patent or group of related patents, secondary copyright infringement mostly arises in the context of technologies or services that work across all copyrighted works. Secondary copyright liability raises issues of platform liability in ways that secondary patent liability usually does not.

The current structure and framing of secondary copyright liability inadequately account for this distinction. The result is that secondary copyright liability tends …

Stopping Runs In The Digital Era, Luís C. Calderón Gómez

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Bank runs, and the financial crises they catalyze and amplify, are incredibly costly-to individuals, families, society, and the economy writ large. Banking regulation has, for the most part, protected us from traditional bank runs for the last ninety years. However, as we saw in the devastating 2008 financial crisis, bank runs can still occur in lightly regulated or opaque segments of the financial sector.

The recent crypto market downturn dramatically forewarned regulators of the potential and significant risks that novel assets could pose to our financial system's stability. In particular, a novel, systemically important asset (stablecoins) revealed its vulnerability to …

Taming Unicorns, Matthew Wansley

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Until recently, most startups that grew to become valuable businesses chose to become public companies. In the last decade, the number of unicorns—private, venture-backed startups valued over one billion dollars—has increased more than tenfold. Some of these unicorns committed misconduct that they successfully concealed for years. The difficulty of trading private company securities facilitates the concealment of misconduct. The opportunity to profit from trading a company’s securities gives short sellers, analysts, and financial journalists incentives to uncover and reveal information about misconduct the company commits. Securities regulation and standard contract provisions restrict the trading of private company securities, which undermines …

Is Bitcoin Prudent? Is Art Diversified? Offering Alternative Investments To 401(K) Participants, Edward A. Zelinsky

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Whether 401(k) plans’ investment menus should feature “alternative” investments is a fact-driven inquiry applying ERISA’s fiduciary standards of prudence, loyalty, and diversification. Central to this fact-driven inquiry is whether the alternative investment class in question is broadly accepted by investors in general and by professional defined benefit trustees in particular. A similarly salient concern when making this inquiry is the financial unsophistication of many, perhaps most, 401(k) participants. Accounting for these considerations, this Article concludes that REITs, private equity funds, and hedge funds can, with limits, today be offered as investment choices to 401(k) participants, but that cryptocurrencies (including Bitcoin), …

Steering Loan Modifications Post-Pandemic, Pamela Foohey, Dalie Jimenez, Christopher K. Odinet

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As part of federal and state relief programs created during the COVID-19 pandemic, many American households received pauses on their largest debts, particularly on mortgages and student loans. Others may have come to agreements with their lenders, likewise pausing or altering payment on other debts, such as auto loans and credit cards. This relief allowed households to allocate their savings and income to necessary expenses, like groceries, utilities, and medicine. But forbearance does not equal forgiveness. At the end of the various relief periods and moratoria, people will have to resume paying all their debts, the amounts of which may …

The Rules Of Professional Responsibility And Legal Finance: A Status Update, Anthony J. Sebok

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Legal finance occurs when strangers fund litigation for profit. Traditionally looked upon with suspicion in the common law, and limited by the doctrines of champerty and maintenance, legal finance is now a thriving part of the American legal landscape. Legal finance has been promoted as a solution to the access-to-justice problems facing working and middle class Americans, as well as a new asset class for Wall Street. At the center of legal finance, however, are lawyers – not the lawyers who write the contracts for the financing – but the lawyers for the cases being financed.

Over the past decade, …

Responding To Mass, Computer-Generated, And Malattributed Comments, Steven J. Balla, Reeve Bull, Bridget C.E. Dooling, Emily Hammond, Michael A. Livermore, Michael Herz, Beth Simone Noveck

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A number of technological and political forces have transformed the once staid and insider dominated notice-and-comment process into a forum for large scale, sometimes messy, participation in regulatory decisionmaking. It is not unheard of for agencies to receive millions of comments on rulemakings; often these comments are received as part of organized mass comment campaigns. In some rulemakings, questions have been raised about whether public comments were submitted under false names, or were automatically generated by computer “bot” programs. In this Article, we examine whether and to what extent such submissions are problematic and make recommendations for how rulemaking agencies …

The Mysterious Market For Post-Settlement Litigant Finance, Ronen Avraham, Lynn A. Baker, Anthony J. Sebok

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Litigant finance is a growing and increasingly controversial industry in which financial firms advance a plaintiff money in exchange for ownership rights in the proceeds of the legal claim on a nonrecourse basis: A plaintiff must repay the advance only if compensation is ultimately received for the legal claim. The nonrecourse nature of this funding exempts it from most states’ consumer credit laws, enabling funders to charge higher interest and fees than would otherwise be permitted. When this funding involves ordinary consumers, critics of the industry contend that the uncapped interest rates exploit vulnerable litigants, while its defenders argue that …

Reallocating Redevelopment Risk, Michael C. Pollack

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Scores of cities across the country face devastating financial crises, and the COVID-19 pandemic has brought even more to the brink. But economically distressed municipalities have few places to turn for help. Saddled by rising unemployment, weak tax bases, and state law limitations on deficit spending and debt assumption, they generally cannot spend their way out. And as conditions deteriorate, mobile capital and labor move to greener pastures, further hollowing out the cities they leave behind. With state and federal lifelines tenuous at best, offers by large developers to redevelop an area of the city can thus appear to be …

Bursting The Auto Loan Bubble In The Wake Of Covid-19, Pamela Foohey

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Before the COVID-19 pandemic, auto loans outstanding in the United States had soared to record highs. The boom in lending spanned new and used cars and traditional and subprime loans. With loan delinquencies also hitting new highs almost every quarter, predictions that the auto lending market could burst soon abounded. When the economy came to a grinding halt and unemployment skyrocketed in the wake of the pandemic, auto lenders knew they were facing a crisis. Throughout 2020, auto lenders granted more payment forbearances to consumers, while slashing interest rates on new loans. Auto manufacturers similarly made promises to buyers, such …

The Growth & Regulatory Challenges Of Decentralized Finance, Aaron J. Wright

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Proceedings of the 2021 Spring Conference: The Impact of Blockchain on the Practice of Law Panel 1: The Growth & Regulatory Challenges of Decentralized Finance

Fraudulent Transfers: Void And Voidable, David G. Carlson

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This Article explores the civil procedure attendant to private fraudulent transfer litigation (primarily outside the context of bankruptcy). In such litigation, courts ponder whether fraudulent transfers are void or voidable. In fact, they are both simultaneously! According to the theory "at law," a fraudulent transfer is "void." That is, a creditor with a judgment could simply levy the property from a fraudulent grantee as if the grantee had no property rights. This Article questions the constitutional viability of this ancient attitude. Meanwhile, "equity" viewed the transfer as voidable. The grantee gets title, but the title might be set aside. The …

Symposium: The California Consumer Privacy Act, Margot Kaminski, Jacob Snow, Felix T. Wu, Justin Hughes

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This symposium discussion of the Loyola of Los Angeles Law Review focuses on the newly enacted California Consumer Privacy Act (CPPA), a statute signed into state law by then-Governor Jerry Brown on June 28, 2018 and effective as of January 1, 2020. The panel was held on February 20, 2020.

The panelists discuss how businesses are responding to the new law and obstacles for consumers to make effective use of the law’s protections and rights. Most importantly, the panelists grapple with questions courts are likely to have to address, including the definition of personal information under the CCPA, the application …

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 …

Blockchain-Based Token Sales, Initial Coin Offerings, And The Democratization Of Public Capital Markets, Jonathan Rohr, Aaron Wright

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Best known for their role in the creation of cryptocurrencies like bitcoin, blockchains are revolutionizing the way technology entrepreneurs finance their business enterprises. In 2017 alone, tech entrepreneurs raised over $6 billion through the sale of blockchain-based digital tokens, with some sales lasting mere seconds before selling out. In a token sale, also referred to as an “initial coin offering” or “ICO,” organizers of a project sell digital tokens to members of the public to finance the development of new technological platforms and services. After the initial sale, cryptocurrency exchanges scattered across the globe list tokens for trading and facilitate …

Commercial Speech Protection As Consumer Protection, Felix T. Wu

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The Supreme Court has long said that “the extension of First Amendment protection to commercial speech is justified principally by the value to consumers of the information such speech provides.” In other words, consumers—the recipients or listeners of commercial speech—are the ones the doctrine is meant to protect. In previous work, I explored the implications of taking this view seriously in three contexts: compelled speech, speech among commercial entities, and unwanted marketing. In each of those contexts, adopting a listener-oriented approach leads to the conclusion that many forms of commercial speech regulation should receive far less First Amendment scrutiny than …

Bitcoin And The Uniform Commercial Code, Jeanne L. Schroeder

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Much of the discussion of bitcoin in the popular press has concentrated on its status as a currency. Putting aside a vocal minority of radical libertarians and anarchists, however, many bitcoin enthusiasts are concentrating on how its underlying technology – the blockchain – can be put to use for wide variety of uses. For example, economists at the Fed and other central banks have suggested that they should encourage the evolution of bitcoin’s blockchain protocol which might allow financial transactions to clear much efficiently than under our current systems. As such, it also holds out the possibility of becoming that …

Class Warfare: The Disappearance Of Low-Income Litigants From The Civil Docket, Myriam Gilles

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In recent years, much attention has been paid to the startling disparities in income and wealth in contemporary U.S. society. The enormous concentration of economic power in the top 1% is the culmination of decades of significant income and wealth gains for the top, combined with stagnant or decreasing growth for the majority - a trend that continues apace. But nowhere is the gap more glaring than in the civil docket, where class actions brought by or on behalf of low-income consumers and employees are on the verge of disappearing.

To be sure, the decline in class actions is only …

A Proposal To Withhold Divorce Decrees On Grounds Of Equity, J. David Bleich

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Throughout the medieval period, marriage was acknowledged by temporal rulers to be a religious matter governed by the ecclesiastic law of the Church which, to be sure, incorporated many principles of Roman law. Subsequent to the Reformation, the rulers of many European countries became disposed to regard marriage as a civil act, to withdraw marriage from the control of the church and to entrust it entirely to the state. The Napoleonic Code was the first example of a legal system that treated marriage as a purely civil act. The Napoleonic Code did not deny the religious element present in marriage …

Judicial Deference And Institutional Character: Homeowners Associations And The Puzzle Of Private Governance, Michael C. Pollack

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Much of the study of judicial review of governing institutions focuses on the institutions of public government at the federal, state, and local levels. But the courts' relationship with private government is in critical need of similar examination, and of a coherent framework within which to conduct it. This Article uses the lens of homeowners associations-a particularly ubiquitous form of private government-to construct and employ such a framework. Specifically, this Article proceeds from the premise that judicial deference is less appropriate the more unaccountable a governing institution is, and therefore develops a set of tests for institutional accountability. Applied to …

Critique Of Money Judgment Part Three: Restraining Notices, David G. Carlson

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New York is virtually unique in permitting lawyers to issue court orders restraining debtors and third parties from conveying away any assets that could be used to satisfy a money judgment. In effect, these orders command the recipient to do nothing, whereas a turnover or garnishment orders the recipient to do something — pay the creditor or sheriff or surrender illiquid property to the sheriff. The weakness and strength of this debt collection tool is assessed at length. The Article also analyzes in detail New York’s Exempt Income Protection Act, enacted in 2008 to force banks to protect the exempt …

California Dreaming: The California Secure Choice Retirement Savings Trust Act, Edward A. Zelinsky

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Half of American workers are not covered by employer-sponsored retirement arrangements. The recently passed California Secure Choice Retirement Savings Trust Act seeks to solve this problem by mandating retirement savings arrangements for California employers, coupled with a public investment vehicle for investing these private retirement savings. The Act is important because of California’s size and status as a trendsetter for other states.

This Article is the first to examine the important legal questions the Act raises under the Internal Revenue Code and ERISA. Contrary to the drafters’ intent, the savings accounts authorized under the Act do not qualify as individual …

Procedural Barriers To Civil Rights Litigation And The Illusory Promise Of Equity, Alexander A. Reinert

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No abstract provided.

The Wisdom Of Crowds? Groupthink And Nonprofit Governance, Melanie B. Leslie

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Scandals involving nonprofit boards and conflicts of interest continue to receive considerable public attention. Earlier this year, for example, musician Wyclef Jean's Yele Haiti charity became the target of intense criticism after the charity disclosed that it had regularly transacted business with Jean and entities controlled by Jean and other directors. Although scandals caused by self-dealing undermine public confidence in the charitable sector, they continue to erupt. Why do charitable boards sanction transactions with insiders?

This Article argues that much of the blame lies with the law itself. Because fiduciary duty law is currently structured as a set of fuzzy …

The Defined Contribution Paradigm, Edward A. Zelinsky

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Pension cognoscenti have frequently remarked on the stagnation of defined benefit pensions and the concomitant rise of defined contribution plans. I suggest that, over the last generation, something even more fundamental has occurred, something that can justly be called a paradigm shift. Americans today primarily conceive of and implement retirement savings in the form of individual accounts. Such accounts have become primary instruments of public policy, not just for retirement savings, but increasingly for health care and education as well.

The Application Of The Foreign Sovereign Immunities Act To An Action Against The French Railroad For Transporting Thousands Of Jews And Others To Their Deaths: Abrams V. Sncf, Malvina Halberstam

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No abstract provided.

Cross-Testing, Nondiscrimination, And New Comparability: A Rejoinder To Mr. Orszag And Professor Stein, Edward A. Zelinsky

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In their response to my article in this symposium issue of the Buffalo Law Review, Peter Orszag and Norman Stein advance their analysis of cross-testing, new comparability and the nondiscrimination norm. I write this brief rejoinder both to clarify the areas of our disagreement and to complete our dialogue.

Capturing Fiduciary Obligation: Shepherd's Law Of Fiduciaries, Arthur J. Jacobson

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No abstract provided.