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The Potential Effect Of The Department Of Labor’S New Fiduciary Rule On Broker-Dealers And The Middle Income Retirement Investors Who Rely On Them, Nadia Yoon 2017 The Catholic University of America, Columbus School of Law

The Potential Effect Of The Department Of Labor’S New Fiduciary Rule On Broker-Dealers And The Middle Income Retirement Investors Who Rely On Them, Nadia Yoon

Catholic University Law Review

On April 6, 2016, the U.S. Department of Labor issued a final rule aimed at increasing the reach of the definition of fiduciary status under the Employee Retirement Income Security Act of 1974 (ERISA). This rule closed a loophole that had allowed broker-dealers to avoid becoming investment advisers under ERISA, allowing them to provide bad advice to their retirement clients without disclosing material conflicts of interest. This note begins by laying out the fiduciary rules and standards under ERISA and the U.S. Securities and Exchange Commission’s oversight regime before the final rule. It then lays out the ...


Is The Dodd-Frank Act Destroying What Is Left Of U.S. Thrifts?, Scott Deacle 2017 Ursinus College

Is The Dodd-Frank Act Destroying What Is Left Of U.S. Thrifts?, Scott Deacle

Business and Economics Faculty Publications

I examine data from 1992 to 2015 to assess the Dodd-Frank Act’s impact on the performance of U.S. depository institutions, thrifts in particular. Ceteris paribus, the average FDIC-regulated institution experienced a decline in profitability as measured by pre-tax return on assets (ROA) following the Act’s passage, but the decline was concentrated among commercial banks. Small thrifts increased pre-tax profitability, after controlling for other factors including weak economic growth. Depository institution loan quality improved after Dodd-Frank, less so for small thrifts but more so for large thrifts. Efficiency ratios, which regulatory costs affect, increased, more for thrifts than ...


Differing Perceptions? Market Practice And The Evolution Of Foreign Sovereign Immunity, W. Mark C. Weidemaier, Mitu Gulati 2017 Duke Law School

Differing Perceptions? Market Practice And The Evolution Of Foreign Sovereign Immunity, W. Mark C. Weidemaier, Mitu Gulati

Faculty Scholarship

The 20th century witnessed a transformative, “tectonic” shift in international law, from “absolute” to “restrictive” theories of sovereign immunity. As conventionally understood, however, this dramatic transformation represented only a shift in the default rule. Under absolute immunity, national courts could not hear lawsuits and enforce judgments against a foreign sovereign without its consent. Under restrictive immunity, foreign sovereigns were presumptively not immune when they engaged in commercial acts. We demonstrate that market practices undermine this conventional understanding. Using an extensive, two-century data set of contracts between foreign governments and private creditors, we show that contracting parties have long treated absolute ...


Too Big To Fool: Moral Hazard, Bailouts, And Corporate Responsibility, Steven L. Schwarcz 2017 Duke Law School

Too Big To Fool: Moral Hazard, Bailouts, And Corporate Responsibility, Steven L. Schwarcz

Faculty Scholarship

The U.S. and foreign regulatory efforts to prevent another financial crisis have been converging on the idea of trying to end the problem of “too big to fail.” Regulators are concerned that systemically important financial firms will take excessive risks because they will profit by success and expect to be bailed out by government money in case of failure. Unfortunately, the legal solutions being advanced to control this moral hazard tend to be inefficient, ineffective, or even dangerous—such as breaking up firms and limiting their size, which can reduce economies of scale and scope; or restricting central bank ...


Regulating Complacency: Human Limitations And Legal Efficacy, Steven L. Schwarcz 2017 Duke Law School

Regulating Complacency: Human Limitations And Legal Efficacy, Steven L. Schwarcz

Faculty Scholarship

This article examines how insights about limited human rationality can improve financial regulation. The article identifies four applicable categories of limitations: herd behavior, cognitive biases, overreliance on heuristics, and a proclivity to panic. Requiring more robust disclosure and due diligence can help to correct the misleading information cascades that motivate herd behavior. Debiasing through law by requiring more concrete and dramatic disclosure of critical consequences can help to correct cognitive biases. Requiring firms to engage in more self-aware operational risk management and reporting can reduce the likelihood that parties will overrely on heuristics. And legislating backstop market liquidity and other ...


Sovereign Debt And The “Contracts Matter” Hypothesis, W. Mark C. Weidemaier, Mitu Gulati 2017 Duke Law School

Sovereign Debt And The “Contracts Matter” Hypothesis, W. Mark C. Weidemaier, Mitu Gulati

Faculty Scholarship

The academic literature on sovereign debt largely assumes that law has little role to play. Indeed, the primary question addressed by the literature is why sovereigns repay at all given the irrelevance of legal enforcement. But if law, and specifically contract law, does not matter, how to explain the fact that sovereign loans involve detailed contracts, expensive lawyers, and frequent litigation? This Essay makes the case that contract design matters even in a world where sovereign borrowers are hard (but not impossible) to sue. We identify a number of gaps in the research that warrant further investigation.


Contractual Arbitrage, Stephen J. Choi, Mitu Gulati, Robert E. Scott 2017 Duke Law School

Contractual Arbitrage, Stephen J. Choi, Mitu Gulati, Robert E. Scott

Faculty Scholarship

Contracts are inevitably incomplete. And standard-form or boilerplate commercial contracts are especially likely to be incomplete because they are approximations; they are not tailored to the needs of particular deals. Not only do these contracts contain gaps but, in an attempt to reduce incompleteness, they often contain clauses with vague or ambiguous terms. Terms with indeterminate meaning present opportunities for strategic behavior well after a contract has been concluded. This linguistic uncertainty in standard form commercial contracts creates an opportunity for “contractual arbitrage”: parties may argue, ex post, that the uncertainties in expression mean something that the contracting parties, ex ...


The Pdvsa Pricing Puzzle, Paolo Colla, Anna Gelpern, Mitu Gulati 2017 Duke Law School

The Pdvsa Pricing Puzzle, Paolo Colla, Anna Gelpern, Mitu Gulati

Faculty Scholarship

Market reports in the summer of 2016 suggest that Venezuela is on the brink of default on upwards of $65 billion in debt. That debt comprises of bonds issued directly by the sovereign and those issued by the state-owned oil company PDVSA. Based on the bond contracts and other legal factors, it is not clear which of these two categories of bonds would fare better in the event of a restructuring. However, market observers are convinced — and we agree — that legal and contractual differences would likely impact the payouts on the bonds if Venezuela defaults. Using a comparison of recent ...


Financiamiento En El Mav Frente Al Sistema Financiero.Pdf, John Pineda Galarza 2016 ie Law School

Financiamiento En El Mav Frente Al Sistema Financiero.Pdf, John Pineda Galarza

John Pineda Galarza

En el presente artículo, se comparan las características del financiamiento mediante el mercado de valores frente al sistema financiero tradicional.

Al respecto, la teoría financiera dice que el sistema bursátil compite con el sistema financiero (Bancario) en la colocación de recursos y que ello conlleva, a la reducción de tasas de interés, pero a su vez, esta afirmación siempre ha sido considerado como algo “teórico”, que no sucede en la práctica, por lo menos no en el Perú. Lo cierto es que desde que entró en vigencia el Reglamento que crea el Mercado Alternativo de Valores (MAV) dicha competencia entre ...


Dashboard Compliance: Benefit, Threat, Or Both?, James Fanto 2016 Brooklyn Law School

Dashboard Compliance: Benefit, Threat, Or Both?, James Fanto

Brooklyn Journal of Corporate, Financial & Commercial Law

This Article poses the basic question that is reflected in its title and that was the subject of the conference where the Article was initially presented: whether technology poses any threats to the mission of compliance and the position of compliance officers, whether it is just another useful tool for them, or whether it is something of both. It begins by explaining the origin of compliance in broker-dealers and investment advisers and its important current position in those firms. It then discusses why compliance officers have always been drawn to technology, particularly to keep up with the business sides of ...


Preserving Human Agency In Automated Compliance, Onnig H. Dombalagian 2016 Brooklyn Law School

Preserving Human Agency In Automated Compliance, Onnig H. Dombalagian

Brooklyn Journal of Corporate, Financial & Commercial Law

As technology transforms financial services, so too must it transform the regulation of financial markets and intermediaries. The imperative of real-time, prophylactic regulation increasingly compels reallocation of regulatory and compliance budgets to surveillance and enforcement technology. At the same time, in light of the well-known weaknesses of automated systems, securities firms (and their regulators) must temper investment in automation with efforts to augment the agency of compliance professionals. This symposium contribution considers how investment in the professional development of compliance personnel can better integrate automated tools within established compliance and supervisory structures and thereby advance regulatory and operational objectives.


Mandatory Third Party Compliance Examinations For Investment Advisers: An Sec Waterloo?, Mercer Bullard 2016 Brooklyn Law School

Mandatory Third Party Compliance Examinations For Investment Advisers: An Sec Waterloo?, Mercer Bullard

Brooklyn Journal of Corporate, Financial & Commercial Law

The Securities and Exchange Commission (SEC or Commission) appears to be on the verge of requiring investment advisers to undergo third party examinations. One justification for the rulemaking is that the Commission lacks sufficient resources to examine advisers frequently enough. Another is to create indirectly a self-regulatory organization (SRO) for investments advisers. Both may leave a rulemaking particularly vulnerable to challenge as arbitrary and capricious under the Administrative Procedures Act. This Article considers three novel grounds on which a rulemaking may be successfully challenged. Congress has repeatedly rejected SEC requests to provide additional funding for examinations or to create an ...


Compliance; Technology; And Modern Finance, Tom C.W. Lin 2016 Brooklyn Law School

Compliance; Technology; And Modern Finance, Tom C.W. Lin

Brooklyn Journal of Corporate, Financial & Commercial Law

An important transformation is happening in the financial industry. The rise of new technology and compliance has dramatically altered many of the key functions and functionaries of modern finance. Artificial intelligence; algorithmic programs; and supercomputers; instead of human actors; now constitute the core of many financial operations. Compliance officers have become just as critical to financial institutions as traders; bankers; and analysts. Finance as we knew it has changed and continues to change. This symposium Article offers a studied commentary on these unfolding changes; the crosscutting developments in compliance; technology; and modern finance. It examines the concurrent and intersecting ascents ...


The Choice Is (Not) Yours: Why The Sec Must Further Amend Its Rules Of Practice To Increase Fairness In Administrative Proceedings, Madeline Ilibassi 2016 Brooklyn Law School

The Choice Is (Not) Yours: Why The Sec Must Further Amend Its Rules Of Practice To Increase Fairness In Administrative Proceedings, Madeline Ilibassi

Brooklyn Journal of Corporate, Financial & Commercial Law

The Securities and Exchange Commission (SEC) plays an extremely important role within the securities industry—it oversees the financial markets; protects consumers; and maintains market efficiency. One of the most important (and recently one of most criticized) responsibilities of the SEC is its duty to enforce the securities laws and punish violators. During the past two decades; and especially after the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010; the SEC’s Division of Enforcement has grown substantially and has utilized administrative enforcement proceedings at an increasing rate. However; this utilization has been occurring without ...


The Overlooked Daisy Chain Problem In Salman, Franklin A. Gevurtiz 2016 University of the Pacific McGeorge School of Law

The Overlooked Daisy Chain Problem In Salman, Franklin A. Gevurtiz

Boston College Law Review

In Salman v. United States, the Supreme Court granted certiorari to resolve a conflict with United States v. Newman as to when corporate insiders receive sufficient personal benefit from making gifts of inside information to make the tip and consequent trade illegal. This Essay explores an overlooked aspect of these cases, the “daisy chain problem,” which involves how the personal benefit element for illegal tipping applies to the subsequent tips that occur when the recipient of information from the corporate insider, in turn, passes the information on to others. This daisy chain problem could potentially distinguish the facts of Salman ...


The Unfinished Business Of Dodd-Frank: Reforming The Mortgage Contract, Christopher K. Odinet 2016 Southern University Law Center

The Unfinished Business Of Dodd-Frank: Reforming The Mortgage Contract, Christopher K. Odinet

SMU Law Review

The standard residential mortgage contract is due for a reappraisal in light of today’s mortgage lending and regulatory environment. The goals of Dodd-Frank and the CFPB have been geared toward creating better stability in the residential mortgage market, in part, by mandating more robust underwriting. This is achieved chiefly through the ability-to-repay rules and the “qualified mortgage” safe harbor, which call for very conservative underwriting criteria to be applied to new mortgage loans. And lenders are whole-heartedly embracing these criteria in their loan originations—in the fourth quarter of 2015 over 98% of all new residential loans were qualified ...


Foreword: Perspectives On Mortgage Lending Regulation, Julie Patterson Forrester 2016 SMU Dedman School of Law

Foreword: Perspectives On Mortgage Lending Regulation, Julie Patterson Forrester

SMU Law Review

No abstract provided.


Governmental Intervention In An Economic Crisis, Robert K. Rasmussen, David A. Skeel Jr. 2016 University of Southern California Law

Governmental Intervention In An Economic Crisis, Robert K. Rasmussen, David A. Skeel Jr.

Faculty Scholarship

This paper articulates a framework both for assessing the various government bailouts that took place at the onset of Great Recession and for guiding future rescue efforts when they become necessary. The goals for those engineering a bailout should be to be as transparent as possible, to articulate clearly the reason for the intervention, to respect existing priorities among investors, to exercise control only at the top level where such efforts can be seen by the public, and to exit as soon as possible. By these metrics, some of the recent bailouts should be applauded, while others fell short. We ...


Governmental Intervention In An Economic Crisis, Robert Rasmussen, David A. Skeel Jr. 2016 University of Southern California

Governmental Intervention In An Economic Crisis, Robert Rasmussen, David A. Skeel Jr.

University of Southern California Legal Studies Working Paper Series

This paper articulates a framework both for assessing the various government bailouts that took place at the onset of Great Recession and for guiding future rescue efforts when they become necessary. The goals for those engineering a bailout should be to be as transparent as possible, to articulate clearly the reason for the intervention, to respect existing priorities among investors, to exercise control only at the top level where such efforts can be seen by the public, and to exit as soon as possible. By these metrics, some of the recent bailouts should be applauded, while others fell short. We ...


Integration Of Securities Offerings: Obstacles To Capital Formation Remain For Small Businesses, Perry E. Wallace, Jr. 2016 Selected Works

Integration Of Securities Offerings: Obstacles To Capital Formation Remain For Small Businesses, Perry E. Wallace, Jr.

Perry Wallace

No abstract provided.


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