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Articles 1 - 30 of 108
Full-Text Articles in Business
Why Do Banks Fail Together? Evidence From Executive Compensation, Deniz Anginer, Jinjing Liu, Cindy A. Schipani, H. Nejat Seyhun
Why Do Banks Fail Together? Evidence From Executive Compensation, Deniz Anginer, Jinjing Liu, Cindy A. Schipani, H. Nejat Seyhun
Fordham Journal of Corporate & Financial Law
Recent bank failures have elicited extensive interest about the causes, focusing on incompetence of bank executives, policymakers, bank regulators and supervisors and even uninsured depositors. Yet, before we can prescribe solutions to bank failures, we need to identify the correct causes of the underlying problems. We argue that the problem is not so much with incompetence of executives, depositors, or regulators per se, but rather with managerial incentives.
We provide both a conceptual basis as well as empirical evidence to show that bank executives have incentives to increase systemic risks in order to maximize the benefits of bank bailouts. Consequently, …
Minutes Are Worth The Minutes: Good Documentation Practices Improve Board Deliberations And Reduce Regulatory And Litigation Risk, Given As The 21st Annual Destefano Lecture, Leo E. Strine Jr.
Fordham Journal of Corporate & Financial Law
This Essay, originally the basis for the 21st Annual Albert A. DeStefano Lecture on Corporate, Securities & Financial Law given on February 27, 2024, at Fordham University School of Law, addresses the importance of good corporate minuting and board documentation practices. Using lessons from Delaware cases where the quality of these practices has determined the outcome of motions and cases, this Essay identifies effective and efficient practices to better address this decidedly not sexy, but unquestionably essential, corporate governance task. The recent Delaware cases underscore the importance of quality and timely documentation of board decision-making, the material benefits of doing …
A Bona Fide Dispute: Can Bankrupt Debtors Sell Assets Free And Clear Of Federal Civil Forfeiture Claims?, Joseph Peter Gomez
A Bona Fide Dispute: Can Bankrupt Debtors Sell Assets Free And Clear Of Federal Civil Forfeiture Claims?, Joseph Peter Gomez
Fordham Journal of Corporate & Financial Law
Auctions are wheeling-dealing extravaganzas in which frenzies of bidders fight over shiny objects. What would happen if the government busted down the doors of the auction house, took the shiny objects, and sold them online? An asset sale through section 363(b) of the Bankruptcy Code provides a court-supervised opportunity to maximize economic value for the bankruptcy estate. To sell estate assets, the debtor must either (1) pay off each creditor holding an interest in the assets or (2) strip the creditor’s interest and attach it to the proceeds of the sale. When the government asserts a civil forfeiture claim against …
Another Major Question: The Department Of Labor Should Retire The Tiebreaker Rule And Reemploy Pecuniary Language In Erisa, Brandon Chesner
Another Major Question: The Department Of Labor Should Retire The Tiebreaker Rule And Reemploy Pecuniary Language In Erisa, Brandon Chesner
Fordham Journal of Corporate & Financial Law
The Employee Retirement Income Security Act of 1974 (“ERISA”) soon turns 50. Instead of celebrating with cake, retirees and future retirees alike get to witness a new chapter in the debate over the consideration of Environmental, Social, or Governance (“ESG”) factors in investing with plan assets. As employees cross the bridge into retirement, they look to their 401(k)s and pension plans for peace of mind, for it is ERISA that has been working silently in the background establishing minimum standards, practices, and fiduciary duties to protect participants. In recent years, the U.S. Department of Labor (“DOL”) has passed three regulations—two …
Corporate Esg Falls Short: Systemic Anti-Black Racism And Inequality Should Be Addressed Through A Cumulative Integrated Approach, Ferrell L. Littlejohn
Corporate Esg Falls Short: Systemic Anti-Black Racism And Inequality Should Be Addressed Through A Cumulative Integrated Approach, Ferrell L. Littlejohn
Fordham Journal of Corporate & Financial Law
In the 1896 case Plessy v. Ferguson, the Supreme Court endorsed the “separate but equal” doctrine, essentially codifying racial segregation. This decision guaranteed that systemic racism would permeate every fabric of society despite the abolition of slavery. Recently, many corporate institutions have pledged to actively support the fight against systemic racism through their environmental, social, and governance (“ESG”) initiatives. Corporate stakeholders have actively advocated for these initiatives, particularly in response to recent scholarship revealing the significant involvement of capitalist institutions in historical slavery, and the continued perpetuation of anti-Black racism. Nevertheless, such initiatives, for example, internal diversity, equity, and …
Speech Without Speakers: Eliminating Artificial Barriers To Pleading Corporate Scienter In Securities Fraud Claims, Jennifer Ligansky
Speech Without Speakers: Eliminating Artificial Barriers To Pleading Corporate Scienter In Securities Fraud Claims, Jennifer Ligansky
Fordham Journal of Corporate & Financial Law
To successfully plead securities fraud claims under Rule 10b–5, the Private Securities Litigation Reform Act (“PSLRA”) requires that plaintiff-investors raise a “strong inference” that the defendant acted with scienter when issuing a false statement. But pleading scienter presents a challenging issue when the defendant is not a person, but an entity. When the defendant is a corporation, U.S. Circuit Courts of Appeals have adopted different approaches for determining whether the plaintiff has pleaded a strong inference of scienter. Some circuits hold that plaintiffs can raise a strong inference of corporate scienter only if the complaint identifies a speaker who knew …
The Lease Of All Evils: How A Middle-Ground Approach Can Resolve The Bankruptcy Code Conflict Between Section 363(F) Sales And Section 365(H) Lessee Protections, Kate Christensen
The Lease Of All Evils: How A Middle-Ground Approach Can Resolve The Bankruptcy Code Conflict Between Section 363(F) Sales And Section 365(H) Lessee Protections, Kate Christensen
Fordham Journal of Corporate & Financial Law
The Fifth Circuit’s recent decision in In re Royal St. Bistro, LLC has awakened an unsettled issue in the Bankruptcy Code that has divided the bankruptcy community for over two decades. The question examined by the Fifth Circuit was whether a non-debtor lessee with a right to continued possession through section 365(h) of the Bankruptcy Code loses this right if the debtor-lessor can sell its property “free and clear” under section 363(f). While early decisions held that section 365(h) always protects lessees against debtors’ free and clear sales, some subsequent decisions created a circuit split by ruling that section 365(h) …
Is A Ban On Non-Competes Supported By Empirical Evidence?, Sarah Oh Lam, Thomas Lenard, Scott Wallsten
Is A Ban On Non-Competes Supported By Empirical Evidence?, Sarah Oh Lam, Thomas Lenard, Scott Wallsten
Fordham Journal of Corporate & Financial Law
The U.S. Federal Trade Commission (FTC) has proposed a rule to declare virtually all non-compete agreements unfair methods of competition under Section 5 of the FTC Act and therefore, illegal. However, the empirical literature on non-compete agreements cited by the FTC in its Notice for Proposed Rulemaking (“NPRM”) shows mixed results on earnings, job creation, firm formation, entrepreneurship, training, investment, and firm value. Evidence in other current studies also does not support an economy-wide ban. The FTC concludes that the proposed rule would yield net benefits even though by its own admission it lacks the information necessary to conduct a …
Outsourcing Voting To Ai: Can Chatgpt Advise Index Funds On Proxy Voting Decisions?, Chen Wang
Outsourcing Voting To Ai: Can Chatgpt Advise Index Funds On Proxy Voting Decisions?, Chen Wang
Fordham Journal of Corporate & Financial Law
Released in November 2022, Chat Generative Pre-training Transformer (“ChatGPT”), has risen rapidly to prominence, and its versatile capabilities have already been shown in a variety of fields. Due to ChatGPT’s advanced features, such as extensive pre-training on diverse data, strong generalization ability, fine-tuning capabilities, and improved reasoning, the use of AI in the legal industry could experience a significant transformation. Since small passive funds with low-cost business models generally lack the financial resources to make informed proxy voting decisions that align with their shareholders’ interests, this Article considers the use of ChatGPT to assist small investment funds, particularly small passive …
The Public’S Companies, Andrew K. Jennings
The Public’S Companies, Andrew K. Jennings
Fordham Journal of Corporate & Financial Law
This Essay uses a series of survey studies to consider how public understandings of public and private companies map into urgent debates over the role of the corporation in American society. Does a social-media company, for example, owe it to its users to follow the free-speech principles embodied in the First Amendment? May corporate managers pursue environmental, social, and governance (“ESG”) policies that could reduce short-term or long-term profits? How should companies respond to political pushback against their approaches to free expression or ESG?
The studies’ results are consistent with understandings that both public and private companies have greater public …
Loophole Entrepreneurship, Brian M. Sirman
Loophole Entrepreneurship, Brian M. Sirman
Fordham Journal of Corporate & Financial Law
All entrepreneurs seek favorable legal or regulatory treatment for their businesses. Sometimes this leads an entrepreneur to build a business within a gap in the law—a loophole. In so doing, these “loophole entrepreneurs” may avoid steep regulatory compliance costs that otherwise would beset (or perhaps prohibit) their businesses, thereby gaining advantages over competitors. Despite these benefits, loophole entrepreneurship is fraught with risks. Loopholes, by nature, are fragile, and their contours are often uncertain. Moreover, the stigma of “exploiting a loophole” (which connotes unfairness or deception) can provoke ill will among competitors, policymakers, and the public.
The ranks of loophole entrepreneurs …
Divined Comity: Assessing The Vitamin C Antitrust Litigation And Updating The Second Circuit’S Prescriptive Comity Framework, William Weingarten
Divined Comity: Assessing The Vitamin C Antitrust Litigation And Updating The Second Circuit’S Prescriptive Comity Framework, William Weingarten
Fordham Journal of Corporate & Financial Law
In re Vitamin C Antitrust Litigation, recently decided by the Second Circuit, sets a grave precedent for American plaintiffs seeking redress for antitrust injuries wrought by foreign defendants. The case involved a group of Chinese manufacturers and exporters of vitamin C, who conspired to fix prices and restrict output in the export market, injuring American consumers in import commerce. The foreign manufacturers conceded that they had colluded in fixing prices and restricting output, in flagrant violation of U.S. antitrust law. And yet, with the assistance of the Chinese government—intervening as amicus curiae—the defendants were successfully able to argue, on appeal …
Expanding Mfw: Delaware Law Should Offer A Business Judgment Rule Safe Harbor For All Conflicted Controller Transactions, Alex Lindsey
Expanding Mfw: Delaware Law Should Offer A Business Judgment Rule Safe Harbor For All Conflicted Controller Transactions, Alex Lindsey
Fordham Journal of Corporate & Financial Law
While courts usually defer to a board’s business decisions under the business judgment rule, courts will apply a much less deferential standard of review due to loyalty concerns if a conflicted controller is involved in a business decision such as a merger. However, in Kahn v. M & F Worldwide (“MFW”) when a squeeze out merger was challenged by a minority stockholder, the Delaware Supreme Court reviewed the transaction under the deferential business judgment rule standard because the Court found that the structure of the transaction neutralized the controller loyalty concerns. Building on this reasoning, the Court developed a checklist …
The Problem With The “Non-Class” Class: An Urgent Call For Improved Gatekeepers In Merger Objection Litigation, Josh Molder
The Problem With The “Non-Class” Class: An Urgent Call For Improved Gatekeepers In Merger Objection Litigation, Josh Molder
Fordham Journal of Corporate & Financial Law
Until recently, class actions dominated merger objection litigation. However, plaintiff’s lawyers have constructed a “non-class” class where an individual suit can benefit from the leverage of a certified class without ever meeting the stringent class certification requirements of Federal Rules of Civil Procedure 23. This new development has initiated a shift in merger objection litigation where plaintiffs are increasingly filing individual suits instead of class actions. However, this shift has left shareholders vulnerable to collusive settlements because plaintiff’s attorneys have significant control over these suits and a strong incentive to settle quickly for a substantial fee. Additionally, corporate defendants are …
Gamestopped: How Robinhood’S Gamestop Trading Halt Reveals The Complexities Of Retail Investor Protection, Neal F. Newman
Gamestopped: How Robinhood’S Gamestop Trading Halt Reveals The Complexities Of Retail Investor Protection, Neal F. Newman
Fordham Journal of Corporate & Financial Law
Should brokers have the unfettered right to restrict investor trading? GameStop, a brick-and-mortar video game retailer, had been experiencing declining revenues since 2016. However, GameStop saw its share price climb almost 1000 percent in the span of a one- week period from January 21, 2021 to January 27, 2021 due to retail investors buying significant amounts of GameStop shares during that period. Melvin Capital, a hedge fund, ended up losing billions as they were betting that GameStop shares would lose value instead of increase—a practice referred to as short selling. On January 28, 2021, brokers inexplicably halted trading on GameStop …
Hired By A Machine: Can A New York City Law Enforce Algorithmic Fairness In Hiring Practices?, Lindsey Fuchs
Hired By A Machine: Can A New York City Law Enforce Algorithmic Fairness In Hiring Practices?, Lindsey Fuchs
Fordham Journal of Corporate & Financial Law
Workplace antidiscrimination laws must adapt to address today’s technological realities. If left underregulated, the rapidly expanding role of Artificial Intelligence (“AI”) in hiring practices has the danger of creating new, more obscure modes of discrimination. Companies use these tools to reduce the duration and costs of hiring and potentially attract a larger pool of qualified applicants for their open positions. But how can we guarantee that these hiring tools yield fair outcomes when deployed? These issues are just starting to be addressed at the federal, state, and city levels. This Note tackles whether a new city law can be improved …
The Battle With Big Tech: Analyzing Antitrust Enforcement And Proposed Reforms, Youngjae Lee, Morgan Hagenbuch
The Battle With Big Tech: Analyzing Antitrust Enforcement And Proposed Reforms, Youngjae Lee, Morgan Hagenbuch
Fordham Journal of Corporate & Financial Law
No abstract provided.
Without Reservation: Ensuring Uniform Treatment In Bankruptcy While Keeping In Mind The Interests Of Native American Individuals And Tribes, Connor D. Hicks
Without Reservation: Ensuring Uniform Treatment In Bankruptcy While Keeping In Mind The Interests Of Native American Individuals And Tribes, Connor D. Hicks
Fordham Journal of Corporate & Financial Law
The Bankruptcy Code (“Code”) exists as a mechanism for good faith debtors to discharge debts and seek a “fresh start” in life and finance. 11 U.S.C. § 106(a) ensures that not only are all debtors treated uniformly, but that all creditors, including governmental creditors which may otherwise enjoy immunity from suit, are equally subject to the jurisdiction of Bankruptcy courts and bound to the provisions of the Code.
However, a recent circuit split has demonstrated one niche yet significant instance in which a debtor may not receive the same treatment as their counterparts. While § 106 contains an express waiver …
The Solution To Shadow Trading Is Not Found In Current Insider Trading Law: A Proposed Amendment To Rule 10b5-2, Jamel Gross-Cassel
The Solution To Shadow Trading Is Not Found In Current Insider Trading Law: A Proposed Amendment To Rule 10b5-2, Jamel Gross-Cassel
Fordham Journal of Corporate & Financial Law
Shadow trading is a lucrative way to exploit a loophole in insider trading law. Insiders abuse this loophole to make six-figure profits and escape liability when done at the right companies. Those who shadow trade use material, nonpublic information to trade not in the securities of their own company, which would be illegal, but in the securities of a closely related company where the information is just as impactful. Efforts to close this loophole rely on the individual insider trading policies of the involved companies. These policies vary in language, making liability for shadow trading dependent on specific language or …
The Exit Theory Of Judicial Appraisal, William J. Carney, Keith Sharfman
The Exit Theory Of Judicial Appraisal, William J. Carney, Keith Sharfman
Fordham Journal of Corporate & Financial Law
For many years, we and other commentators have observed the problem with allowing judges wide discretion to fashion appraisal awards to dissenting shareholders based on widely divergent, expert valuation evidence submitted by the litigating parties. The results of this discretionary approach to valuation have been to make appraisal litigation less predictable and therefore more costly and likely. While this has been beneficial to professionals who profit from corporate valuation litigation, it has been harmful to shareholders, making deals costlier and less likely to be completed.
In this Article, we propose to end the problem of discretionary judicial valuation by tracing …
From Tether To Terra: The Current Stablecoin Ecosystem And The Failure Of Regulators, Mary E. Burke
From Tether To Terra: The Current Stablecoin Ecosystem And The Failure Of Regulators, Mary E. Burke
Fordham Journal of Corporate & Financial Law
The Tether controversy and Terra crash have placed stablecoins in the regulatory spotlight. Stablecoins are often portrayed as posing systemic risks to financial markets, with some pundits labelling them “the villain of the finance world.” Global regulatory bodies, namely the International Monetary Fund (IMF) and the Bank of International Settlement (BIS), and political leaders, including the Biden Administration, have all called for stablecoin regulation. These officials allege that stablecoins’ structure, combined with their exponential growth, pose a unique risk to global markets. Before the May 2022 Terra crash, government reports superficially treated stablecoins by exclusively focusing on asset-backed coins. Post …
Money Creation And Bank Clearing, Nadav Orian Peer
Money Creation And Bank Clearing, Nadav Orian Peer
Fordham Journal of Corporate & Financial Law
Like many other countries, the U.S. money supply consists primarily of deposits created by private commercial banks. How we understand bank money creation matters enormously. We are currently witnessing a debate between two competing understandings. On the one hand, a long-standing conventional view argues that bank money creation originates in individual market transactions. Based on this understanding, the conventional view narrowly limits the scope of banking regulation to market failure correction. On the other hand, authors in a new legal literature emphasize the public aspects of bank money creation, characterizing it as a “public franchise,” a “public-private partnership,” and part …
Blacking Out Congressional Insider Trading: Overlaying A Corporate Mechanism Upon Members Of Congress And Their Staff To Curtail Illegal Profiting, Nicholas Gervasi
Blacking Out Congressional Insider Trading: Overlaying A Corporate Mechanism Upon Members Of Congress And Their Staff To Curtail Illegal Profiting, Nicholas Gervasi
Fordham Journal of Corporate & Financial Law
Congressional insider trading involves members of Congress or their staff trading on material, nonpublic information attained while executing their official responsibilities. This type of private profit-making, while in a government role, casts doubt on the efficacy and impartiality of lawmakers to regulate companies they hold shares of. Egregious acts of illegal profiting from insider trading based on information entrusted to the government escape prosecution and liability due to fundamental gaps in the common law and the Congress specific statutes lack enforcement. Recent calls on Congress by the public and multiple bipartisan proposed bills in both chambers have begun to address …
Exploring Financial Data Protection And Civil Liberties In An Evolved Digital Age, Amanda Lindner
Exploring Financial Data Protection And Civil Liberties In An Evolved Digital Age, Amanda Lindner
Fordham Journal of Corporate & Financial Law
There is no comprehensive financial privacy law that can protect consumers from a company’s collection sharing and selling of consumer data. The most recent federal financial privacy law, the Gramm-Leach-Bliley Act (“GLBA”), was enacted by Congress over 20 years ago. Vast technological and financial changes have occurred since 1999, and financial privacy law is due for an upgrade.
As a result, loopholes exist where companies can share financial data without being subject to laws or regulations. Additionally, federal financial privacy related laws provide little to no recourse for consumers to self-remediate with litigation, also known as a private right of …
Peeking Into The House Of Cards: Money Laundering, Luxury Real Estate, And The Necessity Of Data Verification For The Corporate Transparency Act’S Beneficial Ownership Registry, S. Alexandra Bieler
Peeking Into The House Of Cards: Money Laundering, Luxury Real Estate, And The Necessity Of Data Verification For The Corporate Transparency Act’S Beneficial Ownership Registry, S. Alexandra Bieler
Fordham Journal of Corporate & Financial Law
It is estimated that $800 billion to $2 trillion are laundered globally every year, funding the schemes of bad actors and terrorists alike. These astronomical sums are moved around the world without detection; this is in large part due to the ease with which anonymous shell companies, typically limited liability companies (LLCs), can be created, particularly in the United States. America is one of the most egregious enablers of this practice because most states require little to no information about the person ultimately controlling the entity, known as the “beneficial owner.” Working through an LLC, bad actors often turn to …
Goodbye Buybacks? Why Recent Stock Buyback Reform Proposals Go Beyond What Is Necessary, Joshua Zelen
Goodbye Buybacks? Why Recent Stock Buyback Reform Proposals Go Beyond What Is Necessary, Joshua Zelen
Fordham Journal of Corporate & Financial Law
This note provides an overview of the intensifying debate around the impact that stock buybacks have on economic inequality and the proposals designed to reform the practice. With the advent of the Securities and Exchange Commission’s (SEC) 1982 promulgation of Rule 10b-18, corporations began allocating vast portions of their profits to stock buybacks. In recent years, this practice has become increasingly more common and has surpassed previous historical benchmarks.
Critics of stock buybacks primarily view the practice as a misuse of excess corporate funds that could instead be allocated to improve employee working conditions, benefits, and future outcomes. Opponent’s concerns …
Delaware’S Dominance, Wyoming’S Dare: New Challenge, Same Outcome?, Pierluigi Matera
Delaware’S Dominance, Wyoming’S Dare: New Challenge, Same Outcome?, Pierluigi Matera
Fordham Journal of Corporate & Financial Law
Despite increasing criticism, Delaware’s dominance in corporate law has not experienced a significant decline: as of today, 67.8 percent of Fortune 500 companies are still incorporated in its jurisdiction. Nevada is known as Delaware’s most important competitor, with an aggressive strategy that has overridden the efforts of any other jurisdiction. Yet, its success has been limited to a specific market segment: small firms with low institutional shareholding and high insider ownership.
Scholars suggest several explanations for both the rise and the staying power of Delaware. These explanations are essentially subsumed under the credible commitment theory and the network theory. According …
Direct Liability And Veil-Piercing: When One Door Closes, Another Opens, King Fung Tsang, Katie Ng
Direct Liability And Veil-Piercing: When One Door Closes, Another Opens, King Fung Tsang, Katie Ng
Fordham Journal of Corporate & Financial Law
Piercing the corporate veil has been substantially limited in English law since Prest v. Petrodel. This contraction coincides with the development of the direct liability doctrine which attaches liability directly on the parent company. The authors argue that the shift from using piercing the corporate veil to direct liability is a positive development as it gives English courts a better tool to combat the abuse of separate legal personality. However, compared the English doctrines with their counterparts under the U.S. laws, it is argued that the much broader U.S. piercing doctrine makes the expansion of direct liability doctrine unnecessary in …
Governing Fintech 4.0: Bigtech, Platform Finance, And Sustainable Development, Douglas Arner, Ross Buckley, Kuzi Charamba, Artem Sergeev, Dirk Zetzsche
Governing Fintech 4.0: Bigtech, Platform Finance, And Sustainable Development, Douglas Arner, Ross Buckley, Kuzi Charamba, Artem Sergeev, Dirk Zetzsche
Fordham Journal of Corporate & Financial Law
Over the past 150 years, finance has evolved into one of the world’s most globalized, digitized, and regulated industries. Digitalization has transformed finance, but also enabled new entrants over the past decade in the form of technology companies, especially FinTechs and BigTechs. As a highly digitalized industry, incumbents and new entrants alike are increasingly pursuing similar approaches and models, focusing on the economies of scope and scale typical of finance and the network effects typical of data. Predictably, this has resulted in the emergence of large digital finance platforms. We argue that the combination of digitalization, new entrants (especially BigTechs), …
Returning To The Statutory Text: Why The Language Of Section 13(B) Requires Courts To Narrowly Construe The Ftc’S Ability To Obtain Injunctive Relief, Christopher Halm
Returning To The Statutory Text: Why The Language Of Section 13(B) Requires Courts To Narrowly Construe The Ftc’S Ability To Obtain Injunctive Relief, Christopher Halm
Fordham Journal of Corporate & Financial Law
The Federal Trade Commission (FTC) enforces over 70 laws in the areas of antitrust and consumer protection, and one valuable tool to support their enforcement is Section 13(b) of the Federal Trade Commission Act (“Section 13(b)”). Section 13(b), among other features, grants the FTC authority to seek an injunction in district court against any defendant that is “about to violate” one or more of those laws. For the past three decades, courts have adopted a permissive judicial interpretation of that language, authorizing injunctions against defendants when the allegedly impending violations were only “likely to recur” based on past misconduct. This …