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Banking and Finance Law

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William & Mary Law School

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Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

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You Can’T Stop What You Can’T See: Complementary Risk Mitigation Through Compensation Disclosure, Matt Reeder Feb 2017

You Can’T Stop What You Can’T See: Complementary Risk Mitigation Through Compensation Disclosure, Matt Reeder

William & Mary Business Law Review

Section 956 of the Dodd-Frank Act requires regulators to help prevent the next financial crisis by monitoring executive compensation arrangements to prevent them from becoming excessive or leading to “material financial loss.” A now-pending rule seeks to do just this. This Article argues that the rule is well-conceived inasmuch as it limits the total portion of compensation that can be based on risk-inducing incentives, ties incentive-based compensation to longer-term performance, places a ceiling on potential incentivebased earnings, provides for downward adjustment and clawbacks, prohibits many hedging behaviors, and institutionalizes governance mechanisms and oversight policies. But, by placing a number of …


The Volcker Rule And The Presumption Against Extraterritoriality: Utterly Incompatible, Christine P. Henry Apr 2016

The Volcker Rule And The Presumption Against Extraterritoriality: Utterly Incompatible, Christine P. Henry

William & Mary Business Law Review

The Volcker Rule, enacted in 2010 as part of the Dodd-Frank Wall Street Consumer Protection Act to address the “too big to fail” problem in today’s interconnected global economy, has been controversial from the outset. The deadline for banks to comply with Volcker regulations has been extended several times, with the most recent deadline set for July 21, 2016. This Note examines the impact of the Volcker Rule on foreign banks, detailing the specific effects of Volcker regulations on two prominent German banks, Deutsche Bank and Commerzbank, and analyzes the countervailing European approach to regulating proprietary trading and risky investment. …


Broker-Dealers, Institutional Investors, And Fiduciary Duty: Much Ado About Nothing?, Lynn Bai Feb 2014

Broker-Dealers, Institutional Investors, And Fiduciary Duty: Much Ado About Nothing?, Lynn Bai

William & Mary Business Law Review

Under the mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC is soliciting public opinions on whether broker-dealers should be subject to a fiduciary duty when advising retail and institutional investors. This Article focuses on the advisability of such a proposal for institutional investors. It shows that, first, a fiduciary duty could potentially enhance broker-dealers’ standard of conduct for only a subset of institutional investors who are well capitalized, capable of assessing risks independently, and acknowledge in writing their nonreliance on broker-dealers’ advice. Thus, the benefit of fiduciary duty is much narrower than what …


Systemic Risk And Dodd-Frank's Volcker Rule, Julie A.D. Manasfi Feb 2013

Systemic Risk And Dodd-Frank's Volcker Rule, Julie A.D. Manasfi

William & Mary Business Law Review

With the recent global financial crisis starting in 2007, the issue of “systemic risk” has attracted much attention in our financial system. Some legislators have asserted that proprietary trading by banking entities, generally the trading of financial instruments for a banking entity’s own account, played a critical role in the recent global financial crisis. These sentiments parallel arguments that the practices of banks and their securities affiliates in the 1920s were partly responsible for the stock market crash of 1929 and subsequent Great Depression. At the heart of these assertions is the issue of whether combining the businesses of commercial …


Seeking True Financial Reform: Ending The Debt-Equity Distinction, Joseph B. Allen Feb 2012

Seeking True Financial Reform: Ending The Debt-Equity Distinction, Joseph B. Allen

William & Mary Business Law Review

This Note identifies the failure of Congress to address tax incentives for leverage as a principal cause of the recent financial crisis and a fundamental flaw of recent financial reform legislation. Specifically, the Internal Revenue Code provides substantially disparate tax treatment for debt and equity financing by allowing firms to deduct interest payments on indebtedness, but not providing an equivalent deduction for equity funding. This “debt-equity distinction” artificially reduces the cost of capital for debt financing relative to equity financing and encourages firms to over-employ leverage in their capital structure. This in turn increases financial distress costs and externalities to …