Law Commons^™

A Look Back In Time: Analyzing The Success And Value Of The 2014 Amendments To Rule 2a-7 And Reporting On Form N-Cr In Light Of The March 2020 Market Events, Jocelyn Near

Catholic University Law Review

Money market funds have frequently been a target of regulation by the Securities and Exchange Commission (“SEC”). Perhaps the most expansive regulation came as a response to the 2008 financial crisis, in which the Reserve Primary Fund “broke the buck.” The SEC’s misguided 2014 reforms exacerbated the inherent risks of money market funds, including the risk of runs and first mover advantage, particularly with the implementation of Form N-CR. Form N-CR requires a money market fund to publicly report when various events occur, including when a retail or government money market fund’s current net asset value per share deviates downward …

Failing To Learn The Lessons Of Madoff: Problems With Applying Iqbal To Fraud Claims, Howard Gutman, Chris Garino

University of Massachusetts Law Review

The Iqbal standard requires all civil actions filed in federal courts to provide detailed proof at the pleading stage for the claim to proceed. Under this standard, cases are adjudicated without the aid of discovery or deposition of witnesses. Cases are decided at the pleading stage based on the documents and statements provided by the one accused of fraud. The tools to uncover deception are not available at this stage. This article argues that the Iqbal pleading standard fails to allow civil courts to adequately detect and adjudicate fraud claims. This article explores fraudulent financial schemes, the Iqbal standard, the …

The Sec, The Supreme Court, And The Administrative State, Paul G. Mahoney

Seattle University Law Review

Pritchard and Thompson have given those of us who study the SEC and the securities laws much food for thought. Their methodological focus is on the internal dynamics of the Court’s deliberations, on which they have done detailed and valuable work. The Court did not, however, operate in a vacuum. Intellectual trends in economics and law over the past century can also help us understand the SEC’s fortunes in the federal courts and make predictions about its future.

The Perfect Storm: A Look At The Robinhood Shutdown And The Shady Security Practices Of Payment For Order Flow, Gamification, And Clickwrap Agreements, Justin M. Taylor

University of Massachusetts Law Review

SEC guidelines and Federal Courts have stated, and recently upheld, that brokerdealers do not owe a fiduciary duty to retail investors if they do not provide them with investment advice, but this opens up retail investors to significant and costly mistreatment by financial institutions with no avenue for recourse. Using payment for order flow, gamification, and click-wrap agreements by broker-dealers creates a conflict of interest between themselves and the retail investors they act on behalf of. This article argues that retail investors should have an avenue of recourse against financial institutions when they breach their duty to these investors by …

Neither A Borrower Nor A Lender Be: Analyzing The Sec’S Reaction To Crypto Lending, Carol R. Goforth

University of Massachusetts Law Review

In June 2021, the largest U.S.-based crypto exchange, Coinbase, announced plans to allow its customers to earn 4% interest on deposits of certain cryptoassets through a new “Coinbase Lend” program. Despite a positive reaction from its customers, on September 7, 2021, Coinbase announced it had received a notice from the Securities and Exchange Commission (SEC) to the effect that the Commission had preliminarily concluded that the proposed Lend program was a security and that Coinbase would be in violation of the federal securities laws if it proceeded. The threat of enforcement caused Coinbase to terminate the program. Shortly thereafter, in …

Does Cryptocurrency Staking Fall Under Sec Jurisdiction?, Nicholas E. Gonzalez

Fordham Journal of Corporate & Financial Law

Bitcoin, the first blockchain and cryptocurrency (crypto), launched in 2009 when the Bitcoin network opened to the public. A blockchain is a digital ledger technology where transactions are aggregated and permanently recorded into blocks of information. Maintenance of a blockchain is typically conducted by decentralized managers who own and operate network computers (“Nodes”) and serve the functions normally handled by central intermediaries to validate and confirm transactions. All Nodes follow a blockchain protocol. In Bitcoin’s and most cryptos’ cases, this protocol is known as a Proof- of-Work protocol which requires a large amount of energy consumption. Consequently, Proof-of-Stake protocols (“PoS”) …

The Cryptic Nature Of Crypto Digital Assets Regulations: The Ripple Lawsuit And Why The Industry Needs Regulatory Clarity, Jacqueline Hennelly

Fordham Journal of Corporate & Financial Law

The tension and associated time lag between technology and regulation has been well documented. Paradigmatic of this phenomenon is the global evolution of blockchain technology and digital assets. Digital assets in the blockchain allow users to transact directly without financial intermediaries. However, the regulatory guidelines for the assets, their issuance, and the subsequent transactions are unclear. The Securities and Exchange Commission (SEC) has filed an action to apply its existing regulations and the judicial interpretations to Ripple’s issuance of XRP, its token, and Ripple’s control over subsequent user transactions of XRP. This Note uses SEC v. Ripple as a case …

The Twenty-First Annual A.A. Sommer, Jr. Lecture On Corporate, Securities & Financial Law At The Fordham Corporate Law Center, Matthew Diller, G. Jeffrey Boujoukos, Ben A. Indek, Allison Herren Lee

Fordham Journal of Corporate & Financial Law

No abstract provided.

The Future Of Cryptocurrency And Real Estate Transactions, Rachel Silverstein

Touro Law Review

Bitcoin and other cryptocurrencies are all the rage right now and are beginning to make their ways into everyday transactions— including real estate transactions. This article discusses whether using cryptocurrencies to complete real estate transactions will become the norm in the near future. Cryptocurrency laws in general are few and far between, but laws surrounding cryptocurrency and real property are even more sparse. Recent case law involving cryptocurrency is a major focus of this article, along with background knowledge about cryptocurrency and the meaning of “money” as we know it today. The article concludes with a discussion about the unlikelihood …

Why Do Good People Do Bad Things? A Multi-Level Analysis Of Individual, Organizational, And Structural Causes Of White-Collar Crime, Dr. Joe Mcgrath

Seattle University Law Review

This Article draws on the Securities and Exchange Commission’s (SEC) complaint against Serageldin, the transcript for his plea hearing, and the transcript for his sentencing hearing. The SEC’s complaint provides a prosecutorial account of the fraud. It also includes actual extracts from Serageldin’s recorded phone calls at Credit Suisse which provide a realtime narrative of the fraud. The court transcripts detail Serageldin’s own account of the fraud and give a biographical account of Serageldin’s life, provided by his mother, who offered character evidence on his behalf. These perspectives allowed for the recasting of the SEC’s account of the fraud and …

Direct Listing: How Spotify Is Streaming On The Nyse And Why The Sec Should Press Play, Cody L. Lipke

The Journal of Business, Entrepreneurship & the Law

This Note proposes that given Spotify’s successful launch on the NYSE, direct listings will become increasingly popular—primarily for start-ups but also as an exit strategy for VC and PE firms in their nonpublic investments. Part II of this Note will discuss the process of “going public” via an IPO or a direct listing. Part III will use Spotify as an illustrative example of the direct listing process. Part IV will consider the advantages and disadvantages of direct listing. Part V will conclude that the Securities and Exchange Commission (SEC or the Commission) should embrace the direct listing process and will …

Accredited Investors: A Need For Increased Protection In Private Offerings, Christopher R. Zimmerman

Northwestern University Law Review

On June 19, 2019, the SEC released a report examining, in part, the adequacy of the accredited investor definition contained within Regulation D of the Securities Act of 1933 and soliciting public comment on potential changes to that definition. This Note argues that the current accredited investor definition, which determines who may invest in a private offering, does not adequately protect retail investors. Implemented in 1982 with fixed wealth requirements to qualify, the accredited investor definition has never been significantly revised, despite four decades of inflation that dramatically increased the percentage of households who meet the qualifications of an “accredited …

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 …

The Lehman Brothers Bankruptcy E: The Effects On Lehman’S U.S. Broker-Dealer, Rosalind Z. Wiggins, Andrew Metrick

Journal of Financial Crises

Lehman’s U.S. broker-dealer, Lehman Brothers Inc. (LBI), was excluded from the parent company’s bankruptcy filing on September 15, 2008, because it was thought that the solvent subsidiary might be able to wind down its affairs in a normal fashion. However, the force of the parent’s demise proved too strong, and within days, LBI and dozens of Lehman subsidiaries around the world were also in liquidation. As a regulated broker-dealer, LBI was required to comply with the Securities and Exchange Commission financial-responsibility rules for broker-dealers, including maintaining customer assets separately. However, the corporate complexity and enterprise integration that characterized the Lehman …

The Eu’S Struggles With Collective Action For Securities Fraud: An American Perspective, Dan Morrissey

Texas A&M Law Review

Notwithstanding the apparent exit of the United Kingdom, the European Union (“EU”) has grown in membership and power since its modest beginnings after World War II, now rivaling the U.S. in economic strength. With the goal of promoting the security and prosperity of all the citizens of the countries that belong to it, the EU is pressing ahead to adopt laws that will promote their political and financial integration. Along those lines, it has also recently acknowledged a deficiency in the legal systems of its member states when it comes to allowing collective actions for victims of various types of …

Coinsensus: The Need For Uniform National Virtual Currency Regulations, Anisha Reddy

Dickinson Law Review (2017-Present)

Google search volume for bitcoin and bitcoin-related keywords increased by as much as 1000 percent in 2017 from previous years. This increased interest comes hand-in-hand with increased regulatory and legislative scrutiny. Currently, there is disparate regulation for virtual currencies across national and state borders alike. States’ promulgation of various and incongruous virtual currency regulations have forced service providers to withdraw from different states within the country. However, transactions are not contained within state lines, and disparate state-by-state regulation is impracticable.

The Uniform Law Commission recognized the need for uniform guidance for those entering the North American market and drafted the …

Equity Crowdfunding Portals Should Join And Enhance The Crowd By Providing Venture Formation Resources, Jeff Thomas

Nova Law Review

No abstract provided.

Proxy Access Voting: Evaluating Proxy Access And The Recent Phenomenon Of Corporations Adopting Shareholder Protective Policies, Danielle Vukovich

San Diego International Law Journal

Shareholders hold a financial stake in a corporation, and therefore are often viewed as owners of the corporation and believed to be in control for all corporate actions. However, their powers are circumscribed. Board of directors committees nominate directors to serve the corporation and these directors have the power to select the corporation’s officers. The committees provide shareholders a slate of proposed directors that are voted on and approved at the annual shareholder meeting. Shareholders may also propose their own slate of directors, but this typically requires a proxy contest, which can be expensive due to the costs both associated …

What Would We Do Without Them: Whistleblowers In The Era Of Sarbanes-Oxley And Dodd-Frank, Sean Griffith, Jane A. Norberg, Ian Engoron, Alice Brightsky, Tracey Mcneil, Jennifer M. Pacella, Judith Weinstock, Jason Zuckerman

Fordham Journal of Corporate & Financial Law

No abstract provided.

What I Learned Trading Cryptocurrencies While Studying The Law, Joshua S. Morgan

University of Miami International and Comparative Law Review

No abstract provided.

The Sec Rides Into Town: Defining An Ico Securities Safe Harbor In The Cryptocurrency “Wild West”, C. Daniel Lockaby

Georgia Law Review

This Note recommends a viable way for the Securities and Exchange Commission (SEC) to apply the Regulation S foreign-issuer safe harbor to Initial Coin Offerings (ICOs). In the last two years, cryptocurrencies and blockchain-based companies have witnessed dramatic rises in price and value. New entrants to the crypto-markets often use ICOs as virtual public offerings to earn capital and develop their projects.

The SEC has signaled that they plan to fold ICOs and blockchain offerings into existing securities law. How these new virtual capital-raising mechanisms will fit into this framework is still largely unknown. As a defensive measure, many ICOs …

Whistling Loud And Clear: Applying Chevron To Subsection 21f Of Dodd–Frank, Shaun M. Bennett

Washington and Lee Law Review

This Note addresses a circuit court split arising from a portion of the anti-retaliation provisions in the Dodd–Frank Wall Street Reform and Consumer Protection Act. Subsection 21F’s retaliation prohibitions apply to those employers whose employees make required or protected disclosures under the Sarbanes–Oxley Act of 2002 (SOX) or any other rule or regulation under the SEC’s jurisdiction. SOX provides anti -retaliation protections — similar to those available under Dodd–Frank — for employees of publicly traded companies who report misconduct. However, SOX expressly affords protections to those who provide information to “a Federal regulatory or law enforcement agency; any Member of …

Canons Of Construction For Dysfunctional Statutes: A Comment On Bennett, Paul G. Mahoney

Washington and Lee Law Review

No abstract provided.

Comment On Whistling Loud And Clear: Applying Chevron To Subsection 21f Of Dodd–Frank, Sarah C. Haan

Washington and Lee Law Review

No abstract provided.

Proxy Access And Optimal Standardization In Corporate Governance: An Empirical Analysis, Reilly S. Steel

Fordham Journal of Corporate & Financial Law

According to the conventional wisdom, “one size does not fit all” in corporate governance. Firms are heterogeneous with respect to their governance needs, implying that the optimal corporate governance structure must also vary from firm to firm. This one-size-does-not-fit-all axiom has featured prominently in arguments against numerous corporate law regulatory initiatives, including the SEC’s failed Rule 14a-11—an attempt to impose mandatory, uniform “proxy access” on all public companies—which the D.C. Circuit struck down for inadequate cost–benefit analysis.

This Article presents an alternative theory as to the role of standardization in corporate governance—in which investors prefer standardized terms—and empirical …

A Novel Approach To Defining "Whistleblower" In Dodd-Frank, Ian A. Engoron

Fordham Journal of Corporate & Financial Law

Following the Financial Crisis of 2008, trust in the financial industry was at an all-time low as the American taxpayer was forced to bailout the very same institutions responsible for their suffering. In response, Congress passed Dodd-Frank in 2010 to ensure another crisis like 2008 never happen again. Section 78u-6 of the Act provides incentives and protections for whistleblowers who report violations of securities laws. In recent years there has been a divide among circuit courts over the question of whether employees who report violations internally to their bosses—and not directly to the SEC—are protected by the Act. Currently, the …

The Perfect Storm Is Brewing Once Again: What Scaling Back Dodd-Frank Will Mean For The Credit Default Swap, Daniel Isaacson

The Journal of Business, Entrepreneurship & the Law

The current presidential administration has expressed a concerted desire to “scale back” and even “get rid of” the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd–Frank). Focusing specifically on Dodd–Frank’s regulation of the credit default swap (CDS), this Article explores two timely queries. First, whether Dodd–Frank’s regulatory response to these financial instruments is a justifiable one, and second, what effect a repeal may have. This Article will show that the “perfect storm” CDS—which contributed so significantly to the 2007–2010 financial crisis—flourished in a regulatory environment that contained two key weaknesses: (1) few restrictions on excessive speculation; and (2) the …

If It Quacks Like A Duck: The Financial Industry Regulatory Authority And Federal Jurisdiction, Lesesne Phillips

Washington and Lee Law Review

No abstract provided.

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 relevant details of …