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Full-Text Articles in Law
The Law And Ethics Of High-Frequency Trading, Steven R. Mcnamara
The Law And Ethics Of High-Frequency Trading, Steven R. Mcnamara
Steven R. McNamara
Michael Lewis’s recent book Flash Boys has resurrected the controversy concerning “high-frequency trading” (HFT) in the stock markets. While HFT has been important in the stock markets for about a decade, and may have already peaked in terms of its economic significance, it touched a nerve with a public suspicious of financial institutions in the wake of the financial crisis of 2008-2009. In reality, HFT is not one thing, but a wide array of practices conducted by technologically adept electronic traders. Some of these practices are benign, and some even bring benefits such as liquidity and improved price discovery to …
Insider Trading And Evolutionary Psychology: Strong Reciprocity, Cheater Detection, And The Expanding Boundaries Of The Law, Steven R. Mcnamara
Insider Trading And Evolutionary Psychology: Strong Reciprocity, Cheater Detection, And The Expanding Boundaries Of The Law, Steven R. Mcnamara
Steven R. McNamara
Insider trading law has expanded in recent years to cover instances of trading on non-public information that fall outside of the fiduciary duty framework set forth in the landmark cases of Chiarella and Dirks. The trend towards a broader insider trading law moves the law closer towards what evolutionary psychology tells us humans desire when engaging in collective action: that individuals benefit in proportion to the effort or investment they make in a common enterprise. Insider trading law can therefore be understood as a societal response to cheating in group activities, and the recent expansion of the law as …
Information Failures In Structured Finance And Dodd'frank's "Improvements To The Regulation Of Credit Rating Agencies", Steven R. Mcnamara
Information Failures In Structured Finance And Dodd'frank's "Improvements To The Regulation Of Credit Rating Agencies", Steven R. Mcnamara
Steven R. McNamara
This article analyzes the credit rating agency reform provisions of the Dodd-Frank Act’s “Improvements to the Regulation of Credit Rating Agencies” in light of the massive failures in the ratings of structured finance securities leading up to the 2008 credit crisis. The primary cause of ratings failure was the flawed quantitative ratings models used by the rating agencies; conflicted behavior on the part of the rating agencies was also an important but secondary cause. The key mechanical flaw in the ratings models was the method used to determination correlation, a measure of the likelihood that one borrower would default in …