Law Commons^™

The Financial Reform Act: Will It Succeed In Reversing The Causes Of The Subprime Crisis And Prevent Future Crises?, Charles W. Murdock

Charles W. Murdock

Summary: The Financial Reform Act: Will It Succeed in Reversing the Causes of the Subprime Crisis and Prevent Future Crises? By: Professor Charles W. Murdock

The current financial crisis, which could have plunged the world into a financial abyss similar to the Great Depression, is far from resolved. The financial institutions, which this article asserts caused the crisis, have returned to profitability and have paid billions of dollars in bonuses, while ordinary Americans have borne the brunt of the meltdown, with formal unemployment hanging around the 10% mark. This has caused some to comment that profits have been privatized and …

The Financial Reform Act: Will It Succeed In Reversing The Causes Of The Subprime Crisis And Prevent Future Crises?, Charles W. Murdock

Charles W. Murdock

Summary: The Financial Reform Act: Will It Succeed in Reversing the Causes of the Subprime Crisis and Prevent Future Crises? By: Professor Charles W. Murdock

The current financial crisis, which could have plunged the world into a financial abyss similar to the Great Depression, is far from resolved. The financial institutions, which this article asserts caused the crisis, have returned to profitability and have paid billions of dollars in bonuses, while ordinary Americans have borne the brunt of the meltdown, with formal unemployment hanging around the 10% mark. This has caused some to comment that profits have been privatized and …

Berle’S Conception Of Shareholder Primacy: A Forgotten Perspective For Reconsideration During The Rise Of Finance, Fenner Stewart

Fenner L. Stewart Jr.

Adolf A. Berle is celebrated as the grandfather of modern shareholder primacy, but this glosses over his opposition to how Henry Manne used his argument. If Berle were alive today, he would certainly reject this praise. This is not always appreciated in commentaries of his shareholder primacy argument. For this reason, this article offers a nuanced understanding of Berle’s argument, providing a clear observation point for examining the shift from his shareholder primacy argument to the one of today. From this point of observation, the reader can see distinctions within, and potentials for, the shareholder primacy argument and thus the …

Legal Mechanization Of Corporate Social Responsibility Through Alien Tort Statute Litigation: A Response To Professor Branson With Some Supplemental Thoughts, Donald J. Kochan

Donald J. Kochan

This Response argues that as Alein Tort Statute jurisprudence “matures” or becomes more sophisticated, the legitimate limits of the law regress. The further expansion within the corporate defendant pool – attempting to pin liability on parent, great grandparent corporations and up to the top – raises the stakes and complexity of ATS litigation. The corporate social responsibility discussion raises three principal issues about how a moral corporation lives its life: how a corporation chooses its self-interest versus the interests of others, when and how it should help others if control decisions may harm the shareholder owners, and how far the …

The Humanization Of The Corporate Entity: Changing Views Of Corporate Criminal Liability In The Wake Of Citizens United, Elizabeth R. Sheyn

Elizabeth R Sheyn

Although the recent United States Supreme Court decision in Citizens United v. Federal Election Commission clearly controls the First Amendment rights of corporations, the effect of Citizens United on corporate criminal liability is less obvious, though equally (if not more) significant. The Court’s view that corporations are equal to human beings, at least under the First Amendment’s Free Speech Clause, when combined with the traditional understanding that corporations are considered “persons” under the United States Constitution, likely impacts the way that corporations’ alleged misdeeds are investigated by the government and the manner in which the government subsequently deals with corporate …

Taking Stock -- Salary And Options Too: The Looting Of Corporate America, Kenneth R. Davis

Kenneth R. Davis

Abstract “Taking Stock – Salary and Options Too: The Looting of Corporate America” Executive compensation has come to mean corporate greed. CEO pay has soared to incomprehensible levels. Even during the current financial crisis, more CEOs saw pay increases than cuts. Public resentment to multi-million dollar paychecks swelled to outrage when AIG and Merrill Lynch used bailout funds to dispense enormous bonuses to executives. The looting of America’s corporations has led to numerous strategies to curb executive compensation. These strategies include heightened corporate disclosure requirements, tax incentives, say-on-pay, and shareholder input into the process for nominating directors. All these strategies …

How "Big" Became Bad: America's Underage Fling With Universal Banks, Lawrence G. Baxter

Lawrence G. Baxter

In little more than a decade gigantic new financial institutions have emerged in America. These organizations are quite different from their predecessors in that they share the highly complex, diversified characteristics of foreign “universal banks.” They are still in the process of developing experienced and mature operational and risk management systems. During this same period, the regulatory framework necessary to match the size, power and hazards generated by these new universal banks remains underdeveloped, and the primary framework around which the system is being constructed, namely Basel II, lies in tatters in the wake of the financial crisis of 2007-08. …

The Fox And The Ostrich: Is Gaap A Game Of Winks And Nods?, Arthur Acevedo

Arthur Acevedo

The fox is frequently described as sly, cunning and calculating in world literature. It is often associated with behavior that seeks advantage through trickery and pretext. The ostrich on the other hand, has been portrayed as cowardly and irrational. Its character defect is epitomized when it sticks its head in the sand at the first sign of trouble. The Financial Accounting Standards Board (FASB) can be described as the fox; the Securities Exchange Commission (SEC), the ostrich. This article examines the creation of accounting principles by the fox and the failure to govern by the ostrich. History demonstrates that the …

Corporate Social Responsibility After Citizens United, David G. Yosifon

David G. Yosifon

The Supreme Court recently held Citizens United v. Federal Elections Commission (2010) that the First Amendment forbids Congress from restricting the political speech of corporations. While corporate theory did very little to inform the Court’s thinking in Citizens United, this article argues that the holding in Citizens United requires us to rethink corporate theory. Specifically, this article demonstrates that the shareholder primacy norm in American corporate governance relies on the assumption that corporations can be restrained from influencing external governmental operations. We can enjoy the efficiencies generated by shareholder primacy, mainstream corporate theorists have long argued, because we can rely …

The Equity Trustee, Kelli A. Alces

Kelli A. Alces

As we reel from the effects of a recent financial disaster, it is apparent that there is a significant gap in corporate governance and accountability for management. One reason why we have experienced this financial cataclysm is the inability of shareholders to do the “shareholder job.” Shareholders, as the putative owners of corporations, hold a venerated place in corporate governance. They are responsible for electing directors and monitoring management as well as valuing companies through trades in a vigorous market. The shareholder collective action problem and resulting rational apathy have kept shareholders from effectively fulfilling their role in corporate governance. …

Corporate Social Responsibility After Citizens United, David G. Yosifon

David G. Yosifon

The Supreme Court recently held in Citizens United v. Federal Elections Commission (2010) that the First Amendment forbids Congress from restricting the political speech of corporations. While corporate theory did very little to inform the Court’s thinking in Citizens United, this article argues that the holding in Citizens United requires us to rethink corporate theory. Specifically, this article demonstrates that the shareholder primacy norm in American corporate governance relies on the assumption that corporations can be restrained from influencing external governmental operations. We can enjoy the efficiencies generated by shareholder primacy, mainstream corporate theorists have long argued, because we can …

The Credit Repair Organizations Act: The Sleeping Giant, Justin Smith

Justin T Smith

Congress created the Credit Repair Organizations Act (CROA) to protect consumers from unscrupulous providers of credit repair. In the fifteen years since it was enacted, problems have arisen in its application as many of the key provisions of CROA were left undefined and what little case law that has developed has yet to form a coherent understanding of how CROA is to be read. This lack of predictability makes CROA an ineffective piece of legislation in that parties are unable to properly modify their behavior since they are not operating on known terms.

Just as CROA has been neglected by …

Charitable Waste: Consideration Of A "Waste Not, Want Not" Tax, Evelyn Lewis

Evelyn A Lewis

CHARITABLE WASTE: CONSIDERATION OF A “WASTE NOT, WANT NOT” TAX EVELYN A. LEWIS Abstract Lavish expenditures by charities occur regularly, even in today’s depressed economy. Many are unwarranted and foolish while some prove to be extremely beneficial and valuable over time. But even the best of charitable splurges involve government waste since all charities are substantially supported by significant government subsidies. Unfortunately, most taxpayers don’t respond to charitable luxury-type waste with the same degree of outrage they do to other forms of government waste. This article first reveals the probable reasons for this different taxpayer reaction and posits that it’ll …

The Fox And The Ostrich: Is Gaap A Game Of Winks And Nods?, Arthur Acevedo

Arthur Acevedo

Abstract: The fox is frequently described as sly, cunning and calculating in world literature. It is often associated with behavior that seeks advantage through trickery and pretext. The ostrich on the other hand, has been portrayed as cowardly and irrational. Its character defect is epitomized when it sticks its head in the sand at the first sign of trouble. The Financial Accounting Standards Board (FASB) can be described as the fox; the Securities Exchange Commission (SEC), the ostrich. This article examines the creation of accounting principles by the fox and the failure to govern by the ostrich. History demonstrates that …

How Incentives Drove The Subprime Crisis, Charles W. Murdock

Charles W. Murdock

How Incentives Drove the Subprime Crisis

In order to address any systemic problem, whether the goal is to change the system, regulate the system, or change the incentives driving a system, it is necessary to appreciate all the drivers operating within the system. In the case of the subprime crisis, one of the drivers was the changing nature of the subprime loans, which was not factored into the models used by the investment bankers, the credit rating agencies, and the issuers of credit default swaps.

This paper is an attempt to look dispassionately at the subprime crisis from a particular …

Distorting Legal Principles, Steven L. Schwarcz

Steven L Schwarcz

This article explores the important but until now largely neglected problem of distorting legal principles. Although legal principles enable society to order itself by preserving broadly based expectations, parties sometimes transact in ways that are so inconsistent with accepted principles as to create uncertainty or confusion that undermines the basis for reasoning afforded by the principles. The article starts by examining a fundamental distortion of the nemo dat legal principle (one cannot give what one does not have), which was a trigger of Lehman Brothers’ recent downfall. A practice called “rehypothecation” so distorted nemo dat that Lehman’s customers were uncertain …

How Incentives Drove The Subprime Crisis, Charles W. Murdock

Charles W. Murdock

In order to address any systemic problem, whether the goal is to change the system, o regulate the system, or change the incentives driving a system, it is necessary to appreciate all the drivers operating within the system. In the case of the subprime crisis, one of the drivers was the changing nature of the subprime loans, which was not factored into the models used by the investment bankers, the credit rating agencies, and the issuers of credit default swaps.

This paper is an attempt to look dispassionately at the subprime crisis from a particular perspective, namely, the incentives that …

Delaware For Small Fry: Jurisdictional Competition For Limited Liability Companies, Larry E. Ribstein

Larry E. Ribstein

Most of the work on jurisdictional competition for business associations has focused on publicly held corporations and the factors underlying Delaware’s dominance in attracting formations of large out-of-state corporations. We examine an analogous jurisdictional competition to attract formations by closely held limited liability companies (LLCs). The LLC offered the first attractive business form for closely held limited liability firms unconstrained by the legacy of corporate default rules. State legislatures have adopted and changed LLC statutes rapidly over the past 20 years. Unlike general and limited partnerships, which have been shaped by uniform laws, LLC statutes vary significantly. These circumstances offer …

Strategic Contracting: Contract Law As A Source Of Competitive Advantage, Larry Dimatteo

Larry A DiMatteo

This paper uses sources taken from the legal literature, as well as literature from strategy and human resource management. It explores Professor Gilson’s noted remark in the Yale Law Journal that “business lawyers serve as transaction cost engineers and this function has the potential for creating value.” This exploration focuses on the strategic use of contract law in gaining a competitive advantage and to create value. It begins by differentiating two frames of the contract paradigm. One is the internal frame in which contract law’s inherent flexibility allows for its use as a source of competitive advantage. The second frame …

Silos, Corporate Law, And Bankruptcy Law, Lawrence Hamermesh

Lawrence A. Hamermesh

No abstract provided.

Taking Stock -- Salary And Options Too: The Looting Of Corporate America, Kenneth R. Davis

Kenneth R. Davis

Abstract “Taking Stock – Salary and Options Too: The Looting of Corporate America” Executive compensation has come to mean corporate greed. CEO pay has soared to incomprehensible levels. Even during the current financial crisis, more CEOs saw pay increases than cuts. Public resentment to multi-million dollar paychecks swelled to outrage when AIG and Merrill Lynch used bailout funds to dispense enormous bonuses to executives. The looting of America’s corporations has led to numerous strategies to curb executive compensation. These strategies include heightened corporate disclosure requirements, tax incentives, say-on-pay, and shareholder input into the process for nominating directors. All these strategies …

Asset Specifity And Transaction Structures: A Case Study Of @Home Corporation, Brian Jm Quinn

Brian JM Quinn

No abstract provided.

Guioco Piano: The Acquiree's Dilemma, Karl T. Muth, Hans Trees

Karl T Muth

This article discusses strategic decisions made by the acquiree in an M&A scenario and also includes a case study on Zond Energy and Enron.

Taking Stock -- Salary And Options Too: The Looting Of Corporate America, Kenneth R. Davis

Kenneth R. Davis

Abstract of “Taking Stock – Salary and Options Too: The Looting of Corporate American” Executive compensation has come to mean corporate greed. CEO pay has soared to incomprehensible levels. Even during the current financial crisis, more CEOs saw pay increases than cuts. Public resentment to multi-million dollar paychecks swelled to outrage when AIG and Merrill Lynch used bailout funds to dispense enormous bonuses to executives. The looting of America’s corporations has led to numerous strategies to curb executive compensation. These strategies include heightened corporate disclosure requirements, tax incentives, say on pay, and shareholder input into the process for nominating directors. …

Debt As Venture Capital, Darian M. Ibrahim

Darian M Ibrahim

Venture debt, or loans to rapid-growth start-ups, is a puzzle. How are start-ups with no track records, positive cash flows, tangible collateral, or personal guarantees from entrepreneurs able to attract billions of dollars in loans each year? And why do start-ups take on debt rather than rely exclusively on equity investments from angel investors and venture capitalists (VCs), as well-known capital structure theories from corporate finance would seem to predict in this context? Using hand-collected interview data and theoretical contributions from finance, economics, and law, this Article solves the puzzle of venture debt by revealing that a start-up’s VC backing …

Instituições, Trabalho E Pessoas, Paulo Ferreira Da Cunha

Paulo Ferreira da Cunha

Os especialistas em doenças terminais sabem que ninguém tem saudades, quando abandona a vida, do trabalho que não fez. Tem saudades sim do tempo que não passou com familiares e amigos. A sociedade contemporânea, e algumas instituições "totais" estão a potenciar até ao expoente demencial a exploração e a despersonalização dos trabalhadores, designadamente proletarizando técnicos superiores e técnicos pensantes que, sem ócio criativo, deixarão de criar. É uma crise civilizacional, nada menos.

Arbitration: The "New Litigation", Thomas J. Stipanowich

Thomas J. Stipanowich

Today, binding arbitration procedures are employed in a wider variety of contracts than at any time in our nation's history, and arbitration has become a wide-ranging surrogate for court trial of civil disputes. As a result, arbitration is subjected to unprecedented stresses and strains, and it is fair to say that arbitration has never been subject to wider criticism. Once advocates promoted arbitration as a means of avoiding the contention, cost and expense of court trial; economy, efficiency and the opportunity to fashion true alternatives to litigation are still associated with conventional perceptions of arbitration. Yet today business arbitration is …

Upjohn Warnings, The Attorney-Client Privilege, And Principles Of Lawyer Ethics: Achieving Harmony, Grace M. Giesel

Grace M. Giesel

Individuals who are related to an entity such as a corporation sometimes claim that when they communicated with the entity lawyer, they honestly and reasonably believed that the lawyer represented them. Thus, they claim that the attorney-client privilege applies and protects their statements from disclosure even when the entity has waived its privilege with regard to the communications. Many courts have given privilege claims by entity individuals harsh treatment. These courts, in the interest of protecting the entity, have required individuals to make proofs beyond that required by the traditional definition of the attorney-client privilege. In addition, these courts have …

The Analytic Protocol For The Duty Of Loyalty Under The Prototype Llc Act, Thomas E. Geu, Thomas E. Rutledge

Thomas E. Geu

No abstract provided.

To Be Or Not To Be Exclusive: Statutory Construction Of The Charging Order In The Single Member Llc, Thomas E. Geu, John W. Debruyn, Thomas E. Rutledge

Thomas E. Geu

No abstract provided.