Law Commons^™

Failure's Futures: Controlling The Market For Information In Corporate Reorganization, Jonathan C. Lipson

Jonathan C. Lipson

This Article identifies and explores an important gap in bankruptcy theory and policy, with significant implications for the coming wave of major business failures: How to manage information about financially distressed businesses?

The paper makes three claims. First, Chapter 11 of the United States Bankruptcy Code plays a unique informational role, as it creates mechanisms to explain a debtor’s failure and to promote reinvestment. Second, the information functions performed by this system face internal and external threats. Internally, bankruptcy reorganization increasingly resembles an unregulated securities market, dominated by sophisticated, wealthy investors whose motives and strategies are often highly opaque. Their …

Testimony Before The U.S. House Of Representatives, Committee On Agriculture - “Potential Excessive Speculation In Commodity Markets: The Impact Of Proposed Legislation", Michael Greenberger

Congressional Testimony

Testimony before the U.S. House of Representatives, Committee on Agriculture. 110th Congress, 2nd Session (July 10-11, 2008).

Private Investment Funds: Hedge Funds' Regulation By Size, Tamar Frankel

Faculty Scholarship

This Article focuses on hedge funds-a species of private investment funds. These funds appeared in the 1950s and remained active but small. Then, in a fairly short period, they grew enormously to over $1.5 trillion, although the estimates vary.¹ Hedge fund managers engage in more than twenty-five different categories of investment strategies.² Since 2002, the number of hedge funds has more than doubled to an estimated 9,000 funds,³ and their assets have grown by 400% to an estimated $1.4 trillion since 1999.⁴ Other estimates are higher, suggesting current hedge fund assets at $2 trillion and their …

Fiduciary Duties For Activist Shareholders, Iman Anabtawi, Lynn A. Stout

Cornell Law Faculty Publications

Corporate law and scholarship generally assume that professional managers control public corporations, while shareholders play only a weak and passive role. As a result, corporate officers and directors are understood to be subject to extensive fiduciary duties, while shareholders traditionally have been thought to have far more limited obligations. Outside the contexts of controlling shareholders and closely held firms, many experts argue shareholders have no duties at all.

The most important trend in corporate governance today, however, is the move toward "shareholder democracy." Changes in financial markets, in business practice, and in corporate law have given minority shareholders in public …

An Artifact Of Law: U.S. Prohibition Of Retail Hedge Funds, Houman B. Shadab

Articles & Chapters

The U.S. hedge fund market is one of the largest and most sophisticated hedge fund markets in the world, yet due to U.S. securities regulation it is also one of the least accessible. In the U.S., federal securities law requires individuals to be wealthy to qualify to invest in hedge funds. Nonwealthy individuals, or retail investors, are effectively prohibited from purchasing hedge fund securities. Wealth-based qualifications are meant to ensure that those investing in hedge funds possess enough financial sophistication to make informed investment decisions. However, the application of wealth-based qualifications to hedge fund investors is more an artifact of …

How Arbitrary Really Was The S.E.C.'S "Hedge Fund Rule"? The Future Of Hedge Fund Regulation In Light Of Goldstein, Amaranth Advisors, And Beyond, Joshua Hess

West Virginia Law Review

No abstract provided.

Who Is At The Table? Interpreting Disclosure Requirements For Ad Hoc Groups Of Institutional Investors Under Federal Rule Of Bankruptcy Procedure 2019, James M. Shea, Jr.

Fordham Law Review

This Note explores Federal Rule of Bankruptcy Procedure 2019's disclosure requirements when hedge funds and other institutional investors appear as groups in Chapter 11 cases. In particular, this Note traces the history of Rule 2019 and the various corporate reorganization mechanisms to explain the split between two bankruptcy courts on whether these groups constitute “committees” under Rule 2019. This Note cites the fundamental differences between these groups and protective committees--the committees charged with representing security holders under federal equity receiverships. Hence, ad hoc groups do not have to make detailed disclosures of each individual transaction, disclosure that would be required …

The Unregulables? The Perilous Confluence Of Hedge Funds And Credit Derivatives, Noah L. Wynkoop

Fordham Law Review

This Note examines credit derivatives, hedge funds, and the increase in systemic risk that results from the combination of the two. The issues considered include what method of regulation--entity, transaction, or self-regulation--provides the form and amount of disclosure that best addresses the risk that the markets as a whole will be affected by a financial shock. Emphasizing the role of traders and efficient capital markets, this Note proposes that a system of disclosure for derivatives similar to the Trade Reporting and Compliance Engine, or TRACE, system for corporate bonds would prevent rapid repricings that have the potential to shock the …

The New Antifraud Rule: Is Sec Enforcement The Most Effective Way To Protect Investors From Hedge Fund Fraud?, Kathleen E. Lange

Fordham Law Review

Hedge Funds have consistently grown in both size and influence. Traditionally, hedge funds escaped regulation because access was limited to the wealthy and sophisticated. However, due to inflation, the wealth threshold has become more attainable to less sophisticated investors. Also, an increasing number of pension funds and other institutional investors have begun to invest a significant portion of their money in hedge funds. This increased growth, combined with the "retailization" of the industry, has led to concern over whether investors are adequately protected from the corresponding growth in hedge fund fraud. This Note argues that, absent new legislation, the SEC …

Mutual Funds, Hedge Funds, And The Public-Private Dichotomy In A Macrosociological Framework For Law, Larry D. Barnett

Larry D Barnett

Macrosociology considers law to be one of the institutions of society and, hence, a fundamental component of a social system. Four macrosociological propositions underlie the instant paper: (i) the institutions comprising a social system are, in the long term, compatible with one another; (ii) the compatibility of institutions involves, inter alia, concepts that are similar or identical across at least some institutions; (iii) the concepts and doctrines of the institution of law manifest the properties, including the central values, of the social system; and (iv) the properties of the social system are fashioned by system-level forces. Because the propositions are …