Banking and Finance Law Commons^™

The Ai Doppelgänger Dilemma: Cloned Voices In The Music Industry, Elizabeth Shields

Seattle University Law Review

With the rise of generative artificial intelligence (AI), there has been an influx of “voice clones”—deep-learning algorithms that create synthetic speech to realistically mimic human voices. Celebrities and, in particular, music artists, have been subjected to the proliferation of AI voice clones on social media platforms like TikTok and streaming platforms such as Spotify. Despite music utilizing AI voice clones having amassed much popularity, this technology can be harmful and highly invasive to musicians whose livelihoods often depend on their distinct voices. While legal scholars have attempted to articulate various rights that could protect a person’s voice, individuals are largely …

Let The Sunshine In: Crafting Constitutional Transparency Regulations For Content Moderation, Caitlin Ring Carlson

Seattle University Law Review

In response to public concern about the impact of social media, legislators in some U.S. states have developed laws to regulate the process of content moderation. Many include mandatory transparency and disclosure requirements, some of which courts have already deemed an unconstitutional infringement on social media platforms’ right to free expression. This article explores the parameters for crafting constitutional social media transparency regulations using existing U.S. media policy and insights from recent legal challenges. The resulting analysis identifies content neutral transparency requirements that mandate the disclosure of purely factual, non-controversial information as those most likely to withstand judicial scrutiny. Specifically, …

This Is Not A Game: The Addictive Allure Of Digital Companions, Nizan Geslevich Packin, Karni Chagal-Feferkorn

Seattle University Law Review

Artificial Intelligence (AI) agents have become an inescapable part of modern childhood, reshaping education, leisure activities, entertainment, and social interaction. From AI-powered tutors that adapt to individual learning styles to emotionally responsive chatbots that simulate human companionship, these systems promise unprecedented personalization, cognitive stimulation, and social support. However, these benefits mask significant risks that remain unregulated and inadequately addressed.

Although adults are also susceptible to forming deep emotional bonds with AI companions—often trusting them as if they possessed genuine understanding and empathy—children are particularly vulnerable. Their misplaced trust can more severely distort social development, weaken critical thinking, and foster unhealthy …

Through A Glass Darkly: How Securities Disclosures Give A Distorted View Of The Economy, Gerald F. Davis

Seattle University Law Review

Our understanding of the American economy often relies on stylized facts derived from mandatory disclosures by listed corporations. Data vendors like Standard & Poor’s vacuum up 10Ks and proxy statements into databases, and scholars distill these into tentative maps. This may have been adequate for a postwar economy centered on asset-heavy manufacturers, but it is increasingly out of step with an information-based economy. Companies listed on the stock market are fewer in number and less representative than they were, light in tangible assets and people, and heavy on IP. Basic facts such as what industry they are in are increasingly …

Table Of Contents, Seattle University Law Review

Seattle University Law Review

Table of Contents

Corporate Scenarios: Drawing Lessons From History, Madison Condon

Seattle University Law Review

As corporations are increasingly pressed to reveal information about their exposure to climate-related risks, they are often asked to undertake and disclose the outcome of “scenario analysis.” In this exercise, corporations, including financial institutions, examine how their business would fare under different pathways the future may take. One oft-used scenario, for example, is the International Energy Agency’s “Net-Zero by 2050: A Roadmap for the Energy Sector.” This Essay presents a history of the use of scenarios as a corporate planning tool, particularly in the oil industry, arguing that it is key for understanding our present moment and the role of …

Shareholder Expression In A Time Of Heightened Political Tension, Aaron A. Dhir

Seattle University Law Review

In this article, I provide context for my forthcoming research project on shareholder proposals and racial equity audits. Since the murder of George Floyd in May of 2020, progressive shareholder actors have increasingly used the proposal mechanism to advance diversity, equity, inclusion, and justice-related goals. These proposals have frequently gone beyond requesting the usual corporate fare of diversity trainings, intersectionality workshops, affinity groups, etc. Instead, a more ambitious type of proposal asks corporate America to conduct racial equity audits, defined as “an independent, objective and holistic analysis of a company’s policies, practices, products, services and efforts to combat systemic racism …

Corporate Governance Speech, Sarah C. Haan

Seattle University Law Review

The State has always regulated the intra-firm communications that make corporate governance possible, most commonly by mandating disclosures of information by a corporation to its shareholders. Some such laws are labeled “securities regulation,” but securities regulation is a broad category that extends to speech by actors who are outside the corporate enterprise as well. Also, the conventional securities regulation category does not capture all such laws; other examples, including informationforcing mandates, can be found in state corporate law. This Article uses the term “corporate governance speech” to describe the communications among shareholders, directors, and officers through which corporate governance is …

Dark Accounting Matter, Colleen Honigsberg

Seattle University Law Review

Physicists calculate that approximately 85% of the matter in the universe is composed of “dark matter” that “does not absorb, reflect, or emit electromagnetic radiation and is therefore difficult to detect.” The S&P 500 currently trades at a price-to-book value of 4.2, suggesting that book value accounts for less than 20% of the S&P 500’s market value. The remaining 80% appears nowhere in these firms’ balance sheets—it is invisible to contemporary accounting techniques and constitutes “dark accounting matter.”

Some “dark accounting matter” is composed of factors commonly described as components of “ESG.” Human capital, for example, is an intangible asset …

The Employees’ Dilemma: Balancing Internal Reporting, Whistleblowing, And Insider Trading Risks, Geeyoung Min

Seattle University Law Review

The Essay examines how recent developments in insider trading regulations and whistleblower reward programs can lead to unintended and counterproductive results of discouraging employees from using internal reporting channels within corporate compliance programs. While the presence of a robust and well-functioning corporate compliance program is a critical factor both in mitigating the level of public enforcement actions against companies and in protecting corporate managers from liability in private litigation, these programs often provide little incentive for employees to report potential misconduct internally.

Corporate compliance programs are designed to promote the upward information flow within the company, which is essential for …

How The Antidiscrimination Law Of Commercial Transactions Really Works, Helen Norton

Seattle University Law Review

A variety of businesses now cite 303 Creative when seeking First Amendment protection for their refusal to serve certain customers based on those customers’ protected class status. How this litigation will play out remains to be seen. But future courts need not, and should not, repeat the 303 Creative Court’s misunderstanding of how the antidiscrimination law of commercial transactions actually works.

Part I of this Essay explains the Court’s longstanding understanding of the antidiscrimination law of commercial transactions, and then describes the Court’s failure to engage with this precedent in 303 Creative. Part II then identifies the 303 Creative decision’s …

Volume 48 Masthead, Seattle University Law Review

Seattle University Law Review

Volume 48 Masthead

Voting Matters: Materiality Considerations And The Shareholder Vote, Renee M. Jones

Seattle University Law Review

For the shareholder franchise to have meaning, shareholders must have access to relevant information to inform their voting decisions. The securities laws’ disclosure requirements play an essential role in informing the shareholder vote.

This Essay focuses on the question of the materiality of information in the context of shareholder voting. It addresses the question of whether ESG-related information is material, positioning the materiality inquiry within the context of shareholders’ voting decisions. It explores the definition of materiality with a focus on the “reasonable investor” concept embedded within the definition. The Essay argues that the implicit expectations of many commentators that …

Volume 48 Masthead, Seattle University Law Review

Seattle University Law Review

Volume 48 Masthead

Understanding The Big Three’S Wavering Support Of Environmental And Social Shareholder Proposals, Jeff Schwartz, Jefferson Jensen

Seattle University Law Review

Because of their substantial equity portfolios, BlackRock, Vanguard, and State Street (the Big 3) are central players in corporate governance. It is, therefore, critical to understand how they vote. One puzzle is that their support for shareholder proposals on environmental and social matters appears to waiver. In 2020, for instance, BlackRock supported 11.1% of environmental proposals at S&P 500 firms. In 2021, it seemingly reversed course, supporting 55.2%. It then flipped again, supporting 32.1% in 2022. Such statistics suggest that the Big 3 are constantly changing their views on these topics. This Article seeks to better understand whether this is …

Volume 48 Masthead, Seattle University Law Review

Seattle University Law Review

Volume 48 Masthead

Green Dividends: A Case Study In Green Dividends And The Conditions For Private Ordering Solutions, Anne M. Tucker

Seattle University Law Review

This Essay introduces a novel private ordering solution to facilitate corporate investments in pro-social and environmental initiatives: Green dividends. Green dividends are an optional increase in shareholder dividends that are returned to the company to be reinvested in environmental initiatives or kept by a shareholder.

Green dividends pose an alternative to the current gridlocked debate that corporations can’t, won’t, shouldn’t, and shouldn’t even try to act in pro-social or environmental ways. Turning the common refrains on their head converts each narrative into an element for a successful private ordering solution: authority, accountability, shareholder buy-in, and government- backed enforcement. With Green …

Does Climate Disclosure Work To Reduce Greenhouse Gas Emissions? Emerging Evidence Suggests Cautious Optimism, Cynthia A. Williams

Seattle University Law Review

Significant regulatory resources have been spent developing global, voluntary climate and sustainability disclosure standards, such as the TCFD, TNRD, and ISSB’s Sustainability and Climate Disclosure standards, or domestically required disclosures, such as in the EU and in the U.S. Thus, it is important to evaluate whether this disclosure, particularly voluntary, qualitative disclosure, will have the power to shift the allocation of capital, will have a significant effect on the management of climate risk within firms, and ultimately will reduce climate change risk and biodiversity loss.

In this Article, several interrelated questions will be discussed. First, what does the empirical evidence …

The False Choice Between Digital Regulation And Innovation, Anu Bradford

Northwestern University Law Review

This Article challenges the common view that more stringent regulation of the digital economy inevitably compromises innovation and undermines technological progress. This view, vigorously advocated by the tech industry, has shaped the public discourse in the United States, where the country’s thriving tech economy is often associated with a staunch commitment to free markets. U.S. lawmakers have also traditionally embraced this perspective, which explains their hesitancy to regulate the tech industry to date. The European Union has chosen another path, regulating the digital economy with stringent data privacy, antitrust, content moderation, and other digital regulations designed to shape the evolution …

An Unlikely Romance: The United States And Intermediated Markets, Emily Winston

University of Richmond Law Review

Americans are infatuated with the stock markets, and today’s stock markets are dominated by a small number of large institutions that manage enormous amounts of money. Those two facts are paradoxical given the history of stock markets in the United States. Modern stock markets in the United States are the consequence of federal legislation responding to widespread social and economic harm caused by the stock market crash of 1929. That legislation was designed to avoid the concentration of economic power in a small number of institutions. Despite those historical facts, over the past century, the centrality of the stock markets …

Decentralized Autonomous Organizations: To Statutorily Organize Or Not?, David M. Grant, Eric M. Kirby, Steven Hawkins

Wyoming Law Review

This Article explores the evolving concept of decentralized autonomous organizations (DAOs) in the context of Web3 technology. It raises critical questions about whether DAOs truly represent a step forward in limiting liability in entity governance structures or if they risk centralizing the decentralized. The text discusses the potential of DAOs to address regulatory and tax challenges while also highlighting concerns about their legitimacy and security. It compares the governance structures of traditional entities to DAOs and contemplates the reasons for formal organization pursuant to state statute. The Article further delves into some of the statutory laws in specific states recognizing …

Wanted: A Prudential Framework For Crypto Assets, Lee Reiners, Sangita Gazi

Arkansas Law Review

This Article summarizes the limited publicly available data on banks’ exposure to crypto assets and offers several specific examples of how U.S. banks engage in crypto-related businesses. It then examines past guidance issued by U.S. bank regulators and explains why this guidance lacks sufficient detail to clarify the prudential requirements associated with the various crypto-related activities in which banks are engaged. The Article then assesses the adequacy of the Basel Committee on Banking Supervision’s final prudential standard for crypto-asset exposures, issued in December 2022, and finds that the measure fails to adequately address the unique risks various crypto-asset activities pose …

Just Because They Say It: Does The U.S. Really Have The “First-Ever Comprehensive Framework” For Digital Assets?, Carol R. Goforth

Arkansas Law Review

On March 9, 2022, President Biden made history by signing an Executive Order on Ensuring Responsible Development of Digital Assets. On September 16, 2022, the White House released a fact sheet proclaiming that it had produced the “First Ever Comprehensive Framework for Responsible Development of Digital Assets,” based on nine reports stemming from the Executive Order. This Article is divided into two main parts. Part one reviews the reports received by the White House, explaining what they address while pointing out open issues for which no particular direction is established. Part two assesses regulatory gaps in the crypto space in …

Keynote Address By Cftc Commissioner Kristin Johnson, Kristin N. Johnson

Arkansas Law Review

Today, our markets are witnessing a transformative moment marked by exceptional, rapidly evolving innovation. To better understand this transformation, we might inquire about the nature of these novel financial instruments, intermediaries, and the underlying technologies that fuel an ever-expanding adoption. Thinking critically about these issues may inform our understanding of the intermediaries or lack thereof, and financial products that characterize this moment in the history and evolution of financial markets.

Henderson And The Objective Observer Standard: The Future Of Race-Conscious Standards Post-Students For Fair Admissions, Gabriela Dionisio

Seattle University Law Review

On June 29, 2023, the Supreme Court of the United States decided Students for Fair Admissions v. President & Fellows of Harvard College, which struck down race-conscious admissions policies. Within just a year after its ruling, Students for Fair Admissions has already had a sweeping impact, reaching beyond higher education. Although the Supreme Court did not indicate whether Students for Fair Admissions applies to sectors beyond higher education, law firms, and other employers have already modified their diversity policies and initiatives, erasing race and company diversity considerations. Given those dramatic changes, there is growing fear that Students for Fair Admissions …

Same Crime, Different Time: Sentencing Disparities In The Deep South & A Path Forward Under The Fourteenth Amendment, Hailey M. Donovan

Seattle University Law Review

The United States has the highest incarceration rate of any country in the world. The American obsession with crime and punishment can be tracked over the last half-century, as the nation’s incarceration rate has risen astronomically. Since 1970, the number of incarcerated people in the United States has increased more than sevenfold to over 2.3 million, outpacing both crime and population growth considerably. While the rise itself is undoubtedly bleak, a more troubling truth lies just below the surface. Not all states contribute equally to American mass incarceration. Rather, states have vastly different incarceration rates. Unlike at the federal level, …

A New Era Of Accountability? The Holding Foreign Companies Accountable Act’S Pursuit Of Regulatory Equality, Robert Ruelas

Northwestern Journal of International Law & Business

This paper discusses the Holding Foreign Companies Accountable Act (HFCAA) as a response to the long-standing regulatory disparities between U.S. and foreign firms listed on U.S. stock exchanges, with particular regard to foreign firms from China. The HFCAA requires that any firms listed on U.S. stock exchanges be subject to inspections by the Public Company Accounting Oversight Board (PCAOB) or face delisting, aiming to eliminate historic regulatory disparities. The paper begins by highlighting the historic regulatory gap in oversight resulting from China’s lack of cooperation with U.S. regulators and continues by discussing the investor harm from various scandals that could …

Public Primacy In Corporate Law, Dorothy S. Lund

Seattle University Law Review

This Article explores the malleability of agency theory by showing that it could be used to justify a “public primacy” standard for corporate law that would direct fiduciaries to promote the value of the corporation for the benefit of the public. Employing agency theory to describe the relationship between corporate management and the broader public sheds light on aspects of firm behavior, as well as the nature of state contracting with corporations. It also provides a lodestar for a possible future evolution of corporate law and governance: minimize the agency costs created by the divergence of interests between management and …

Robo-Voting: Does Delegated Proxy Voting Pose A Challenge For Shareholder Democracy?, John Matsusaka, Chong Shu

Seattle University Law Review

Robo-voting is the practice by an investment fund of mechanically voting in corporate elections according to the advice of its proxy advisor— in effect fully delegating its voting decision to its advisor. We examined over 65 million votes cast during the period 2008–2021 by 14,582 mutual funds to describe and quantify the prevalence of robo-voting. Overall, 33% of mutual funds robo-voted in 2021: 22% with ISS, 4% with Glass Lewis, and six percent with the recommendations of the issuer’s management. The fraction of funds that robo-voted increased until around 2013 and then stabilized at the current level. Despite the sizable …

The Limits Of Corporate Governance, Cathy Hwang, Emily Winston

Seattle University Law Review

What is the purpose of the corporation? For decades, the answer was clear: to put shareholders’ interests first. In many cases, this theory of shareholder primacy also became synonymous with the imperative to maximize shareholder wealth. In the world where shareholder primacy was a north star, courts, scholars, and policymakers had relatively little to fight about: most debates were minor skirmishes about exactly how to maximize shareholder wealth.

Part I of this Essay discusses the shortcomings of shareholder primacy and stakeholder governance, arguing that neither of these modes of governance provides an adequate framework for incentivizing corporations to do good. …