Banking and Finance Law Commons^™

Digital Vat And Development: D-Vat And D-Velopment, Richard Thompson Ainsworth

Faculty Scholarship

This article suggests that the time is right for developing countries to consider adopting a comprehensive, fully digital VAT, (complete with certified software and trusted third party intermediaries who could assume all of the taxpayer's VAT responsibilities) within the limited group of enterprises encompassed by the large taxpayer group.

Since the e-commerce revolution began in the 1990's, tax policy discussions in developed economies have enlisted "e-solutions" to streamline consumption tax administration, as well as to resolve technical problems.

Inspiration came from the marketplace. Policy-makers observed widespread, business-initiated e-solutions to consumption tax compliance problems in a wide spectrum of jurisdiction. There …

The One-Stop-Shop For Vat And Rst: Common Approaches To Eu-U.S. Consumption Tax Issues, Richard Thompson Ainsworth

Faculty Scholarship

In March 2004 the European Commission solicited comments on a proposal to simplify value added tax (VAT) obligations through a one-stop scheme. The proposal was modest in scope. It was designed to build upon the success of a similar scheme that dealt with non-EU established persons supplying digital products to non-taxable EU persons. That scheme is found in Article 26c of the Sixth VAT Directive.

In its March Consultation Paper the Commission proposed that businesses established within the EU be allowed to participate in a one-stop scheme that would be similar to the Article 26c scheme. Limited to B2C transactions, …

Global Changes In Regulating Corporate Auditors: A Comparative Assessment, Richard Thompson Ainsworth

Faculty Scholarship

Auditor independence was a global concern of financial regulators in the 1990's. Some observers saw this in a positive light, a natural development. Adjusting auditor independence rules was a manifestation of global convergence in corporate governance structures. New rules, especially rules leaning toward a harmonized system were welcome.

There was a more sobering view. This view held that global regulators were less concerned with convergence than they were with a sense of impending disaster. Things had gone too far. Significant, maybe even radical change was needed. The independence of corporate auditors had eroded; trust had been fundamentally compromised in the …

Is Equity Compensation Tax Advantaged?, David I. Walker

Faculty Scholarship

Employees who receive stock options and other forms of equity compensation generally are able to defer paying tax on this compensation for years, sometimes decades. In a rising market this deferral results in a tax benefit at the employee level. This article asks whether the employee-level tax benefit in a rising market results in a global tax advantage for companies that rely heavily on equity compensation and their employees. There are two primary issues. First, on initial inspection one might conclude that the employee-level benefit in a rising market is offset by a disadvantage in a stagnant or declining market. …

Advisory Fees: Evolving Theories, Tamar Frankel

Faculty Scholarship

The theories on which mutual fund advisers' fiduciary and advisory fees are based have evolved over time. They were changed to justify different public policy approaches and reflect different perceptions of the relationships between advisers and investors. Three theories have developed on the subject and yet another is percolating currently. The familiar context in which these theories arose is revisited to clarify their development.

Regulation And Investors' Trust In The Securities Market, Tamar Frankel

Faculty Scholarship

The subject of investor confidence in the securities markets has received wide attention recently as details of fraud and avarice continue to emerge. Investors' trust in the securities markets is important for the reasons discussed in Professor Stout's marvelous paper.¹ This Comment focuses on the relationship between investors' trust and government regulation of the markets. By regulation I mean congressional legislation and actions by federal agencies. I exclude the courts mainly because their lawmaking is not primarily policy-based, and my aim is to sound the alarm for legislative and regulatory policy-directed actions. Many an economist and academic have argued …

Banks And Inner Cities: Market And Regulatory Obstacles To Development Lending, Keith N. Hylton

Faculty Scholarship

Why are poor inner cities underserved by financial institutions, and why is it so difficult to find a solution to this problem? Explanations of the lending shortfall problem range between theories based on discrimination to the view that the lending market is working flawlessly. Drawing largely on the economic development literature, I elaborate an alternative explanation here. The asymmetric information theory I offer yields the prediction that urban minority communities will be underserved by financial institutions even in the absence of discriminatory intent.

I claim that the existing framework of banking regulation is in part responsible for the difficulty in …

Securitizing Insurance Risks, Tamar Frankel, Joseph W. Laplume

Faculty Scholarship

This Article analyzes and evaluates the legal problems that have arisen in connection with this rapidly developing insurance risk securitization. The first part of the Article deals with legal issues concerning the SPVs that undertake insurance and reinsurance contracts with ceding insurers and the other parties to the transaction. The Article addresses the dilemma in choosing the laws applicable to SPVs, the bonds they issue, and the persons and entities that form part of the securitization transaction. These laws involve state insurance laws, bankruptcy and tax laws, the Investment Company Act of 1940 and the Commodity Exchange Act of 1934, …

Securitization: The Conflict Between Personal And Market Law (Contract And Property), Tamar Frankel

Faculty Scholarship

The road to securitization - transforming debt and loans into securities - is littered with obstacles. These obstacles seem unrelated. Yet, upon reflection, many legal and business problems arising in the securitization process can be traced to one source: the inherent conflict between contract law governing personal relations among creditors and debtors, and property law governing the same relations converted into "commodities" issued or traded in the market among investors. Identical terms can be characterized as contract loans in personal context, and as personal property (securities or bonds) in market context.

Taking Future Claims Seriously: Future Claims And Successor Liability In Bankruptcy, Frederick Tung

Faculty Scholarship

Treatment of contingent tort liabilities when a business is sold presents a particular challenge for corporate and bankruptcy law. In this article, I focus on the precarious position of future tort claimants-those who may be harmed by a manufacturer's defective product after the manufacturer has sold its business and disappeared. By the time the future claimant's injury occurs, she may be left with no means of recovery. While the article focuses primarily on the bankruptcy sale context, a discussion of the nonbankruptcy context provides important background.

In the article, I make two claims. First, I address recent proposals suggesting that …

Trends In The Regulation Of Investment Companies And Investment Advisers, Tamar Frankel

Faculty Scholarship

Statutes, rules and enforcement actions are tea leaves we can read to predict future trends of mutual fund regulation. While statutes and rules are specific, the trends they signify are far more speculative. This Essay engages in such speculation to envision the long-term implications of the recent new N- 1A disclosure form, I the plain English Rule,² and the profile. ³ More generally, the Essay speculates on future trends in Securities and Exchange Commission ("Commission") enforcement, and predicts a continued and stronger use of informal enforcement by the Commission.

Arbitration In Banking And Finance, William W. Park

Faculty Scholarship

The world's bifurcation into debtors and creditors has created yet another class of people: those involved in resolving disputes between lenders and borrowers. To promote reliability in financial dispute resolution, credit agreements have generally provided that potential controversies will be submitted either to courts in the bank's home jurisdiction, or to courts of a major money center such as London or New York.

Lending Discrimination: Economic Theory, Econometric Evidence, And The Community Reinvestment Act, Keith N. Hylton, Vincent D. Rougeau

Faculty Scholarship

Although it has been settled law for almost two decades, there has been a heightened interest in the Community Reinvestment Act (CRA) over the last several years. One factor driving this interest is the continuing economic decline of the inner cities and the consequent widening of the wealth gap between cities and surrounding suburbs in many areas of the country. A second factor is the consolidation of the banking industry, which has encouraged expansion-oriented banks to improve their CRA ratings to gain the approval of regulators. A recent effort to enhance enforcement of the statute, in part the result of …

The Pros And Cons Of A Self-Regulatory Organization For Advisers And Mutual Funds, Tamar Frankel

Faculty Scholarship

Congress is seriously considering bills to establish self-regulatory organizations (SROs) for investment advisers (advisers) and investment companies (Funds). These bills would require members of the investment management industry to regulate themselves under the watchful eye of the Securities and Exchange Commission, similar in approach to the regulation of broker-dealers by the National Association of Securities Dealers, Inc. (NASD) and the securities exchanges. Proposals to establish SRO for investment advisers have arisen before. However, those proposals did not cover Funds and their advisers,

Bank Powers To Sell Annuities, Tamar Frankel

Faculty Scholarship

The conflict over turf between the banking industry and the insurance agents has heated up again. In the 1993 case Variable Annuity Life Ins. Co. v. Clarke, ¹ the Fifth Circuit held banks have no power to sell fixed annuities issued by insurance companies in cities with more than 5,000 inhabitants. On June 6, 1994, the Supreme Court granted certiorari to review the decision. ³ Both the Clinton Administration and members of Congress are considering steps toward resolving this issue. Concerned that the flight of high-quality borrowers from the banking system has rendered bank lending increasingly risky, the Comptroller of …

Anonymous Bank Accounts: Narco-Dollars, Fiscal Fraud, And Lawyers, William W. Park

Faculty Scholarship

This Article will focus on how lawyers in countries with a tradition of bank secrecy have played a part in maintaining their clients’ anonymity vis-a-vis bankers. For comparative purposes ` the Article will also comment on the banker’s interest in knowing his or her customer’s identity in a tax context, particularly when the customer claims the benefits of income tax treaties. My modest purpose is to help us all to be more aware of the divergent ethical implications of bank account anonymity

What Can Be Done About Stock Market Volatility, Tamar Frankel

Faculty Scholarship

Volatility is as old as the financial markets. The bull market of 1986 and the crash that followed in 1987 were but the latest of periodic market gyrations that started with the South Sea Bubble and the Lombard Street run on commercial paper and have continued ever since.' Volatility in the financial markets would not be very important if market activity simply mirrored economic activity. Volatility would be much less important if the markets moved independently of the economy. But if we believe, as I do, that the markets and the economy are interdependent, and that their volatility is generally …

Legal Policy Conflicts In International Banking, William W. Park

Faculty Scholarship

The world debt crisis might never have occupied the front pages of our newspapers during much of the past decade if more attention had been paid to the advice old Polonius gave to young Laertes. More than one Secretary of the Treasury has tried to control a multibillion dollar problem of money addiction, whose resolution sometimes seems to lie in the realm of financial eschatology.

National Law And Commercial Justice: Safeguarding Procedural Integrity In International Arbitration, William W. Park

Faculty Scholarship

The law chosen to govern the merits of an international contract dispute does not always lead to results hat satisfy an arbitrator's personal sense of what is right. The arbitrator therefore may be tempted to resolve the dispute according to his own notion of justice. Seduced away from the rules of the otherwise applicable law, the arbitrator may take on unauthorized powers of amiable composition. While most international arbitrators are conscientious in respecting the bounds of their mission, some have been known to boast of their skill in finding ways to bypass the established rules of the party-chosen law. …

The Inconsistent Treatment Of Secured Tax Claims In Liquidation And Reorganization Proceedings Under The Bankruptcy Code, Steven B. Levine

Faculty Scholarship

There is general inconsistency and tension regarding the treatment of secured tax claims under the Bankruptcy Code. In order to resolve the ambiguity and tension in the Code, tax claims for the same periods should be treated alike regardless of whether one taxing authority has filed a notice of lien in the appropriate public records office or whether such claims are asserted in a reorganization or liquidation proceeding. Some of the rights and priorities associated with tax liens outside of bankruptcy must be limited so as not to harm 2 basic goals of the reorganization process. These are: 1. equitable …

The Dual State - Federal Regulation Of Financial Institutions - A Policy Proposal, Tamar Frankel

Faculty Scholarship

In 1983 South Dakota passed an Act permitting its chartered banks to sell and underwrite insurance.¹ The issue that I address is whether states should have the power to pass such a law. I am not concerned here with interpretation of positive law but with public policy implications.

The issue is a matter of congressional policy. Like most financial intermediaries banks are regulated by both state and federal laws,² but it is clear that the federal government has the power to preempt state laws that regulate banks. Therefore, whether South Dakota can pass the statute is not a …

Regulating Heart And Liver Transplants In Massachusetts: An Overview Of The Report Of The Task Force On Organ Transplantation, George J. Annas

Faculty Scholarship

Organ transplantation has been a favorite topic of health lawyers since its inception. Organ procurement was addressed with the adoption of the Uniform Anatomical Gift Act in all fifty states, and "brain death" has been recognized both judicially and legislatively across the country. Nonetheless, it is now apparent that the major problems in organ transplantation are not legal and thus neither are their solutions. Heart and liver transplants are extreme and expensive interventions that few individuals can afford and few hospitals can offer. In an era of economic scarcity, how (if at all) should organ transplant procedures and other extreme …

Developments In Banking Law 1982, Dennis S. Aronowitz, Robert Volk

Faculty Scholarship

In 1982, the nation's depository institutions continued to cope with a difficult economic environment. Although the high interest rates of the early part of the year began a slow decline in the fall, commercial banks and thrift institutions continued to face stiff competition from alternative investment instruments for the depositor's dollar. Savings banks and savings and loan associations continued to have trouble remaining solvent in a difficult time. In 1982 both the Federal Deposit Insurance Corporation (FDIC) and the Federal Home Loan Bank Board (FHLBB) arranged a record number of mergers and acquisitions involving failing institutions.

Developments In Banking Law: 1980-81, Dennis S. Aronowitz, Robert Volk

Faculty Scholarship

The years 1980 and 1981 were marked by a continuation and acceleration of change in the nation's financial institutions in general and in depository institutions in particular. Until recently, the banking and thrift industries have been unique in possessing the capacity to thrive in a changing economy without changing very significantly themselves. This phenomenon was largely attributable to a regulatory environment that protected depository institutions, minimizing competition from unregulated financial entities and imposing a form of organization that permitted institutions to thrive while conducting their activities in traditional ways. The advent of stubbornly high inflation and historically high interest rates …

Fiscal Jurisdiction And Accrual Basis Taxation: Lifting The Corporate Veil To Tax Foreign Company Profits, William W. Park

Faculty Scholarship

"No rules of international law exist to limit the extent of any country's tax jurisdiction." Although not yet locus classicus, this assertion summarizes a view that finds favor among academic and practicing lawyers. Even if it is admitted that a relevant nexus must exist between the taxing sovereign and the person, property, or income to be taxed, the competing jurisdictional claims of other states are seldom viewed as imposing limits on national competence. This Article will examine the conflicts among rival assertions of fiscal jurisdiction that result from attempts of capital-exporting states to tax the undistributed income of foreign companies.

Variable Annuities, Variable Insurance And Separate Accounts, Tamar Frankel

Faculty Scholarship

The variable annuity is a novel retirement plan. It was devised to minimize the inadequacies of a fixed-dollar annuity as a retirement device. Inflation and an accelerating standard of living have left persons receiving fixed-dollar annuities with only a fraction of the income required to meet their needs.