Banking and Finance Law Commons^™

Algorithmic Tax Ownership Young Ran (Christine) Kim &, Young Ran (Christine) Kim, Dmitry Erokhin

BYU Law Review

Tax ownership is a crucial concept for determining tax liabilities, compliance, and enforcement. However, neither the courts nor the IRS has provided clear guidance on how to analyze it. Since the Supreme Court first outlined a twenty-six-factor test for determining tax ownership in Frank Lyon Co. v. United States in 1978, this multifactor test has remained largely unchanged, and there has been no further guidance from the courts or the IRS to this day. Even tests with shorter lists of factors only add to the confusion regarding compliance and enforcement, as there is no clarity on which factors are most …

Regulatory Influence In The Financial Markets Revisited, Jessica E. Lees

BYU Law Review

Historically, the financial markets of the United States and their corresponding regulatory scheme wielded unique influence throughout the globe. But this influence is waning, due largely to the centralization of financial services rulemaking within the European Union and the growth of global emerging markets. It is thus an important time to consider the circumstances under which a jurisdiction may assume and exercise the global regulatory influence traditionally wielded by the U.S. regime.

This Article develops a new framework to specifically address regulatory influence within global financial regulation and financial markets more broadly, looking beyond market size to establish a more …

Triangulating The Likelihood Of Confusion: Linguistics And Consumer Surveys, Eric Derosia, Jesse Egbert, Thomas Lee

BYU Law Review

This Article highlights contributions that linguistic analysis can offer in the assessment of the likelihood of confusion in trademark infringement cases. Parties in such cases often engage an expert witness to conduct a survey that measures the likelihood of consumer confusion. We show how an expert linguist can provide important, nonintuitive dynamics of corroboration. We introduce “expert triangulation” as a conceptual framework to analyze whether, and to what extent, experts in linguistics and consumer surveys can corroborate one another. That is, having two different sources of empirical evidence which lead to similar conclusions should be a benefit to the courts, …

The Esg Gap, Sharon Hannes, Adi Libson, Gideon Parchomovsky

BYU Law Review

The corporate world is undergoing a transformation: there has been a dramatic influx in demand for companies to promote environmental, social, and governance (ESG) values. Yet these preferences do not necessarily translate into effective corporate actions. In this Article, we underscore the structural problems that prevent such preferences from steering the corporate ship full steam ahead toward ESG goals. We analyze the central actors in the corporate sphere that can potentially bring about such change on the ground: managers, institutional investors, and activist hedge funds. We demonstrate that none of these actors have the two central elements required for promoting …

Ordinary Meaning As Last Resort: The Meaning Of "Undue Hardship" In Title Vii, James Phillips

BYU Law Review

Ordinary meaning reigns supreme in modern statutory interpretation. Yet that supremacy can cause an interpreter to miss specialized meaning. And the Supreme Court has never fully clarified when ordinary meaning must give way to specialized or technical meaning.

This Article attempts to provide doctrinal clarification as to when one should use ordinary as opposed to other meanings through putting the doctrinal pieces together in a full and coherent way. That doctrinal clarity leads to a methodological refinement: rather than the starting point, ordinary meaning is the ending point of statutory interpretation.

This Article applies this doctrine and methodology, as well …

Inequity In Equities: Spacs And The Expansion Of The Retail Market, Usha Rodrigues, Michael Stegemoller

BYU Law Review

Federal securities law creates a divide between the haves and the have-nots: On one side are the wealthy, who can invest in private companies; on the other side stand the rest of us, noses pressed up against the glass. Ordinary (or retail) investors are on the outside looking in because generally they can only invest in companies after they have gone public. Even the traditional process of going public typically keeps coveted initial public offering (IPO) shares in the hands of the rich. Put differently, even as a private firm debuts on the public markets, the wealthy take their cut …

Regulating Strategic Sovereign Wealth, Paul Rose

BYU Law Review

In an era of ascendant globalization, sovereign wealth funds were used by governments around the world – and, in particular, by governments with massive natural resource wealth or balance-of-trade surpluses – to invest widely in foreign markets. Sovereign wealth funds were products of the international economic order then in existence, adapted to a political and economic environment in which borders could be easily crossed and foreign assets seemed abundant and easily acquired. After the Financial Crisis, and with the increasing nationalization seen in the 2010s, this environment began to change. Both domestic and international forces spurred the development of new, …

Scaling Daos Through Fiduciary Duties, Alex Dolphin

BYU Law Review

DAOs (Decentralized Autonomous Organizations) are a unique type of business organization due in large part to their directly democratic governance structure. Owners of DAOs, “tokenholders,” do not delegate control to a board or a general partner. Rather, tokenholders directly control a DAO and must approve every action that a DAO takes. Because tokenholders do not delegate control to an agent, the principal-agent problem is tempered in DAOs. The principal-agent problem is the basis for the fiduciary duties that govern traditional business organizations. These fiduciary duties are meant to prevent agents entrusted with power by their principals from self-dealing. Some have …

Nontraditional Investors, Jennifer S. Fan

BYU Law Review

In recent years, nontraditional investors have become a major player in the startup ecosystem. Under the regulatory regime of U.S. securities law, those in the public realm are heavily regulated, while those in the private realm are largely left alone. This public-private divide, which is a fundamental organizing principle of securities law, has eroded with the rise of nontraditional investors. While legal scholars have addressed the impact of some of these nontraditional investors individually, their collective impact on deal terms, deal timelines, due diligence, and board configuration has not been discussed in a holistic manner; neither has their impact on …

Corruption In University Admissions And The Administrative Allocation Of Scarce Goods, L. Burke Files, Roger E. Meiners, Andrew P. Morriss

BYU Law Review

The Varsity Blues investigation uncovered a seamy side of university admissions. Multiple wealthy parents were indicted for securing their children s admission to selective institutions through bribery. Despite the publicity the indictments and guilty pleas received, and the public schadenfreude over the sight of celebrities being arrested, the investigation is most notable for what it did not do: it did not deploy the federal government's arsenal of anti-money laundering and anti-corruption tools against the universities involved. This represents a significant missed opportunity to address the serious problems that arise from rationing access to selective institutions via opaque, easily manipulated admissions …

The Case For Empowering Quality Shareholders, Lawrence A. Cunningham

BYU Law Review

Anyone can buy stock in a public company, but not all shareholders are equally committed to a company’s long-term success. In an increasingly fragmented financial world, shareholders’ attitudes toward the companies in which they invest vary widely, from time horizon to conviction. Faced with indexers, short-term traders, and activists, it is more important than ever for businesses to ensure that their shareholders are dedicated to their missions. Today’s companies need "quality shareholders," as Warren Buffett called those who "load up and stick around," or buy large stakes and hold for long periods.

While scholars in recent years have extensively debated …

Utility Token Offerings: Can A Security Transform Into A Non-Security?, Scott W. Maughan

BYU Law Review

No abstract provided.

Courts As Information Intermediaries: A Case Study Of Sovereign Debt Disputes, Sadie Blanchard

BYU Law Review

When foreign sovereigns default on their debt, creditors sometimes sue them. These creditors are sophisticated actors, and they know that if they sue, courts can do little to force a sovereign to satisfy a judgment. Why do they sue? This Article argues that these creditors sue because they use litigation to produce information about the debtor state or its government that induces third parties to sanction or refuse to deal with the state or the government. The ability to produce such information strengthens the litigating creditors’ bargaining position in settlement negotiations. Courts thus serve as information intermediaries that strengthen reputational …

The Other Eighty Percent: Private Investment Funds, International Tax Avoidance, And Tax-Exempt Investors, Omri Marian

BYU Law Review

The taxation of private equity managers’ share of funds’ profits—the twenty percent “carried interest”—received much attention in academic literature and popular discourse. Much has been said and written about the fact that fund managers’ profits are taxed at preferred rates. But what about the other eighty percent of funds’ profits? This Article theorizes that the bulk of such profits are never taxed. This is a result of a combination of three factors: First, private equity, venture capital, and hedge funds (collectively, Private Investment Funds, or “PIFs”) are major actors in cross-border investment activity. This enables PIFs to take advantage of …

Misaligned Interests In Private Equity, Jarrod Shobe

BYU Law Review

This Article examines the unique set of agency costs that arise from the separation of ownership and control in private equity funds. These funds operate without significant regulatory or legislative oversight. Instead, they are governed primarily by contractual arrangements between investors and managers that are poorly understood by legal scholars. This Article looks into the black box of these internal arrangements to provide a broad analysis of whether and how these contracts align or misalign the interests of investors and managers. It turns out that the compensation of managers, which is commonly thought to serve as the most powerful tool …

Trusts No More: Rethinking The Regulation Of Retirement Savings In The United States, Natalya Shnitser

BYU Law Review

The regulation of private and public pension plans in the United States begins with the premise that employer-sponsored plans resemble traditional donative, or gift, trusts. Accordingly, the Employee Retirement Income Security Act of 1974 (ERISA) famously “imports” major principles of donative trust law for the regulation of private employer-sponsored pension plans. Statutes regulating state and local government pension plans likewise routinely invoke the structure and standards applicable to donative trusts. Judges, in turn, adjudicate by analogy to the common law trust.

This Article identifies the flaws in the analogy and analyzes the shortcomings of a regulatory framework that, despite dramatic …

Surveillant And Counselor: A Reorientation In Compliance For Broker-Dealers, James A. Fanto

BYU Law Review

This Article argues that the compliance officer should play a major role in the ongoing reform of broker-dealers and other financial firms. This role is facilitated by the fact that compliance is now well established and accepted and compliance officers are close to decision making at all levels of a firm. The contention is that the role of compliance must be rethought and reoriented if it is to contribute fully to the reform. Compliance officers now ensure that the firms and their employees comply with the numerous laws and regulations governing them and their activities, primarily by producing and then …

Innovations In The War On Tax Evasion, Tracy A. Kaye

BYU Law Review

Offshore tax evasion is a global problem that requires a global solution. Nevertheless, the United States unilaterally responded to the offshore tax evasion problem by enacting the Foreign Account Tax Compliance Act. FATCA requires foreign banks to report information about financial accounts held by U.S. taxpayers directly to the Internal Revenue Service and imposes a thirty percent withholding tax on certain U.S. payments to any bank that will not cooperate. Yet, U.S. banks were not required to report any information on nonresident account holders (except for Canadians) to anyone. FATCA garnered worldwide attention. The European Union expressed its concerns to …

Separation Of Bank And State: Consolidating Bailed-Out Companies Into The U.S. Debt Ceiling And Government Financial Statements, J. W. Verret

BYU Law Review

No abstract provided.

Managerial Entrenchment And Shareholder Wealth Revisited: Theory And Evidence From A Recessionary Financial Market, Jay B. Kesten

BYU Law Review

No abstract provided.

The Global Financial Crisis And Proposed Regulatory Reform, Randall D. Guynn

BYU Law Review

No abstract provided.

"If You Poison Us Do We Not Die?" - A Critical Analysis Of The Legality Of Poison Puts In The Wake Of San Antonio Fire And Police Pension Fund V. Amylin, Inc., Marcus Kai Hintze

BYU Law Review

No abstract provided.

Law And Finance: Inaccurate, Incomplete, And Important, Ruth V. Aguilera, Cynthia A. Williams

BYU Law Review

No abstract provided.

Law And Financial Development: What We Are Learning From Time-Series Evidence, John Armour, Simon Deakin, Viviana Mollica, Mathias Siems

BYU Law Review

No abstract provided.

Rethinking The "Law And Finance" Paradigm, Katharina Pistor

BYU Law Review

No abstract provided.

Adopting Restatement Mortgage Subrogation Principles: Saving Billions Of Dollars For Refinancing Homeowners, Grant S. Nelson, Dale A. Whitman

BYU Law Review

No abstract provided.

Penny Wise, Pound Foolish: Why Investors Would Be Foolish To Pay A Penny Or A Pound For The Protections Provided By Sarbanes-Oxley, Cory L. Braddock

BYU Law Review

No abstract provided.

So You've Been Preempted-What Are You Going To Do Now?: Solutions For States Following Federal Preemption Of State Predatory Lending Statutes, Christopher R. Childs

BYU Law Review

No abstract provided.

Overoptimism And Overborrowing, Richard M. Hynes

BYU Law Review

No abstract provided.

The Minimum Distribution Rules And Their Critical Role In Controlling The Floodgates Of Qualified Plan Wealth, Jay A. Soled, Bruce A. Wolk

BYU Law Review

No abstract provided.