Banking and Finance Law Commons^™

Hedge Fund Governance, Houman B. Shadab

Articles & Chapters

This Article provides the first comprehensive scholarly analysis of the internal governance of hedge funds. Hedge fund governance consists of the funds' underlying legal regime and the practices they adopt in response to lacking permanent capital and to reduce agency costs. Hedge fund governance is important because better governance can improve investor returns and help managers raise and retain capital. I argue that hedge fund governance is best understood as a type of responsive managerialism. It is a type of managerialism because applicable law and contracting structures give managers uniquely wide-ranging control over the fund and its operations. Hedge fund …

The 2012 Revised Fatf Recommendations: Assessing And Mitigating Mobile Money Integrity Risks Within The New Standards Framework, Louis De Koker

Washington Journal of Law, Technology & Arts

Mobile money holds great financial inclusion promise, but also poses financial integrity challenges. The Financial Action Task Force (FATF)—the intergovernmental global anti-money laundering (AML) and counter-terrorist financing (CTF) standard-setting body—expressed support for financial inclusion and mobile money as a means to decrease the use of non-transparent cash in many developing countries. In February 2012, FATF adopted a new revised set of standards. This Article considers the impact of these new standards on mobile money models in developing countries. It highlights aspects of the new standards that would facilitate innovative mobile money models, but also points to questions and challenges. The …

Governance Of Global Mobile Money Networks: The Role Of Technical Standards, Jane K. Winn

Washington Journal of Law, Technology & Arts

Mobile money has the potential to be an effective policy instrument for financial inclusion in developing countries, but it also has the potential to fuel money laundering and terrorist financing. The 2012 revised Financial Action Task Force standards attempt to strike a workable balance between the goals of financial inclusion and financial integrity in developing countries. Mobile money schemes are mostly based in national markets, however, and are not normally designed to address the need of poor migrants for cheap, effective cross-border remittance services. Demand for such cross-border remittance services may drive the development of technical standards to build global …

Privacy And Security Concerns Associated With Mobile Money Applications In Africa, Andrew Harris, Seymour Goodman, Patrick Traynor

Washington Journal of Law, Technology & Arts

The rapid adoption of mobile money use in Africa raises concerns regarding the privacy and security of users, particularly in light of Financial Action Task Force recommendations requiring user transparency and the collection of transaction data. The transparency required of the now-financially-included—particularly in nations with weak adherence to the rule of law and limited privacy protections—leaves users vulnerable to abuse. Further, the increasing complexity of mobile phone use that is indicative of mobile money applications raises concerns regarding Africa’s preparedness for heightened security threats that come hand in hand with increased use. To address these problems, the authors of this …

Mobile Money As An Engine Of Financial Inclusion And Lynchpin Of Financial Integrity, Claire Alexandre, Lynn Chang Eisenhart

Washington Journal of Law, Technology & Arts

Few people would dispute that mobile money can be an engine of financial inclusion and has the potential to reach millions of customers, including those at the bottom of the socio-economic pyramid. Fewer though would characterize mobile money as the lynchpin of financial integrity. But financial inclusion and financial integrity have at least three tangential points to mobile money: (1) mobile money will help reduce dependency on cash, which is the common enemy of both financial inclusion and financial integrity, (2) mobile money generates data which is instrumental to the health and growth of both financial inclusion and financial integrity, …

The Role Of Anti-Money Laundering Law In Mobile Money Systems In Developing Countries, Emery S. Kobor

Washington Journal of Law, Technology & Arts

This Article explains that the application of anti-money laundering (AML) regulation, supervision, and enforcement is relevant to financial inclusion, but is not, in itself, necessarily determinative of the success or failure of financial inclusion initiatives or their impact on economic growth. Successful payments system innovation, particularly payment tools targeting underserved markets, requires effective entrepreneurship operating in an environment of good governance and rational economic policies. AML safeguards help to deter corruption and other forms of financial crime, which helps to establish and maintain economic stability and preserve the rule of law, creating a supportive environment for innovation and financial inclusion. …

M-Payments In Brazil: Notes On How A Country's Background May Determine Timing And Design Of A Regulatory Model, Gilberto Martins De Almeida

Washington Journal of Law, Technology & Arts

Extended periods of high-inflation in Brazil have resulted in a sophisticated platform for payment methods and a vast network of banking correspondents all over the country. Social policies have encouraged increased access to telecommunications, with the number of mobile phones exceeding the nearly 200 million inhabitants. Governmental programs intend to combine such strengths to achieve massive financial inclusion and integrity, an effort that is expected to reach dozens of millions of new beneficiaries. In that endeavor, authorities wish to foster rapid popularization of mobile payments (m-payments) while keeping sound financial controls. Availability of current technological and legal platforms has allowed …

Safaricom And M-Pesa In Kenya: Financial Inclusion And Financial Integrity, Mercy W. Buku, Michael W. Meredith

Washington Journal of Law, Technology & Arts

The recent and widespread availability of affordable mobile phone technology in developing countries has paved the way for the development of a number of mobile money and electronic remittance services. One of the most successful of these services is Safaricom’s M-PESA program, launched in the East African nation of Kenya in March 2007. Since then, the program has successfully enrolled 15.2 million users, transferred more than US$1.4 trillion in electronic funds, and contributed significantly to poverty alleviation and financial inclusion efforts in rural Kenya. This Article seeks to trace the development of M-PESA in Kenya, provide a snapshot of the …

The Reporting Of Suspicious Activity By Mobile Money Service Providers In Accordance With International Standards: How Does It Impact On Financial Inclusion?, Miriam Goldby

Washington Journal of Law, Technology & Arts

Among the obligations which countries are required to impose upon their financial institutions under the Financial Action Task Force’s (FATF) 40 Recommendations is the obligation to report suspicions of money laundering. This Article discusses the impact that a reporting regime such as that set up in the United Kingdom in response to FATF requirements is likely to have should it be set up in developing countries seeking to regulate mobile money services. This Article argues that certain features of the U.K. suspicious activity reporting regime make it unsuitable for wholesale adoption into such a context. A one-size-fits-all approach by the …

Why Register Hedge Fund Advisers—A Comment, Lyman P.Q. Johnson

Washington and Lee Law Review

No abstract provided.

International Financial Reforms: Capital Standards, Resolution Regimes And Supervisory Colleges, And Their Effect On Emerging Markets, Duncan E. Alford

Faculty Publications

This paper focuses on the relevance to emerging economies of three major financial reforms following the global financial crisis of 2007–2009: (1) the improved capital requirements intended to reduce the risk of bank failure (“Basel III”), (2) the improved recovery and resolution regimes for global banks, and (3) the development of supervisory colleges of cross-border financial institutions to improve supervisory cooperation and convergence. The paper also addresses the implications of these regulatory reforms for Asian emerging markets.

The Church And The Usurers: Unprofitable Lending For The Modern Economy, Brian Mccall

Faculty Books and Book Chapters

Professor McCall explains in a scholarly yet accessible manner the core principles of the usury doctrine. Tracing its history from Biblical texts, through Aristotelian philosophy and Roman law, to the great scholastic synthesis, Professor McCall separates the unchanging principles from the changes in their applications to new economic realities. With debt, personal, business and government spiraling out of control and massive insolvencies of ancient nations like Greece, contemporary economic theory has offered little in response. Professor McCall contributes the wisdom of the centuries in a concise and readable study.

Endorsements

"Professor McCall places the issues confronting our debt based economy …

Towards A Legal Theory Of Finance, Katharina Pistor

Faculty Scholarship

This paper develops the building blocks for a legal theory of finance. LTF holds that financial markets are legally constructed and as such occupy an essentially hybrid place between state and market, public and private. At the same time, financial markets exhibit dynamics that frequently put them in direct tension with commitments enshrined in law or contracts. This is the case especially in times of financial crises when the full enforcement of legal commitments would result in the self-destruction of the financial system. This law-finance paradox tends to be resolved by suspending the full force of law where the survival …

Index Theory: The Law, Promise And Failure Of Financial Indices, Gabriel Rauterberg, Andrew Verstein

Faculty Scholarship

Financial indices, like the S&P 500 or the Consumer Price Index, have become a ubiquitous feature of our financial markets. One index, the London InterBank Offered Rate ("Libor"), may be the world's most important number, an interest rate benchmark upon which hundreds of trillions of dollars depend. Yet, almost every day new revelations emerge that Libor was tampered with during the height of the financial crisis by one or many of the world's most prominent banks, with billions of dollars potentially misappropriated. This index disruption has attracted tremendous interest from regulators, private litigants, and market observers. Despite their importance, however, …

Bitcoins: Hacker Cash Or The Next Global Currency? , Conor Desmond

Public Interest Law Reporter

No abstract provided.

Crowdfunding Securities, Andrew A. Schwartz

Publications

A new federal statute authorizes the online "crowdfunding" of securities, a new idea based on the concept of "reward" crowdfunding practiced on Kickstarter and other websites. This method of selling securities had previously been banned by federal securities law but the new CROWDFUND Act overturns that prohibition.

This Article introduces the CROWDFUND Act and explains that it can be expected to have two primary effects on securities law and capital markets. First, it will liberate startup companies to use peer networks and the Internet to obtain modest amounts of capital at low cost. Second, it will help democratize the market …

Review: Is Hedge Fund Registration Necessary? , J. W. Verret

Washington and Lee Law Review

No abstract provided.

Dodd-Frank And International Regulatory Convergence: The Case For Mutual Recognition, Nicholas W. Turner '12

NYLS Law Review

No abstract provided.

Municipalities In Distress: A Preventive View, Tamar Frankel

Faculty Scholarship

The recent rising failure of municipalities has not produced the avalanche that some expected.¹ Yet concerns have been raised that the future will spawn more failures.² New York City and other municipalities face soaring pension, Medicaid, and retiree health care costs.³ New York City’s neighboring counties face similar challenges; Yonkers, Suffolk, and Nassau Counties each face their own set of fiscal problems.⁴

Municipalities that have failed, or are likely to fail, have raised a number of legal issues implicated by their inability to pay their debts. Some questions seem new. For example, are employees’ pension benefits …

Book Review: Theory And Practice Of Harmonisation, Mads Andenæs & Camilla B. Andersen (Eds), Toby S. Goldbach

All Faculty Publications

"Theory and Practice of Harmonisation" is an edited symposium publication which tackles the ambitious topic of legal harmonisation. Some common themes can be identified. First, several papers deal with the background to or reasons for harmonisation and consider whether harmonisation goals are being met.Second, several papers examine language-textual issues or problems with defining concepts. A third centralizing theme is the role of legal institutions, in particular courts, in facilitating harmonisation. Finally, a fourth theme is evident in those papers that look at the instruments, mechanisms or legal techniques that are used to implement harmonisation. As a whole, the text seems …

Don’T ‘Screw Joe The Plummer’: The Sausage-Making Of Financial Reform, Kimberly D. Krawiec

Faculty Scholarship

This Article examines agency-level activity during the preproposal rulemaking phase—a time period about which little is known despite its importance to policy outcomes—through an analysis of federal agency activity in connection with section 619 of the Dodd–Frank Act, popularly known as the Volcker Rule. By capitalizing on transparency efforts specific to Dodd–Frank, I am able to access information on agency contacts whose disclosure is not required by the Administrative Procedure Act and, therefore, not typically available to researchers.

I analyze the roughly 8,000 public comment letters received by the Financial Stability Oversight Council in advance of its study regarding Volcker …

Introduction: Connecting The Dots Between Two Parallel Worlds, Rena Steinzor

Maryland Law Review

No abstract provided.

Keynote Address, Brooksley Born

Maryland Law Review

No abstract provided.

The Emperor's New Loans: A Cautionary Tale From The Subprime Era, David J. Reiss

Faculty Scholarship

No abstract provided.

Dirt Lawyers And Dirty Remics: A Debate, David J. Reiss, Bradley T. Borden, Joshua Stein

Faculty Scholarship

No abstract provided.

Trouble With Regulating Microfinance, Anita Bernstein

Faculty Scholarship

No abstract provided.

A Simpler Approach To Financial Reform, Morgan Ricks

Vanderbilt Law School Faculty Publications

There is a growing consensus that new financial reform legislation may be in order. The Dodd-Frank Act of 2010, while well-intended, is now widely viewed to be at best insufficient, at worst a costly misfire. Members of Congress are considering new and different measures. Some have proposed substantially higher capital requirements for the largest financial firms; others favor an updated version of the old Glass-Steagall regime. This paper offers up a simpler approach, one that centers around the financial sector’s short-term funding. The simpler approach would be compatible with other financial stability reforms, but it is better understood as a …

The Problematic Case Of Clearinghouses In Complex Markets, Yesha Yadav

Vanderbilt Law School Faculty Publications

This Article challenges the academic and policy consensus that clearinghouses adequately mitigate the risks of trading credit derivatives. The Article advances two arguments. First, scholars have devoted little attention to the risks posed by underlying assets (e.g. a mortgage loan) that the credit derivative references and the impact that these have on the clearinghouse. Credit derivatives enable the economic risk of debt to be separated from the legal rights attaching to that debt. This separation impacts the clearinghouse profoundly. As a contract party to each trade it processes, the clearinghouse can be saddled with economic risk of underlying debt without …

Making Money: Leverage And Private Sector Money Creation, Margaret M. Blair

Vanderbilt Law School Faculty Publications

In the wake of the financial crisis of 2008-2009, practitioners and theorists in law, finance, and economics are rethinking our theories about how the financial sector influences the real economy. In particular, they are reexamining the linkages among financial innovation, supply of credit and money, monetary policy, bubbles, financial stability, and economic growth. One of the key issues that is being reconsidered is the dynamics of how banks and other financial institutions drive credit creation and credit allocation, and how these factors, in turn affect the performance of the macroeconomy. In this article, I argue that, by providing an alternative …

Rural Crowdfunding, Andrew A. Schwartz

Publications

One reason that economic development in rural America lags behind its urban counterpart is the persistent lack of venture capital for rural entrepreneurs. Geography deserves much of the blame, as angel investors and venture capitalists tend to live and work in metropolitan areas on the coasts, in places like Silicon Valley and Boston. Many rural areas are literally thousands of miles away, with the result that venture capital has rarely found its way to rural regions.

Recent federal legislation, however, has the potential to change this dynamic. The JOBS Act authorizes the sale of securities over the Internet to large …