Banking and Finance Law Commons^™

Transparency In Corporate Groups, Jay Lawrence Westbrook

Brooklyn Journal of Corporate, Financial & Commercial Law

This Article addresses a remarkable blind spot in American law: the failure to apply the well-established principles of secured credit to prevent inefficiency, confusion, and fraud in the manipulation of the webs of subsidiaries within corporate groups. In particular, “asset partitioning” has been a fashionable subject in which the central problem of non-transparency has been often mentioned but little addressed. This Article offers a concept for a new system of corporate disclosure for the benefit of creditors and other stakeholders. It would require disclosure of corporate structures and allocations of assets among affiliates to the extent the affiliates are to …

Insider Trading: Are Insolvent Firms Different?, Andrew Verstein

Brooklyn Journal of Corporate, Financial & Commercial Law

Federal law restricts insider trading. Yet these restrictions operate differently on insolvent or bankrupt firms. The law is more constraining in some respects: federal law extensively regulates the trading of residual claims in solvent firms but not insolvent firms. However, the law is more constraining in other respects: insider trading law does little to limit debt-trading at solvent firms, but a bankruptcy enmeshes all creditors in a web of insider trading rules. This Article identifies insolvency’s economic and legal influence on insider trading law and then normatively evaluates this transformation.

Swamp Money: The Opportunity And Uncertainty Of Investing In Wetland Mitigation Banking, Elan L. Spanjer

Northwestern University Law Review

In recent years, the wetland mitigation banking program has emerged as a favored mechanism for protecting the nation’s aquatic resources while allowing for economically beneficial development projects to proceed. Mitigation banks generate wetland credits, which in turn can be sold at a profit to developers who need them to offset wetland impacts. The number of mitigation banks has grown significantly in recent years, and the market has seen an influx of institutional investment. However, investors face significant risks and uncertainty, and many prospective investors lack access to information about wetland credit prices—which are neither reported to the regulatory authorities nor …

Increasing Investor Protection Through Improving Hedge Fund Valuation, Deirdre Farrell

St. John's Law Review

(Excerpt)

This Note examines the current hedge fund regulations in the United States and in Europe, and proposes ways for regulators to improve hedge fund valuation in the United States to increase investor protection. Although valuation issues affect all pooled investment vehicles that invest in illiquid, difficult-to-value assets, this Note focuses only on the valuation systems of hedge funds.

Part I gives an overview of hedge funds in general—their structure and the major stakeholders involved. Part II summarizes the valuation process and its associated issues. Part III describes recent regulatory changes in the United States affecting hedge funds, including the …

A Canadian Lens On Third Party Litigation Funding In The American Bankruptcy Context, Stephanie Ben-Ishai, Emily Uza

Chicago-Kent Law Review

This Article offers two major recommendations to expand the use of third party litigation funding (“TPLF”) into the U.S. insolvency context. As seen in the Canadian context, courts have accepted the use of litigation funding agreements fitting within certain parameters. If U.S. courts follow suit, friction against the implementation of TPLF can be mitigated. Alternatively, regulation may occur through legislative and regulatory models to govern and set out precisely what types of arrangements are permitted. Involving entities such as the SEC may expedite the acceptance of TPLF, but special attention is necessary not to intermingle notions of fiduciaries into the …

The Curious Policy Implications Of In Re Semcrude: Do Crude Oil Markets Need A Volcker Rule?, Joseph A. Schremmer

Faculty Scholarship

In the summer of 2008 the nation's largest and fastest growing midstream crude oil purchaser, SemCrude, declared bankruptcy. SemCrude's demise was not the result of a bear market but of its taste for risky options trading. The bankruptcy pitted the competing liens of thousands of unpaid oil and gas producers and royalty owners who sold their crude oil to SemCrude at the wellhead against those of SemCrude's lenders and the claims of downstream purchasers. The Bankruptcy Court for the Federal District of Delaware found none of the producers' lien rights to be perfected under applicable law and awarded priority to …

Crowdfunding Signals, Darian M. Ibrahim

Faculty Publications

Entrepreneurs can now “crowdfund,” or sell securities to unaccredited investors over the Internet, to raise capital. But will these companies be able to attract the follow-on investors (angels and venture capitalists) that are necessary for long-term success? Angels and VCs face extreme levels of information asymmetry when deciding whether to fund a company. Signals can reduce this asymmetry. Early commentary argues a company only crowdfunds as a last resort for fear of sending a negative signal about the company’s quality to follow-on investors. This Article argues the inverse. This Article argues a successful crowdfunding campaign can send a positive signal …

Shadowing Lenders And Consumers: The Rise, Regulation, And Risks Of Non-Banks, Shelby D. Green

Elisabeth Haub School of Law Faculty Publications

Since the financial crisis of 2008, “shadow banking” or financial transactions by “non-banks,” has skyrocketed. Non-banks are not depositary institutions and as such, they roam free, largely outside the purview of the bank regulators. They occupy all parts of the credit markets, from mortgage loan origination to payday lenders. Untethered, they operate without government guarantees, such as deposit insurance and have no access to emergency government lending facilities, such as the Federal Reserve's discount window.

There are both positives and negatives in the rise of non-banks. On the positive side is market liquidity and greater diversity of funding sources for …

Realizing The Recession: Modifying Dodd-Frank With A View To The Future, David E. Chaney

West Virginia Law Review

No abstract provided.

Too Big To Supervise: The Rise Of Financial Conglomerates And The Decline Of Discretionary Oversight In Banking, Lev Menand

Cornell Law Review

The authority of government officials to define and eliminate “unsafe and unsound” banking practices is one of the oldest and broadest powers in U.S. banking law. But this authority has been neglected in the recent literature, in part because of a movement in the 1990s to convert many supervisory judgments about “safety and soundness” into bright-line rules. This movement did not entirely do away with discretionary oversight, but it refocused supervisors on compliance, risk management, and governance—in other words, on internal bank processes.

Drawing on the rules versus standards debate, this Article develops a taxonomy for parsing the various approaches …

Equity Crowdfunding Portals Should Join And Enhance The Crowd By Providing Venture Formation Resources, Jeff Thomas

Nova Law Review

No abstract provided.

Nova Law Review Full Issue Volume 42, Issue 3

Nova Law Review

No abstract provided.

Cryptocurrencies: The New Species, Ors Penzes

Nova Law Review

No abstract provided.

Taxing & Zapping Marijuana: Blockchain Compliance In The Trump Administration Part 4, Richard Thompson Ainsworth, Brendan Magauran

Faculty Scholarship

This is the fourth of a five-part series dealing with the rescission by U.S. Attorney General Jeff Sessions of the Obama-era policy that discouraged federal prosecutors from bringing charges in all but the most serious marijuana cases.

This article focuses on retail-level frauds. It proposes a limited purpose crypto currency. At the retail level the MJ Freeway or METRC software essentially functions as a marijuana-industry-specific point of sale (POS) system. It is common in retail for different industry sectors (restaurants, hotels, convenience stores, or gasoline stations) to have market-specific POS systems that are molded to fit the unique characteristics of …

Taxing & Zapping Marijuana: Blockchain Compliance In The Trump Administration Part 3, Richard Thompson Ainsworth, Brendan Magauran

Faculty Scholarship

This is the third of a five-part series dealing with the rescission by U.S. Attorney General Jeff Sessions of the Obama-era policy that discouraged federal prosecutors from bringing charges in all but the most serious marijuana cases.

This article focuses on cyber-attacks on the main commercial chain, and the use of a private blockchain using HyperLedger Fabric as a platform.

This fraud is a direct, criminal attack; an attack designed to destroy/corrupt records of marijuana inventory and plant tags throughout the supply chain. The attack allows legalized marijuana to escape the system and be sold on the black market. A …

Alternative Financial Services And Health Status In U.S. Metropolitan Statistical Areas, Courtney Hundley, Richard W. Wilson 8520196, John Chenault

Journal of Health Disparities Research and Practice

Abstract

Alternative financial services (AFS) such as, payday lenders, pawn brokers, tax refund loans, and check cashers are more prevalent in minority and lower income neighborhoods. These are neighborhoods also found to have disparities in health, compared to more affluent neighborhoods and communities. The focus of this paper is to determine if any relationship exists between use of AFS and health disparities.

Using data from a survey performed by the Federal Deposit Insurance Corporation (FDIC), we compared four banking variables to several measures of health for 85 metropolitan statistical areas (MSA) across the nation. The four banking variables all related …

Rethinking International Investment Governance: Principles For The 21st Century, Emma Aisbett, Barnali Choudhury, Olivier De Schutter, Frank Garcia, James Harrison, Song Hong, Lise Johnson, Mouhamadou Kane, Santiago Peña, Matthew Porterfield, Susan Sell, Stephen E. Shay, Louis T. Wells

Columbia Center on Sustainable Investment Books

Rethinking International Investment Governance: Principles for the 21st Century – written over the course of a week by a distinguished group of experts in international economic governance using the Booksprint process – aims to serve as a practical resource for those interested in the elements of an international investment system that promotes sustainable development and achieves legitimacy by providing benefits to all stakeholders.

The objective of Rethinking International Investment Governance is to change the terms of the debate so that societal values and goals are at the center of discussions about each reform proposal and process. This book rethinks international …

Is Cryptocurrency Money And Why Does It Matter?, Benjamin Geva

Articles & Book Chapters

The emergence of Bitcoin heralded the era of crypto and digital currencies designed for use in the general economy. But are these new currencies considered money and is current Canadian law adequate to accommodate them as money?

What You Need To Know

• Cryptocurrency denotes a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the execution of payment transactions on a decentralized network.
• "Money" is an element in definitions that determine the scope of a few statutes. As well, unlike property in general, money passes to a taker in good faith …

Is Cryptocurrency Money And Why Does It Matter?, Benjamin Geva

Articles & Book Chapters

No abstract provided.

The Avoidance Of Pre-Bankruptcy Transactions: An Economic And Comparative Approach, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

Most insolvency jurisdictions provide several mechanisms to reverse transactions entered into by a debtor prior to the commencement of the bankruptcy procedure. These mechanisms, generally known as claw-back actions or avoidance provisions, may fulfil several economic goals. First, they act as an ex post alignment of incentives between factually insolvent debtors and their creditors, since the latter become the residual claimants of an insolvent firm but they do not have any control over the debtor´s assets while the company is not yet subject to a bankruptcy procedure. Thus, avoidance powers may prevent or, at least, reverse opportunistic behaviors faced by …

The End Of The Home Affordable Modification Program And The Start Of A New Problem, Christopher K. Whelan

Brooklyn Law Review

The mortgage crisis hit the United States hard, leaving millions of homeowners facing hardship and foreclosure. One of many programs enacted during the mortgage crisis was the Home Affordable Modification Program (HAMP). The Obama Administration set out to assist three to four million struggling homeowners in modifying their mortgages and avoiding foreclosure. This note examines HAMP, focusing on the years of litigation that shaped HAMP, giving life to a program that was built on a foundation ready to crack. HAMP provided homeowners with modified mortgage payments, typically beginning with a trial period plan. Once completed, homeowners were routinely denied, resulting …

Leaders In The Expansive And Restrictive Interpretation Of Investment Treaties: A Descriptive Study Of Isds Awards To 2010, Gus Van Harten

Articles & Book Chapters

This article provides an empirical analysis of interpretive discretion in investor–state dis- pute settlement (ISDS). Since the late 1990s, foreign investors have brought hundreds of investment treaty claims against states, leading to numerous awards in which arbitrators have interpreted investment treaties. Arbitrators may resolve ambiguities in the treaties in expansive or restrictive ways, thereby affecting the compensatory promise of ISDS for foreign investors and corresponding risks for states. Which arbitrators have contributed most to expansive or restrictive approaches? To examine this question, data was analysed on arbitrators’ resolutions of contested legal issues, such as the permissibility of parallel or minority …

The Shadow Payment System, Dan Awrey, Kristin Van Zwieten

Cornell Law Faculty Publications

Banking, derivatives, and structured finance may attract the lion's share of accolades and approbation in global finance-but payment systems are where the money is. Historically, payment systems in most jurisdictions have been legally and operationally intertwined with the conventional banking system. The stability of these payment systems has thus parasitically benefited from the unique prudential regulatory strategies imposed on deposit-taking banks. These strategies include emergency liquidity assistance or "lender of last resort" facilities, deposit guarantee schemes, and special bankruptcy or "resolution" regimes for failing banks. Importantly, these strategies have the practical effect of relaxing the strict application of corporate bankruptcy …

Technology Regulation By Default: Platforms, Privacy, And The Cfpb, Rory Van Loo

Faculty Scholarship

In the absence of a technology-focused regulator, diverse administrative agencies have been forced to develop regulatory models for governing their sphere of the data economy. These largely uncoordinated efforts offer a laboratory of regulatory experimentation on governance architecture. This symposium essay explores what the Consumer Financial Protection Bureau (CFPB) has done in its first several years to regulate financial technology (“fintech”), in the context of broader technology-related concerns identified in the literature. It begins with a survey of what the CFPB has undertaken using more traditional administrative agency tools—enforcement and rulemaking—in areas such as privacy, consumer control over data, and …

Maintaining Condominiums And Homeowner Associations: How Much Of A Priority?, Stewart E. Sterk

Articles

During the recent real estate crisis, competition for scarce dollars pitted the holders of defaulted mortgages against condominiums and homeowner associations seeking to collect maintenance assessments. Statutes providing mortgagees with lien priority threatened association ability to provide services, and imposed a disproportionate burden on non-defaulting unit owners. Statutes enacted in other states gave associations a “super priority” lien for six months of assessments, but left uncertainty about the meaning of that super priority in an environment in which foreclosure delays became the norm.

The last five years have brought a spate of litigation over the relative rights of associations and …

Is High-Finance An Extractive Sector?, Saskia Sassen

Indiana Journal of Global Legal Studies

The article examines some of the key features of high finance (henceforth, simply finance) from the angle of the mix of capabilities that constitute the sector. It has a radically different organizing logic from that of, for instance, the typical mass consumer-oriented corporation. The article posits that finance has de-bordered the narrowly defined notion of finance as simply "financial firms and markets." It emphasizes its capacity to financialize a growing range of material and non-material elements. This has also meant that the sector by now encompasses a very broad range of financial and nonfinancial institutions, different types of jurisdictions, a …

The Final Countdown: California Public Employees’ Retirement System V. Anz Securities And The Sweeping Ban On Tolling Statutes Of Repose In Class Actions, Emily Kelsay

Maryland Law Review

No abstract provided.

Regulating Fintech: Lessons From Africa, Anton Didenko

San Diego International Law Journal

Technological innovation in finance (“FinTech”) has been on the rise in recent years, creating new challenges for regulators. These challenges vary significantly depending on the region in question and type of economy, not least because different technologies are applied to tackle different problems. This Article focuses on regulatory frameworks of two leading jurisdictions in terms of FinTech development in Sub-Saharan Africa: Kenya and South Africa. As the developments in the region cannot be analyzed in isolation from the global trends in FinTech regulation, this Article approaches the matter systematically. It starts by clarifying the existing terminology and preparing a comprehensive …

Proxy Access Voting: Evaluating Proxy Access And The Recent Phenomenon Of Corporations Adopting Shareholder Protective Policies, Danielle Vukovich

San Diego International Law Journal

Shareholders hold a financial stake in a corporation, and therefore are often viewed as owners of the corporation and believed to be in control for all corporate actions. However, their powers are circumscribed. Board of directors committees nominate directors to serve the corporation and these directors have the power to select the corporation’s officers. The committees provide shareholders a slate of proposed directors that are voted on and approved at the annual shareholder meeting. Shareholders may also propose their own slate of directors, but this typically requires a proxy contest, which can be expensive due to the costs both associated …

Sourcing Service Receipts For Franchise Tax Apportionment In Texas, Ray Langenberg, Matt Jones

St. Mary's Law Journal

Abstract forthcoming