Banking and Finance Law Commons^™

Upskirting, Bitcoin, And Crime, Oh My: Judicial Resistance To Applying Old Laws To New Crimes – What Is A Legislature To Do?, Michael Whiteman

Indiana Law Journal

As technology continues to advance at a break-neck speed, legislatures often find themselves scrambling to write laws to keep up with these advances. Prosecutors are frequently faced with the prospect of charging a defendant with a crime based on an existing law that does not quite fit the circumstances of the defendant’s actions. Judges, cognizant of the fact that legislatures, and not the judiciary, have the primary responsibility for creating crimes, have pushed back. Judges routinely refuse to convict a defendant if the statute does not fairly criminalize the defendant’s actions. To determine if a defendant’s actions fit within a …

Breaking The Code: Cryptocurrency And Programming Proposal, Allan C. Hutchinson

Articles & Book Chapters

The problem to be faced in regulating cryptocurrency is the general thrust of the ‘governance paradox’—how do you regulate an innovative scheme that demands some regulation in the public interest, when you know that any regulation will transform the very features of that scheme that not only makes it what it is, but also makes it especially useful and attractive to that same public? More specifically, how do you regulate an off-the-grid, decentralized and distributed scheme without making it into an on-the-grid, centralized and undistributed scheme? This is the challenge to be met in devising any kind of proposal to …

Inclusive Economics And Home Loan Policies For Informal Workers, Kim Vu-Dinh

Faculty Scholarship

The United States has been suffering from a housing crisis that existed long before the proliferation of sub-prime loans and the Great Recession of 2008-2009. For decades, millions of gainfully employed workers have been institutionally excluded from homeownership, simply because they work in the informal economy. Because of this, the economic growth of households in this demographic has been stymied by discriminatory banking policies that heavily prioritize short-term profit maximization over borrower reliability, or loan viability. Many of those affected are historically disenfranchised people, who systematically have been excluded from the American dream of “a chicken in every pot and …

Petition For Rulemaking On Short And Distort, John C. Coffee Jr., Joshua Mitts, James D. Cox, Peter Molk, Edward Greene, Randall S. Thomas, Meyer-Eisenberg, Robert B. Thompson, Colleen Honigsberg, Andrew Verstein, Donald C. Langevoort, Charles K. Whitehead

Faculty Scholarship

Today, some hedge funds attack public companies for the sole purpose of inducing a short-lived panic which they can exploit for profit. This sort of market manipulation harms average investors who entrust financial markets with their retirement savings. While short selling serves a critical function in the capital markets, some short sellers disseminate negative opinion about a company, inducing a panic and sharp decline in the stock price, and rapidly close that position for a profit prior to the price partially or fully rebounding. We urge the SEC to enact two rules which will discourage manipulative short selling. The petition …

Revising Boilerplate: A Comparison Of Private And Public Company Transactions, Stephen J. Choi, Robert E. Scott, G. Mitu Gulati

Faculty Scholarship

The textbook model of commercial contracts between sophisticated parties holds that terms are proposed, negotiated and ultimately priced by the parties. Parties reach agreement on contract provisions that best suit their transaction with the goal of maximizing the joint surplus from the contract. The reality, of course, is that the majority of the provisions in contemporary commercial contracts are boilerplate terms derived from prior transactions and even the most sophisticated contracting parties pay little attention to these standard terms, focusing instead on the price of the transaction. With standard-form or boilerplate contracts, this dynamic of replicating by rote the terms …

No Pain, No Gain: Australia, Uk, And Us Stock Market Responses To The 2020 Stimulus Efforts, Jett Zeimantz

CMC Senior Theses

The stock market shocks of 2020 caused by the COVID-19 crisis have been met by monetary policy announcements rapidly issued by the central banks of developed economies, signaling a concerted effort to keep markets afloat. Utilizing an ordinary least squares regression, this paper tests whether the monetary policy announcements of the central banks of the United States, Australia, and the United Kingdom served their intended purpose in soothing market reactions via high-frequency event data. For the overall stock market, I find that the Federal Reserve’s announcements boosted market returns of the S&P 500 Index by 4.2%, the All Ordinaries Index …

Building A Law-And-Political-Economy Framework: Beyond The Twentieth-Century Synthesis, Jedediah S. Purdy, David Singh Grewal, Amy Kapczynski, K. Sabeel Rahman

Faculty Scholarship

We live in a time of interrelated crises. Economic inequality and precarity, and crises of democracy, climate change, and more raise significant challenges for legal scholarship and thought. “Neoliberal” premises undergird many fields of law and have helped authorize policies and practices that reaffirm the inequities of the current era. In particular, market efficiency, neutrality, and formal equality have rendered key kinds of power invisible, and generated a skepticism of democratic politics. The result of these presumptions is what we call the “Twentieth-Century Synthesis”: a pervasive view of law that encases “the market” from claims of justice and conceals it …

A Better Financing System? The Death And Possible Rebirth Of The Presidential Nomination Public Financing Program, Richard Briffault

Faculty Scholarship

In the spring of 1974, the 31-year-old junior Senator from Delaware, Joseph R. Biden, Jr., published a law review article in which he decried the traditional system of privately financed election campaigns. Private financing, Senator Biden contended, “affords certain wealthy individuals or special interest groups the potential for exerting a disproportionate influence over both the electoral mechanism and the policy-making processes of the government.” Moreover, Biden urged, private funding poses an obstacle to the candidacies of “individuals of moderate means” and so was at odds with the “concept of American democracy [that] presumes that all citizens, regardless of access to …

Restructuring Vs. Bankruptcy, Jason Roderick Donaldson, Edward R. Morrison, Giorgia Piacentino, Xiaobo Yu

Faculty Scholarship

We develop a model of a firm in financial distress. Distress can be mitigated by filing for bankruptcy, which is costly, or preempted by restructuring, which is impeded by a collective action problem. We find that bankruptcy and restructuring are complements, not substitutes: Reducing bankruptcy costs facilitates restructuring, rather than crowding it out. And so does making bankruptcy more debtor-friendly, under a condition that seems likely to hold now in the United States. The model gives new perspectives on current relief policies (e.g., subsidized loans to firms in bankruptcy) and on long-standing legal debates (e.g., the efficiency of the absolute …

Bankruptcy’S Role In The Covid-19 Crisis, Edward R. Morrison, Andrea C. Saavedra

Faculty Scholarship

Policymakers have minimized the role of bankruptcy law in mitigating the financial fallout from COVID-19. Scholars too are unsure about the merits of bankruptcy, especially Chapter 11, in resolving business distress. We argue that Chapter 11 complements current stimulus policies for large corporations, such as the airlines, and that Treasury should consider making it a precondition for receiving government-backed financing. Chapter 11 offers a flexible, speedy, and crisis-tested tool for preserving businesses, financing them with government funds (if necessary), and ensuring that the costs of distress are borne primarily by investors, not taxpayers. Chapter 11 saves businesses and employment, not …

The Covid-19 Pandemic And Business Law: A Series Of Posts From The Oxford Business Law Blog, Gert-Jan Boon, Markus K. Brunnermeier, Horst Eidenmueller, Luca Enriques, Aurelio Gurrea-Martínez, Kathryn Judge, Jean-Pierre Landau, Marco Pagano, Ricardo Reis, Kristin Van Zwieten

Faculty Scholarship

The COVID-19 Pandemic is the biggest challenge for the world since World War Two, warned UN Secretary General, António Guterres, on 1 April 2020. Millions of lives may be lost. The threat to our livelihoods is extreme as well. Job losses worldwide may exceed 25 million.

Legal systems are under extreme stress too. Contracts are disrupted, judicial services suspended, and insolvency procedures tested. Quarantine regulations threaten constitutional liberties. However, laws can also be a powerful tool to contain the effects of the pandemic on our lives and reduce its economic fallout. To achieve this goal, rules designed for normal times …

Credit Rating Agencies: Regulation And Liability, Colin Bradshaw

Lewis & Clark Law Review

In 2007, the economy crashed because of credit rating agency misconduct. Through the early 2000s, credit raters’ reckless pursuit of profits facilitated the enormous real estate and structured finance bubble that eventually burst in 2007. This Article examines the ratings industry and its institutions, their role in the crash, the regulation that led to their dominance in the markets, how that regulation changed in the wake of the economic crisis, and how they can be held liable today for present and future misconduct.

Section I describes what credit rating agencies (CRAs) are and what they do. Understanding the function of …

Shadow Credit And The Devolution Of Consumer Credit Regulation, Nathalie Martin, Lydia Pizzonia

Lewis & Clark Law Review

Shadow credit is trending. Shadow credit has all the essential attributes of regular credit except that it is unregulated. It operates in a world in which products and services that look, act, and feel like credit products are deemed to be something that is not actually credit. This legal sidestep is accomplished either by passing industry-friendly legislation or by tweaking the shadow credit product just enough to not be defined as credit, but “something else.” That “something else” is often called a “lease,” an “advance,” or in the case of After- pay, simply a “service.” At its essence, however, it …

Executive Underreach, In Pandemics And Otherwise, David E. Pozen, Kim Lane Scheppele

Faculty Scholarship

Legal scholars are familiar with the problem of executive overreach, especially in emergencies. But sometimes, instead of being too audacious or extreme, a national executive's attempts to address a true threat prove far too limited and insubstantial. In this Essay, we seek to define and clarify the phenomenon of executive underreach, with special reference to the COVID-19 crisis; to outline ways in which such underreach may compromise constitutional governance and the international legal order; and to suggest a partial remedy.

Anticipating Venezuela’S Debt Crisis: Hidden Holdouts And The Problem Of Pricing Collective Action Clauses, Robert E. Scott, Stephen J. Choi, Mitu Gulati

Faculty Scholarship

A creditor who asks for stronger enforcement rights upon its debtor’s default will rationally accept a lower interest rate reflecting the greater expected recovery the exercise of those rights provides. Over a dozen studies, however, have failed to document this basic relationship in the context of the collective action clause, a key provision in sovereign bonds. We conjecture that this failure is because enforcing the rights in question requires collective decision-making among anonymous creditors with different interests, impeding market predictions regarding future price effects. The pricing of rights that require collective enforcement thus turns on whether the market observes an …

Revising Boilerplate: A Comparison Of Private And Public Company Transactions, Robert E. Scott, Stephen J. Choi, Mitu Gulati

Faculty Scholarship

The phenomenon of “sticky boilerplate” causing inefficient contract terms to persist exists across a variety of commercial contract types. One explanation for this failure to revise suboptimal terms is that the key agents on these transactions, including attorneys and investment bankers, are short sighted; their incentives are to get the deal done rather than ensure that they are using the best terms possible for their clients. Moreover, these agents face a first mover disadvantage that deters unilateral revisions to inefficient terms. If agency costs are indeed driving the stickiness phenomenon, we expect that the pace of revision will vary across …

Dealing With Disruption: Emerging Approaches To Fintech Regulation, Saule T. Omarova

Cornell Law Faculty Publications

“Fintech” refers to a variety of digital assets, technologies, and infrastructure that deal with the operation of today’s financial markets. The regulation of this presents both legal and regulatory challenges. This article examines the regulatory responses to fintech disruption; specifically, the “experimentation” approach, the “incorporation” approach, and the “accommodation” approach. These approaches provide a baseline for further discussion and policy analysis in response to “Fintech.”

The Role Of Intent In The Rise Of Individual Accountability In Aml-Bsa Enforcement Actions, Tyler Halloran

Fordham Journal of Corporate & Financial Law

The statutory framework which prohibits individuals at financial institutions from engaging in money laundering attributes criminal or civil liability on the basis of an individual’s culpability with respect to the prohibited conduct. A recent Department of Justice policy shift has begun to place a greater focus on the prosecution of individuals within corporations. This shift has led to increased prosecutions of compliance personnel and bank officials in recent years.

Through analysis of recent cases, this Note seeks to explore how the requirement of intentional and/or willful conduct defines the potential for criminal and/or civil exposure for compliance personnel and bank …

The Layers Of Digital Financial Innovation: Charting A Regulatory Response, Teresa Rodriguez De Las Heras Ballell

Fordham Journal of Corporate & Financial Law

The increasing penetration of digital technologies in financial markets is evidenced by promising adoption rates among users, expanding presence of fintech firms and bigtech providing techfin services, and the growing use of fintech solutions by incumbents. The increasingly popular term "fintech" captures the accelerated transformation of contemporary financial markets driven and enabled by technology, and encapsulates its multifarious potential impact on services, market structures, and business models. This Article first aims to devise and propose an analytical framework to understand the digital challenges to financial regulation based on the "layers of digital financial innovation" theory. Accordingly, digital innovation (fintech) is …

Framing Regulation Around The Potential Liabilities Of Parties In The Blockchain & Smart Contract Industry, Jeceaca An

Fordham Journal of Corporate & Financial Law

Blockchains, which have been most significantly utilized by the technology, media, and telecommunication industry (TMT) and the financial sector, amassed global attention in the 2010s. This surging popularity may, however, cause the public to overlook the core characteristics of blockchain technology, and to consequently be unaware of the inherent risks at play when engaging with blockchains. Simply put, blockchain technology is an information storing technology that can be utilized in various ways, such as services to facilitate cryptocurrency exchanges and smart contracts. The recent widespread use of blockchain technology by unique parties has raised questions of how to deal with …

Willfulness In A Post-Robare World: Evidence Of Subjective Intent, Not Negligence Conduct, Is Needed To Show Willful Violations Of Securities Laws, Kevin Aguirre

Fordham Journal of Corporate & Financial Law

The D.C. Circuit's holding in Robare Group, Ltd., v. SEC, potentially marks the end of at least twenty years of permissive judicial interpretation of the term "willful," as found in various provisions of securities laws-including the Investment Advisers Act of 1940. Traditionally, willful violations of securities laws only required evidence that defendants were aware of their conduct, not that they knew that their conduct was unlawful. This low burden of proof operates in practice as a negligence standard. However, Robare makes a key distinction between evidence of negligent conduct and "subjectively intentional" violations under section 207 of the Advisers Act …

The Case For Accountability & Transparency: How Corporate Asset Forfeiture Creates A Conflict Of Interest, Tiffany J. Klinger

Fordham Journal of Corporate & Financial Law

Asset forfeiture is a tool used by law enforcement to seize property or profits related to criminal activity. Due to the public's growing distain of asset forfeiture, congressional and state reform has attempted to curtail the use of civil asset forfeiture over the past twenty years. However, little attention has been given where asset forfeiture is used against corporations. This Note sheds light as to how asset forfeiture is used against the organizational defendant and makes the following observations: First, asset forfeiture is a powerful tool in corporate criminal proceedings; however, forfeiture lacks the procedural restraints that are placed on …

Book Review, Roberto Rosas

St. Mary's Law Journal

Abstract forthcoming.

Electronic Payments: Guide On Legal And Regulatory Reforms And Best Practices For Developing Countries, Benjamin Geva

Articles & Book Chapters

Electronic payments (e-payments) occur whenever payment instructions, initiated by a device such as a computer or mobile phone, enter a payments system via the Internet or any other telecommunications network. E-payments can be assisted by non-banking channels. They enhance the speed, efficiency and safety of payments. However, to reap all such benefits, e-payments require new legal and regulatory solutions to accommodate both the promise and risks inherent in the quickening pace of development. This Guide sets out a general framework addressing e-payment systems in a broad international/cross-border context, as well as addresses regulatory principles, risk of legal uncertainty and e-payments …

Bayview Loan Servicing, Llc V. Providence Business Loan Fund, Inc., 200 A.3d 153 (R.I. 2019)., Ethan M. Armitano

Roger Williams University Law Review

No abstract provided.

Payday, Yonathan A. Arbel

Articles

Legislation lags behind technology all too often. While trillions of dollars are exchanged in online transactions-safely, cheaply, and instantaneously-workers still must wait two weeks to a month to receive payments from their employers. In the modern economy, workers are effectively lending money to their employers, as they wait for earned wages to be paid.

The same worker who taps a credit card to pay for groceries in semiautomated checkout lines depends on dated payroll systems that only transfer payments on a "payday." Workers, especially those living paycheck-to-paycheck, are hard-pressed to meet their daily needs and turn to expensive, short-term credit …

ความเหมาะสมของการนำหลักการที่นำเสนอภายใต้มาตรการจัดเก็บภาษี ขั้นต่ำเพื่อป้องกันการหลีกเลี่ยงภาษีโดยการถ่ายโอนกำไร (Pillar Two) ของ Oecd มาปรับใช้กับกลุ่มประเทศกำลังพัฒนา, อุษา เขียวมณี

Chulalongkorn University Theses and Dissertations (Chula ETD)

No abstract provided.

ปัญหาการนำหนังสือตอบข้อหารือภาษีอากรแบบกลุ่ม (Class Ruling) มาปรับใช้กับการเก็บภาษีฝ่ายสรรพากร, อัษฎาวุธ ไกรสิทธิ์

Chulalongkorn University Theses and Dissertations (Chula ETD)

เอกัตศึกษาฉบับนี้จัดทําขึ้นเพื่อมุ่งศึกษาเกี่ยวกับการนําหนังสือตอบข้อหารือภาษีอากรแบบกลุ่ม(Class Rulings) ในกรณีที่มีกลุ่มผู้เสียภาษีเดียวกันเช่น กลุ่มผู้ถือหุ้นของบริษัท กลุ่มนายจ้างหรือกลุ่มลูกจ้างในธุรกิจเครือ เดียวกันที่มีความเกี่ยวข้องกับธุรกรรมทางภาษีเดียวกัน มีข้อเท็จจริงและข้อกฎหมายภาษีอากรแบบเดียวกัน ซึ่งใน ปัจจุบันฝ่ายสรรพากรไทยยังไม่มีการนําหนังสือตอบข้อหารือภาษีอากรแบบกลุ่ม(Class Rulings) มาปรับใช้กับการ ให้คําแนะนําทางกฎหมายโดยการตอบหนังสือข้อหารือภาษีอากรทําให้ผู้เสียภาษีไม่สามารถรวมตัวกันเพื่อขอ หนังสือตอบข้อหารือภาษีอากรไปในคราวเดียวกันได้ อีกทั้งปัจจุบันหนังสือตอบข้อหารือภาษีอากรมีสถานะเป็น เพียงการให้บริการแก่ประชาชนหรือการให้ความเห็นในทางกฎหมายเท่านั้นไม่มีผลบังคับผูกพันฝ่ายสรรพากรและ ผู้เสียภาษีส่งผลกระทบแก่ผู้เสียภาษีที่เชื่อโดยสุจริตและได้ปฏิบัติตามหนังสือตอบข้อหารือภาษีอากรนั้น ดังนั้นผู้ศึกษาจึงได้ศึกษาแนวความคิดและหลักเกณฑ์หนังสือตอบข้อหารือภาษีอากรแบบกลุ่ม(Class Rulings) ของฝ่ายสรรพากรออสเตรเลียเพื่อหารูปแบบและแนวทางที่เหมาะสมในการนําหนังสือตอบข้อหารือภาษี อากรแบบกลุ่ม(Class Rulings) มาปรับใช้กับการเก็บภาษีฝ่ายสรรพากร ผู้เขียนมีความเห็นว่าฝ่ายสรรพากรไทยสมควรนําระบบหนังสือตอบข้อหารือภาษีอากรแบบกลุ่ม (Class Rulings) ของฝ่ายสรรพากรออสเตรเลียมาปรับใช้สำหรับการให้คำในเรื่องการส่งเสริมการส่งออกแนะนําทางกฎหมายโดยการตอบหนังสือข้อหารือภาษีอากรในกรณีที่มีกลุ่มผู้เสียภาษีเดียวกัน มีความเกี่ยวข้องกับธุรกรรมทางภาษีเดียวกัน มีข้อเท็จจริงและข้อกฎหมายภาษีอากรแบบเดียวกันเพื่อช่วยแก้ไขปัญหาการขัดแย้งกันของหนังสือตอบข้อหารือภาษีอากรและแก้ไขปัญหาสถานะทางกฎหมายของหนังสือตอบข้อหารือภาษีอากรที่ไม่มีผลบังคับผูกพันฝ่ายสรรพากรและผู้เสียภาษีเพื่อให้เป็นประโยชน์ในการบริหารจัดเก็บภาษีอากรและเพื่อให้สอดคล้องกับการคุ้มครองสิทธิของผู้เสียภาษีต่อไป

Fintech And International Financial Regulation, Yesha Yadav

Vanderbilt Journal of Transnational Law

This Article shows that Fintech exacerbates the difficulties of standard setting in international financial regulation. Earlier work introduced the "Innovation Trilemma" (the Trilemma). When seeking to balance the goals of achieving market integrity and innovation through clear and simple rulemaking, regulators can--at best--achieve only two out of these three objectives. Fintech's unique characteristics--a reliance on automation and artificial intelligence, novel types of big data, as well as the use of disintermediating financial supply chains comprising a mix of traditional firms as well as technology specialists and newcomers--complicates the application of the Trilemma. Rulemaking struggles to achieve needed clarity where innovative …

Failure To Capture: Why Business Does Not Control The Rulemaking Process, Gabriel Scheffler

Articles

Leading figures on both the political right and the political left have concluded that the agency rulemaking process is captured: that it serves to benefit businesses, at the expense of the general public. This perception appears to be supported by recent theoretical and empirical scholarship and has prompted lawmakers to introduce various proposals to reform the federal rulemaking process.

Yet as I will demonstrate in this Article, the view of the rulemaking process as captured is unwarranted. I will show that the academic literature actually provides little guidance as to the magnitude of business influence that is, the extent to …