Banking and Finance Law Commons^™

Proposal For A New Regulation Of Speculation In Sovereign Debt, Justin Vanderschuren

Fellow, Adjunct, Lecturer, and Research Scholar Works

Over the past few years, several countries have undertaken to regulate the speculation in sovereign debt pursued by so-called “vulture funds.” The various realizations and attempts present a series of loopholes that make a new regulation of this speculation advisable. A proposal for a new regulation, legally justified and precisely framed, is all the more desirable given that some legislators, in particular from the New York State Legislature, have recently taken up the issue of speculation.

Debt sustainability is the only realistic regulation benchmark. It is inconceivable to ban debt purchases on the secondary market as this would significantly impact …

How To Understand China's Approach To Central Bank Digital Currency?, Heng Wang

Research Collection Yong Pung How School Of Law

China's central bank digital currency (CBDC), digital yuan or e-CNY, is likely to profoundly affect the international financial system. China's CBDC is fast evolving. Understanding the influencing factors of China's CBDC will likely be crucial to explore its future direction. Major influencing factors include (i) China's perception and conception of regulation and technology, (ii) complementarity between China's preferences and CBDC development, (iii) domestic and international legitimacy, and (iv) institutional development. This paper argues that these influencing factors contribute to China's likely approach of selectively reshaping the international financial system. Given the potential wide-ranging implications of the introduction of CBDC globally, …

Taming Wildcat Stablecoins, Gary B. Gorton, Jeffery Y. Zhang

Articles

Cryptocurrencies, including stablecoins, are all the rage. Investors are exploring ways to profit off of them. Governments are considering ways to regulate them. While the technology underlying cryptocurrencies is new, the economics is centuries old. Oftentimes, lawmakers are so focused on understanding a new technological innovation that they fail to ask what exactly is being created.

In this case, the new technology has recreated circulating private money in the form of stablecoins, which are similar to the banknotes that circulated in many countries during the nineteenth century. The implication is that stablecoin issuers are unregulated banks. Based on lessons learned …

The Problematic Forgotten Buyback, Yesha Yadav

Vanderbilt Law School Faculty Publications

Totaling in excess of $100 billion dollars in transactions annually, debt buybacks allow a company to repurchase bonds from investors, rewriting bargains and stripping away creditor control rights in the process. This Article shows that regulation systematically underprotects bondholders in the context of debt buybacks. It makes three points. First, bondholders confront information asymmetries that enable issuers to buy back creditor claims cheaply. Regulation imposes near negligible requirements on issuers to disclose information about the transaction. Lacking fiduciary protection, bondholder interests are vulnerable to being extinguished by issuers in the interests of promoting those of shareholders and managers. Second, buybacks …

The Sec’S Spac Solution, Karen Woody, Lidia Kurganova

Emory Law Journal Online

The SPAC craze has ebbed and flowed over the past few years, creating fortunes and ruining others. The SEC stepped into the mix in 2022 and proposed rules governing SPACs. The proposed rules artfully balance the interests of investor protection while retaining some of the featured characteristics of SPACs as innovative ways to take companies public. This Article details the history of SPACs, including their benefits and risks, and analyzes the SEC’s proposed rules, arguing that the SEC is well within its Congressional authority to regulate SPACs, and that the proposed rules are both well-tailored and necessary.

Beyond Consumer Protection: Standardized Stablecoins Disclosure As Information Infrastructure, Shuping Li

Brooklyn Journal of International Law

This article argues for standardized disclosure for stablecoins regulation. Information disclosure has long been considered a primary tool for consumer protection. Stablecoin issuers should disclose honestly and responsibly about the qualification of themselves, as well as the value, quantity, and operational mechanism of their stablecoins. Such disclosure can prevent issuers from taking advantage of information asymmetries for consumer exploitation or fraud. It is then up to the consumers to make informed investment or consumption decisions. More importantly, this paper argues that the fundamental role of information disclosure is to form a knowledge base for financial regulation and policymaking. The importance …

Decentralized Finance Oracles, Lucia Suarez Barcia

Journal of New Finance

Financial markets have recently suffered from an increased interest of users of cryptocurrencies and decentralized finance solutions. Although Decentralized Finance (DeFi) has been designed based on smart contracts and leave out third-party intermediaries, these platforms sometimes require information from the outside world, such as exchange rates or prices. DeFi Oracles are the link solution between the on-chain world and the off-chain universe. This article describes the oracles, including taxonomy, governance and use cases. Thereafter, it considers their potential and, at the same time, addresses the possible risk that they present, which could impact the future DeFi space.

Auditing Overseas: How The United States Can Learn From Recent Financial Audit Reform In The United Kingdom, Daniel Damitio

Northwestern University Law Review

Financial auditing is one of the cornerstones of an effective capital market structure. When performed correctly, an independent financial audit provides investors with the security they need to effectively transact based on company disclosures. When this system fails, however, the results for investors and the economy as a whole can be devastating. In recognition of this danger, the market for financial auditing in the United States is regulated by a number of governmental and nongovernmental bodies charged with maintaining its health and effectiveness. But stakeholders within the U.S. market and government have criticized these regulators for failing to adequately respond …

Federal Data Privacy Regulation: Do Not Expect An American Gdpr, Matt Buckley

DePaul Business & Commercial Law Journal

No abstract provided.

Legal Representation And The Metaverse: The Ethics Of Practicing In Multiple Realities, Madeline Brom

DePaul Business & Commercial Law Journal

No abstract provided.

Welcome Address, Lauren Mckenzie

DePaul Business & Commercial Law Journal

No abstract provided.

Front Matter

DePaul Business & Commercial Law Journal

No abstract provided.

Wireless Investors & Apathy Obsolescence, Sergio Alberto Gramitto Ricci, Christina M. Sautter

Faculty Works

This Article discusses how a subgenre of retail investors makes investors’ apathy obsolete. In prior work, we dub retail investors who rely on technology and online communications in their investing and corporate governance endeavors “wireless investors.” By applying game theory, this Article discusses how wireless investors’ global-scale online interactions allow them to circulate information and coordinate, obliterating collective action problems.

The Retail Investor Report, Nick Einhorn, Jill E. Fisch, Sergio Alberto Gramitto Ricci, Monique Le, Christina M. Sautter

Faculty Works

In 2020, a wave of retail investors entered the stock market. In the last two years, approximately 30 million new retail investors opened brokerage accounts in the U.S. By 2021, retail investors comprised 25% of total equities trading volume, nearly double the percentage reported a decade prior.

And they’ve stuck around. In February 2023, retail investors across platforms set a new all-time high for weekly inflows, with $1.5 billion dollars pouring into the market in a single week.

Participation in the public markets remains high; more significantly, it has evolved. Public.com surveyed 2,000+ investors to compile its 2023 report. Public’s …

Lex Cryptographica Financiera, Rosa M. Lastra, J.G. Allen

Research Collection Yong Pung How School Of Law

The past year has witnessed significant growth in the size, and mainstream profile, of financial markets built on distributed ledger technology (“DLT”), in particular “blockchain”. In February 2021, the market capitalisation of the cryptoasset Bitcoin, which is built on the first operational blockchain, topped USD 1 trillion. So-called decentralised finance (“DeFi”), built mostly on the Ethereum blockchain, grew from less than USD 1 billion to over USD 80 billion in May 2021. Even if one adopts a sceptical posture towards these developments, “crypto” markets cannot be ignored by scholars or practitioners of financial and monetary law.

Severity Under Scrutiny: The U.S. Supreme Court Battle Over The Fbar Penalty, Beckett Cantley, Geoffrey Dietrich

The Journal of Business, Entrepreneurship & the Law

In recent years, Congress strengthened federal regulation of foreign bank accounts held by United States citizens. In 1970, Congress passed the Bank Secrecy Act (BSA), requiring U.S. citizens to report their foreign bank accounts using a form called the Foreign Bank Account Report, or “FBAR.” However, the Treasury Department rarely enforced this requirement. After the Patriot Act’s passage came the Bank Secrecy Act 2004 amendment, allowing the Treasury Department to delegate enforcement of U.S. foreign bank account reporting to the Internal Revenue Service (IRS) through the FBAR. The amendment’s major change to the law concerned new penalties for non-willful FBAR …

Stopping Runs In The Digital Era, Luís C. Calderón Gómez

Articles

Bank runs, and the financial crises they catalyze and amplify, are incredibly costly-to individuals, families, society, and the economy writ large. Banking regulation has, for the most part, protected us from traditional bank runs for the last ninety years. However, as we saw in the devastating 2008 financial crisis, bank runs can still occur in lightly regulated or opaque segments of the financial sector.

The recent crypto market downturn dramatically forewarned regulators of the potential and significant risks that novel assets could pose to our financial system's stability. In particular, a novel, systemically important asset (stablecoins) revealed its vulnerability to …

Initiation Payments, Scott Hirst

Faculty Scholarship

Many of the central discussions in corporate governance, including those regarding proxy contests, shareholder proposals, and other activism or stewardship, can be understood as a single question: Is there under-initiation of corporate changes that investors would collectively prefer?

This Article sheds light on this question in three ways. First, the Article proposes a theory of investor initiation, which explains the hypothesis that there is under-initiation of collectively-preferred corporate change by investors. Even though investors collectively prefer that certain corporate changes take place, the costs to any individual investor from initiating such changes through high-cost proxy contests, or even low-cost shareholder …

The Quincecare Duty In Flux: The Implications For Banks And Digital Asset Platforms, Jason. Teo, Aaron Yoong

Research Collection Yong Pung How School Of Law

With the increased sophistication of online payment methods, it is unsurprising that incidents of fraud have become commonplace, with fraudsters often employing innovative means against unsuspecting victims. Users, regulators and industry players in the banking sector are, in many aspects, struggling to keep pace with the continually evolving legal landscape of the fraud space. Similar challenges also begin to arise in the digital asset space for the various platforms engaged (whether for trading or staking). In recent years, a significant question has resurfaced concerning the liability of entities such as banks and digital asset platforms for the losses suffered by …

Debtor-In-Possession Financing In Reorganization Procedures: Regulatory Models And Proposals For Reform, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

A situation of insolvency hinders a firm’s ability to obtain external finance. As a result, viable but financially distressed firms might be unable to keep operating and pursuing value-creating investment projects. Consequently, value can be destroyed for debtors, creditors, employees, suppliers and society as a whole. To address this problem, several jurisdictions around the world have adopted a system of rescue or debtor-in-possession (‘DIP’) financing that seeks to encourage lenders to extend credit to viable but financially distressed firms. They do so by providing DIP lenders with different forms of priority that typically range from a basic administrative expense priority …

The Bank Is A Guarantor To Fulfill The Use Of Electronic Cards, Dr. Karima Krim

مجلة جامعة الإمارات للبحوث القانونية UAEU LAW JOURNAL

There are many guarantees of using modern payment methods, especially the electronic card: whether before using it – the conditions of obtaining - or even when used. Which is mainly related to the intervention of the bank, who puts it at the disposal of its customers as a result of the relationship between them, and is obliged to guarantee the payment as a result of their use depending on the banking norms governing its dealing. Because of its commitment to independence, abstraction and irreversibility, the Bank is the best guarantor to fulfill the use of electronic cards.

Protecting The Investor In The Promotional Operations Of Financial Products: An Analytical Study Within The Framework Of The Legislation Of The Securities And Commodities Market Authority In The United Arab Emirates, Rasha Hattab Dr., Ahmed Qasim Farah Dr

مجلة جامعة الإمارات للبحوث القانونية UAEU LAW JOURNAL

The Decision of the Emirates Securities and Commodities Authority No. (3/R. M) of 2017 concerning the Regulation of Promotion and Introduction Activities represent an important stage in the development of the regulatory regime of promotion of financial products in the UAE. This Decision complete the previous Decision No. (9/R. M) of 2016 concerning Mutual Funds which determinates the conditions for the promotion of Foreign investment Funds. The main problematic of this study is to determine whether the legal rules governing the promotion of financial products in UAE legislation provide adequate protection to the targeted investors. Several other problematics are related …

An Outlook For Employing The "Initial Coin Offering" (Ico) For The Issuance Of "Islamic Smart Sukuk" Across The Blockchain, Dr. Mohiuddin Adnan Al-Hajjar

مجلة جامعة الإمارات للبحوث القانونية UAEU LAW JOURNAL

The Blockchain introduced new concepts related to the field of finance especially by giving birth to cryptocurrencies. This technical tool is for some a revolution in the business world, while other conservatives are careful about this new technology. Among its various applications, ICO represent an attractive solution for companies seeking capital.

The Islamic orientation of ICO can be an alternative for Islamic financing of projects and businesses to the general public, i.e. companies or individuals. Our analytical and comparative approach is to prove that:

- The issue via an ICO results in the appearance of a Token representing the co-ownership …

The Mobilization Of Bank Debts Under The Tunisian Law, Nizar Hamrouni Dr.

مجلة جامعة الإمارات للبحوث القانونية UAEU LAW JOURNAL

finance the projects of its clients, which results in long-term debts that the bank can only extract after long terms. These operations weaken the financing capacity of the bank.

To face this situation, banks need to transfer long-term debts to the benefit of a bank or other financial institution in exchange for an urgent payment of the value of these debts, so that the bank can recover its financial balance.

In response to the needs of bank debt trading, the Tunisian legislator has organized many legal processes that enable the bank in need of financing to transfer its debts to …

The Establishment Of A Unified Asean Monetary System Following The European Model: Is It Legally Feasible?, James Keith C. Heffron

Center for Business Research and Development

For the last several decades, the drive towards globalization has influenced most of the world’s economic and fiscal direction. Regional cooperation therefore is a natural step towards this thrust. For many years, many sectors have been clamoring for a unified monetary system in the ASEAN patterned after the European Monetary System, the same system that gave birth to the Euro – the European Union’s regional currency. The main benefit of having a regional unified monetary system is price and currency stability. This in turn would result to an accelerated economic growth in the region especially in developing members such as …

The Urgency And Strategic Role Of Maqasid Shari'ah And Maslahah In Responding To The Legal And Economic Challenges Of Muslim Business, Fadhli Suko Wiryanto

Journal Of Middle East and Islamic Studies

The study of maqashid shari'ah began to receive intensive attention after the Prophet's death, especially when the Companions were faced with new problems and social changes that had never occurred when the Prophet Muhammad was still alive. With the existence of social changes as a result of the demands of the times and the dynamics of society, thus demanding the creativity of the friends seriously to conduct a study of the maqashid shari'ah as an effort to make legal breakthroughs to anticipate social changes that occur. Maqashid shari'ah and maslahat have a very urgent and strategic role to be used …

Reimagining Financial Whistleblower Protection: A Proposal For Stronger Protection Under The Sarbanes-Oxley Act, Matthew J. Gilligan

Brooklyn Law Review

Whistleblowers occupy a unique place in American society. They operate in nearly every sphere of modern life, exposing unlawful conduct by financial institutions, technology companies, and government entities, just to name a few. When whistleblowers encounter retaliatory behavior, they are faced with an uphill battle to hold their employer accountable. This note discusses the circuit split regarding whistleblower protections under the Sarbanes-Oxley Act, which was recently granted cert by the US Supreme Court. Until recently, no circuit required whistleblowers suing their employers for engaging in retaliatory behavior to show that the employer acted with retaliatory intent. The Second Circuit broke …

But Is It Material? A Case Study Evaluating Climate Risk’S Place In Financial Disclosures, Matilda Lindberg

Student Theses and Dissertations

The year of 2022 highlighted the importance of understanding how Environment, Social, and Governance (hereafter, ESG) factors impact investors. By the end of 2021, 37.8 trillion USD had been invested in ESG funds, a number expected to grow to $53 trillion by the end of 2025. Despite this bullish projection, controversy has grown about the “materiality” of ESG factors, especially climate risks, as defined by the Securities and Exchange Commission (hereafter, SEC). On March 21, 2022, the SEC proposed rules to enhance the standardization of climate- related disclosures (hereafter The Proposal) to promote consistent, comparable, and reliable information for investors …

Sec V. Panuwat: The Federal Pursuit Of Shadow Trading, Kayla Kershen

Brooklyn Journal of Corporate, Financial & Commercial Law

In 2021, the SEC filed a complaint against a biopharmaceutical executive, Matthew Panuwat, for trading on material non-public information in violation of both the federal securities laws and his employer’s company policies. However, because the subject of the confidential information was not his employer, but a similarly situated peer company, Panuwat’s conduct constitutes “shadow trading.” The SEC’s enforcement, and the Northern District of California’s subsequent approval, indicate that company insiders may face liability for shadow trading. However, as written, the SEC arguably bases its attachment of federal liability on the company policies that Panuwat was bound by and violated. This …

Banking-As-A-Service: Fintechs Walking The Regulatory Perimeter, Braeden Hodges

Brooklyn Journal of Corporate, Financial & Commercial Law

Financial technology (fintech) has ushered into today’s financial markets a wave of innovations that have revolutionized the way financial services are rendered and consumed. One such transformation is Banking-as-a-Service (BaaS): a partnership model through which nonbank businesses offer federally regulated banking products directly to consumers. By disintermediating the banking value chain, BaaS is democratizing access to financial services and lowering barriers to entry for many unbanked and underbanked individuals. These initiatives bring with them a number of concerns—such as data privacy risks, new forms of surveillance and discrimination, and economic instability—that are augmented by a systemic deficiency in regulators’ ability …