Banking and Finance Law Commons^™

The Marijuana Insurgency: Federalism And Social Reframing In Policy Reform, Matthew P. Cavedon

Seattle University Law Review

After fifty years of federal prohibition, marijuana reform efforts have won political and legal success. These victories hold lessons for anyone seeking to resist federal law without being able to directly affect it.

Victory can come from reframing an issue. For marijuana reform, social reframing—not formal legal analysis or material factors—provides the best explanation for how advocates achieved change. Their unconventional political tactics, akin to those used by insurgents in wartime, undercut federal prohibition by winning hearts and minds.

This is an analysis of the sociology of legal change. It is also the story of how ordinary Americans retook personal …

Exiting The Disaster, Evading The Responsibility? Wadi Al-Qamar -- The Moon Valley, Suzan Nada

Perspectives

This essay explores a case that delivered no results for the complainants, where harm was not prevented, and where stakeholders who filed the complaint were not compensated. Investigated by the Compliance Advisor Ombudsman (CAO) of the International Finance Corporation (IFC), the Wadi al-Qamar case illustrates some of the limitations of accountability mechanisms in limiting the harms caused directly or indirectly by projects in which the International Financial Institutions (IFIs) invest.

Shareholder Primacy Versus Shareholder Accountability, William W. Bratton

Seattle University Law Review

When corporations inflict injuries in the course of business, shareholders wielding environmental, social, and governance (“ESG”) principles can, and now sometimes do, intervene to correct the matter. In the emerging fact pattern, corporate social accountability expands out of its historic collectivized frame to become an internal subject matter—a corporate governance topic. As a result, shareholder accountability surfaces as a policy question for the first time. The Big Three index fund managers, BlackRock, Vanguard, and State Street, responded to the accountability question with ESG activism. In so doing, they defected against corporate legal theory’s central tenet, shareholder primacy. Shareholder primacy builds …

Verses Turned To Verdicts: Ysl Rico Case Sets A High-Watermark For The Legal Pseudo-Censorship Of Rap Music, Nabil Yousfi

Seattle University Law Review

Whichever way you spin the record, rap music and courtrooms don’t mix. On one side, rap records are well known for their unapologetic lyrical composition, often expressing a blatant disregard for legal institutions and authorities. On the other, court records reflect a Van Gogh’s ear for rap music, frequently allowing rap lyrics—but not similar lyrics from other genres—to be used as criminal evidence against the defendants who authored them. Over the last thirty years, this immiscibility has engendered a legal landscape where prosecutors wield rap lyrics as potent instruments for criminal prosecution. In such cases, color-blind courts neglect that rap …

Everybody Wants To Rule The World: Central Bank Digital Currencies In The Era Of Decoupling The World’S Two Largest Economies, James M. Cooper

Faculty Scholarship

Some 130 central banks around the world are experimenting with various levels of a central bank digital currency (“CBDC”), a digitized form of a sovereign-backed, national currency that is a liability of that country’s central bank. Unlike fiat currency, CBDCs are trackable and potentially subject to interference and even freezing by government authorities. CBDCs will affect citizens’ control over commerce, payments, and savings, and impact their privacy rights. The Chinese government has piloted, refined, and rolled out its own CBDC called the Digital Currency/Electronic Payment initiative (“DC/EP”), also known as the digital yuan or e-CNY. The Chinese government is far …

Financial Exclusion In The Uk's Cashless Society Initiative: Challenges And Policy Considerations, Ogochukwu Monye

International Journal on Consumer Law and Practice

This study explores the challenges posed by the United Kingdom's (UK) cashless society initiative, which has sparked a surge in digital financial services (DFS), including contactless payment and online banking. While the policy promises benefits such as convenience, security, and faster transactions, there is a concern that many, particularly financially underserved and excluded consumers, will face isolation from the cashless transition. Data from the Bank of England (BoE) reveals that approximately 1.2 million UK adults lack access to traditional bank accounts, compelling them to rely primarily on cash transactions. Using the doctrinal research method, this study examines the compelling issue …

English Company Law: Legal Architecture For A Global Law Market, Andrew P. Morriss, Charlotte Ku

Faculty Scholarship

English-architecture company law describes the distinct and diverse group of company or corporate law used in more than 60 jurisdictions worldwide. English-architecture company law provides a robust platform for innovation and development due to its permissive structure, opportunity for choice of law in an entity’s internal governance, and scalability permitting variation for small and large entities. It is the dominant form among International Financial Centers (IFCs), many of which have legal systems with a British connection. This body of law responds to competition and maintains dynamism by engaging its practice community through “learning by doing” and “frictioneering.” An architecture approach …

Corporate Law As Decolonization, Martin W. Sybblis

Faculty Articles

After centuries of colonial subordination, Black and Brown former colonies are still fighting to achieve the fruits of decolonization. The traditional theory is that former colonies will emerge from the colonial period with the legal mandate and international recognition needed to chart their own futures. But, for those Black and Brown British colonies that achieved political independence, it became clear that, without economic strength to care for their societies, legal separation could not deliver on its promise of freedom from subordination. This Article argues that investments in corporate law innovations by some jurisdictions, such as Bermuda, the British Virgin Islands, …

Legal Risk And Accountability In Development Finance: Lessons From Jam V. International Finance Corporation, Michelle Harrison, Shannon Marcoux

Perspectives

In a landmark decision in 2019, the U.S. Supreme Court ruled in Jam v. International Finance Corporation that international organizations like the International Finance Corporation (IFC), the private lending arm of the World Bank Group, can be sued in U.S. courts, ending the “absolute immunity” from suit that they had long claimed. The Jam lawsuit arose out of IFC’s gross mishandling of the Tata Mundra coal-fired power plant project in Gujarat, India, which has destroyed the livelihoods, environment, and way of life of local communities living in its shadow. The lawsuit, and especially the clash between IFC’s sweeping assertions of …

Capital Gains Realizations, Daniel Schaffa

Law Faculty Publications

If there are important nondeductible costs to long-term investing, then higher capital gains tax rates may encourage or discourage investors from realizing accumulated gains. This ambiguity suggests that the sizeable observed effects of capital gains taxes on realizations may partly reflect factors other than the time value of money, such as investor anticipations of future tax rate changes.

Taming The Digital Wild West: The Need To Fully Regulate The Crypto Market, Shawn Stevenson

Lewis & Clark Law Review

Despite past doubts from sophisticated investors, cryptocurrencies have fully emerged from the underground and become a hot topic in mainstream financial discussions. At its peak, the global crypto market possessed a market cap of nearly $3 trillion, with the vast amount of that value created in less than two years. But this rapid growth has also come with extreme volatility; now more than a year out from that peak, the global crypto market has shrunk to under $1 trillion and has been riddled by high-profile bankruptcies. On top of this extreme volatility, the largely unregulated crypto market has become an …

Fractionalizing Investment Securities: Using Fintech To Expand Financial Inclusion, Steven L. Schwarcz, Robert Bourret

Faculty Scholarship

Recent innovations in financial technology, or “FinTech,” are enabling the fractionalization of investment securities, such as shares of stock and bonds. We explain how this fractionalization can fundamentally expand financial inclusion both for investors and for businesses, including small and medium-sized enterprises (SMEs). Using the fractionalization of investment securities as a model, we also counter the argument that FinTech-enabled transactions should not need regulation because they are governed by mathematical algorithms under so-called smart contracts. Additionally, we derive and test a regulatory framework to identify and help to mitigate the risks caused by fractionalization. In the process, we also explain …

A Major Question For The Sec: Analyzing Constitutional Limits On Regulatory Authority, Matthew Diller, Meredith Berger, Samuel W. Buell, John M. Golden, Suzanne Ashley, Coy Garrison, Aaron Saiger, Suman Naishadham, Mary Jo White

Fordham Journal of Corporate & Financial Law

No abstract provided.

Why Do Banks Fail Together? Evidence From Executive Compensation, Deniz Anginer, Jinjing Liu, Cindy A. Schipani, H. Nejat Seyhun

Fordham Journal of Corporate & Financial Law

Recent bank failures have elicited extensive interest about the causes, focusing on incompetence of bank executives, policymakers, bank regulators and supervisors and even uninsured depositors. Yet, before we can prescribe solutions to bank failures, we need to identify the correct causes of the underlying problems. We argue that the problem is not so much with incompetence of executives, depositors, or regulators per se, but rather with managerial incentives.

We provide both a conceptual basis as well as empirical evidence to show that bank executives have incentives to increase systemic risks in order to maximize the benefits of bank bailouts. Consequently, …

A Bona Fide Dispute: Can Bankrupt Debtors Sell Assets Free And Clear Of Federal Civil Forfeiture Claims?, Joseph Peter Gomez

Fordham Journal of Corporate & Financial Law

Auctions are wheeling-dealing extravaganzas in which frenzies of bidders fight over shiny objects. What would happen if the government busted down the doors of the auction house, took the shiny objects, and sold them online? An asset sale through section 363(b) of the Bankruptcy Code provides a court-supervised opportunity to maximize economic value for the bankruptcy estate. To sell estate assets, the debtor must either (1) pay off each creditor holding an interest in the assets or (2) strip the creditor’s interest and attach it to the proceeds of the sale. When the government asserts a civil forfeiture claim against …

Infrastructure Finance For The Public Good: How Asset Recycling Can Untangle The New York Mta's $50 Billion Debt Load, Lev Breydo

Journal of Law and Mobility

Systematic infrastructure underinvestment – a $2.6 trillion ‘gap’ – and accelerating climate change have become facts of life in the United States. Though typically attributed to politics, this Article posits the circumstances as a market disequilibrium rooted in an interplay between unique dimensions of infrastructure and distinctive features of the U.S. approach. Legislative action, including the Infrastructure Investment and Jobs Act, is insufficient to overcome these long-standing challenges.

Based on a broad, global study of effective approaches to infrastructure finance, as well as a multi-disciplinary analysis of the economics, engineering and finance literature, this Article proposes addressing the U.S. infrastructure …

Are Illinois Courts Still Champions Of Fiduciary Duties?, Charles W. Murdock, Michael Huiras

Faculty Publications & Other Works

Illinois courts have departed from the corporate-law jurisprudence that traditionally served as a champion of fiduciary duties. Historically, Illinois courts have consistently protected minority shareholders and punished directors and those in control for engaging in unfaithful, abusive, and deceitful behavior. In recent years, however, the Illinois Supreme Court has taken a technical approach to fiduciary duties, resulting in wrongdoers getting away with unconscionable conduct. First, this Article will demonstrate why Illinois has historically been characterized as a “shareholder” state by comparing the Illinois and Delaware corporate statutes and examining Illinois courts’ favorable fiduciary duty jurisprudence. In the latter half of …

We Shall Overcome: The Evolution Of Quotas In The Land Of The Free And The Home Of Samba, Stella Emery Santana

Seattle University Law Review

When were voices given to the voiceless? When will education be permitted to all? When will we need to protest no more? It’s the twenty-first century, and the fight for equity in higher education remains a challenge to peoples all over the world. While students in the United States must deal with the increase in loans, in Brazil, only around 20% of youth between the ages of twenty-five and thirty-four have a higher education degree.

The primary objective of this Article is to conduct an in-depth comparative analysis of the development, implementation, and legal adjudication of educational quota systems within …

Pacific Islands And The U.S. Military: The Legal Borderlands Of The Environmental Movement, Sonia Lei

Seattle University Law Review

Climate change remains an urgent, ongoing global issue that requires critical examination of institutional polluters. This includes the world’s largest institutional consumer of petroleum: the United States military. The Department of Defense (DoD) is a massive institution with little oversight, a carbon footprint spanning the globe, a budget greater than the next ten largest nations combined, and overly generous exemptions to environmental regulations and carbon reduction targets. This Comment examines how this lack of accountability and oversight plays out in the context of three Pacific islands that have hosted U.S. military bases for decades. By considering the environmental impact of …

Venture Capital's Esg Problem, Ryan A. Ashburn

Law Student Publications

Venture capital (“VC”) is repeatedly described as one of the “crown jewels” of the U.S. economy for its role in financing startups and innovation. However, recent corporate scandals, including fraud, have exposed a darker side of the VC industry and the startups in which venture capitalists (“VCs”) invest. For example, Theranos received $686 million in VC funding yet proved to be nothing more than a “house of cards” once it came to light that Theranos falsified blood test results. When Theranos founder Elizabeth Holmes was convicted of fraud, many VCs tried to distance themselves, saying Theranos was an exception and …

Investment Crowdfunding: Anarchy In The U.K.?, Andrew A. Schwartz

Publications

Investment crowdfunding is a new type of venture capital market open to the broad public--'the crowd'--and the United States and United Kingdom adopted rather different legal regimes to govern and police it. In order to protect investors, the United States enacted an extensive set of laws and regulations, while the United Kingdom took a 'liberal' approach to investment crowdfunding, imposing few legal rules and relying primarily on private ordering.

A decade has now passed, allowing us to see whether the liberal U.K. market has devolved into anarchy and failure in the absence of heavy regulation. Recently published data reflects well …

Investment Daos And Crowdfunding: A Solution To Securities Law Challenges, Katherine Stromin

University of San Francisco Law Review

No abstract provided.

The Consumer’S Choice To Boycott, Agnes Bresee

Seattle University Law Review

In the wake of employees losing their jobs upon voicing their political opinions concerning Israel, Harvard and Columbia law students’ job offers being rescinded upon expressing support for Palestine, and the names and social media profiles of individuals who support Palestine being collected and listed on Canary Mission, such backlash may leave many Americans wondering what form of resistance to settler-colonialist apartheid is acceptable in the twenty-first century. Recently, the movement to collectively boycott brands like Starbucks, which sued its Worker’s Union for a tweet expressing support for Palestine; Disney, which donated money to Israel; and McDonald’s, where a location …

Unblocking The Chain: Leveraging Mediation And Negotiation In Crypto Exchange User Disputes, Jane Perov

Cardozo Journal of Conflict Resolution

No abstract provided.

A Different Approach To Agency Theory And Implications For Esg, Jonathan Bonham, Amoray Riggs-Cragun

Seattle University Law Review

In conventional agency theory, the agent is modeled as exerting unobservable “effort” that influences the distribution over outcomes the principal cares about. Recent papers instead allow the agent to choose the entire distribution, an assumption that better describes the extensive and flexible control that CEOs have over firm outcomes. Under this assumption, the optimal contract rewards the agent directly for outcomes the principal cares about, rather than for what those outcomes reveal about the agent’s effort. This article briefly summarizes this new agency model and discusses its implications for contracting on ESG activities.

Overseeing The Administrative State, Jill E. Fisch

Seattle University Law Review

In a series of recent cases, the Supreme Court has reduced the regulatory power of the Administrative State. Pending cases offer vehicles for the Court to go still further. Although the Court’s skepticism of administrative agencies may be rooted in Constitutional principles or political expediency, this Article explores another possible explanation—a shift in the nature of agencies and their regulatory role. As Pritchard and Thompson detail in their important book, A History of Securities Law in the Supreme Court, the Supreme Court was initially skeptical of agency power, jeopardizing Franklin Delano Roosevelt (FDR)’s ambitious New Deal plan. The Court’s acceptance …

The Sec, The Supreme Court, And The Administrative State, Paul G. Mahoney

Seattle University Law Review

Pritchard and Thompson have given those of us who study the SEC and the securities laws much food for thought. Their methodological focus is on the internal dynamics of the Court’s deliberations, on which they have done detailed and valuable work. The Court did not, however, operate in a vacuum. Intellectual trends in economics and law over the past century can also help us understand the SEC’s fortunes in the federal courts and make predictions about its future.

A Hard Pill To Swallow: The Abysmal Mental Health Standards Of Detained Immigrant Children In The United States, Rama Bankesly

Seattle University Law Review

After setting foot into the U.S., unaccompanied children must learn to navigate academic and legal systems while receiving little support and carrying the heavy burden of effects of trauma on their mental health. They need access to mental health care from qualified professionals, but as this Comment will explain, they systematically fail to receive care, as can be seen in cases like Doe v. Shenandoah Valley Juv. Ctr. Comm’n. In Shenandoah, an unaccompanied child arrived in the U.S. and was placed in a facility that failed to provide remotely adequate mental health care and in fact was subjected …

Singapore’S Emerging Regulatory Approach To Stablecoins, Rachel Phang

Research Collection Yong Pung How School Of Law

The Monetary Authority of Singapore's vision to develop "an innovative and responsible digital asset ecosystem" has placed stablecoins firmly on the regulatory agenda. Stablecoins, as cryptoassets designed to maintain a stable value, are regarded as having the potential to serve as a tenable medium of exchange for the digital asset ecosystem - so long as they are well-regulated and securely backed. Both this vision of a flourishing digital asset ecosystem, as well as the specter of the instability wrought by the recent algorithmic stablecoin collapse, speak to the need for sound regulation of stablecoins. This article therefore seeks to critically …

Regulatory Approaches To Consumer Protection In The Financial Sector And Beyond: Towards A Smart Disclosure Regime?, Nydia Remolina, Yvonne Ai-Chi Loh, David Hardoon

International Journal on Consumer Law and Practice

Consumer and data protection policies often focus on consent and information disclosure. The purpose of these regulatory strategies is the protection of consumers by reducing some contracting failures, such as asymmetries of information and a lower bargaining power, especially in transactions involving complex issues such as financial products and sensitive personal data. In the past, regulators have responded to privacy and consumer protection by adopting what this article refers to as an “imperfectly informed regime”, in which consumers do not receive full information about the risks associated with their decisions, even if they are still protected through a variety of …