Banking and Finance Law Commons^™

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 …

Entire Fairness Or Bust: The Burst Of The 2020-2021 Spac Bubble, Nicole Lynch

Brooklyn Journal of Corporate, Financial & Commercial Law

Special Purpose Acquisition Companies (SPACs) have skyrocketed in recent years as an alternative for taking private companies public through an initial public offering (IPO). SPACs are blank-check companies that raise capital through public exchanges for the “special purpose” of acquiring a privately held company. Once acquired, the private company will take the SPAC’s place on the public exchange, effectively accomplishing the same thing as a traditional IPO but without all the onerous reporting requirements and upfront costs. For these reasons, SPACs have become the next big thing in securities markets despite being around since the 1990s. Throughout 2020 and 2021, …

Regulating Strategic Sovereign Wealth, Paul Rose

BYU Law Review

In an era of ascendant globalization, sovereign wealth funds were used by governments around the world – and, in particular, by governments with massive natural resource wealth or balance-of-trade surpluses – to invest widely in foreign markets. Sovereign wealth funds were products of the international economic order then in existence, adapted to a political and economic environment in which borders could be easily crossed and foreign assets seemed abundant and easily acquired. After the Financial Crisis, and with the increasing nationalization seen in the 2010s, this environment began to change. Both domestic and international forces spurred the development of new, …

Meme Corporate Governance, Dhruv Aggarwal, Albert H. Choi, Yoon-Ho Alex Lee

Law & Economics Working Papers

Can retail investors revolutionize corporate governance and make public companies more responsive to social concerns? The U.S. stock market offered an unusual experiment to test the impact of retail investors in 2021, when there was a dramatic influx of retail investors into the shareholder base of companies such as GameStop and AMC. The meme surge phenomenon elicited a variety of reactions from scholars and practitioners. While some worried that affected companies’ share prices were becoming disjointed from their financial fundamentals, others predicted that retail shareholders will reduce the power of large institutional investors and democratize corporate governance. This Article presents …

Gamestopped: How Robinhood’S Gamestop Trading Halt Reveals The Complexities Of Retail Investor Protection, Neal Newman

Faculty Scholarship

Should brokers have the unfettered right to restrict investor trading? GameStop, a brick-and-mortar video game retailer, had been experiencing declining revenues since 2016. However, GameStop saw its share price climb almost 1000 percent in the span of a one- week period from January 21, 2021 to January 27, 2021 due to retail investors buying significant amounts of GameStop shares during that period. Melvin Capital, a hedge fund, ended up losing billions as they were betting that GameStop shares would lose value instead of increase—a practice referred to as short selling. On January 28, 2021, brokers inexplicably halted trading on GameStop …

The Intersection Of Nfts And Structured Finance, Christopher K. Odinet, Andrea Tosato

Faculty Scholarship

Blockchain technology, cryptocurrencies, stablecoins and non-fungible tokens (NFTs) continue to invade financial markets. Whether through partnerships between financial institutions and tech firms or through in-house initiatives at some of the nation’s largest banks, blockchain-based products, services, and transactional structures are a major point of interest. In a recent work by Professor Steven Schwarcz, the growing NFT market is analyzed using the traditional tools of structured finance. Creating a new conceptual model called non-cash-flow monetizations, Professor Schwarcz reveals the risks to investors and markets, if the tokenization of non-traditional and largely illiquid assets proliferates. Having identified the potential harms, he offers …

Globalize Me: Regulating Distributed Ledger Technology, Roee Sarel, Hadar Y. Jabotinsky, Israel Klein

Vanderbilt Journal of Transnational Law

Distributed Ledger Technology (DLT)—the technology underlying cryptocurrencies—has been identified by many as a game-changer for data storage. Although DLT can solve acute problems of trust and coor- dination whenever entities (e.g., firms, traders, or even countries) rely on a shared database, it has mostly failed to reach mass adoption out- side the context of cryptocurrencies.

A prime reason for this failure is the extreme state of regulation, which was largely absent for many years but is now pouring down via uncoordinated regulatory initiatives by different countries. Both of these extremes—under-regulation and over-regulation—are consistent with traditional concepts from law and economics. …

Regulating Cryptocurrency Derivatives: A Comparative Analysis Of Approaches In The Uk, The Eu And Singapore, Rachel Phang

Research Collection Yong Pung How School Of Law

Cryptocurrency derivatives have been attracting growing retail and institutional interest, raising the increasingly pertinent question of how such products should be regulated. This paper assesses different regulatory approaches in the United Kingdom, the European Union and Singapore, and considers what insights these might provide for the regulation of cryptocurrency derivatives generally.

Menger Or Marx? The Political Ontology Of Cryptocurrency, Rector Tully, J.G. Allen

Research Collection Yong Pung How School Of Law

One of the perennial fault-lines in monetary theory is that between commodity and credit theories of money. The emergence of alternative payment systems based on blockchain and distributed ledger technologies, of which Bitcoin is the most prominent example, has raised a host of important questions in relation to this debate. This article considers two. The first is ontological: Are Bitcoin and similar ‘cryptocurrencies’ best conceived of as money? The second is political: Do these money candidates represent an emancipatory development over state-backed fiat currency? The ontological question, we will argue, invites the political one. If it is the case, as …

Fenceposts Without A Fence, Katherine E. Di Lucido, Nicholas K. Tabor, Jeffery Y. Zhang

Vanderbilt Law Review

Banking organizations in the United States have long been subject to two broad categories of regulatory requirements. The first is permissive: a "positive" grant of rights and privileges, typically via a charter for a corporate entity, to engage in the business of banking. The second is restrictive: a "negative" set of conditions on those rights and privileges, limiting conduct and imposing a program of oversight and enforcement, by which the holder of that charter must abide. Together, these requirements form a legal cordon, or "regulatory perimeter," around the U.S. banking sector.

The regulatory perimeter figures prominently in several ongoing policy …

The Meme Stock Frenzy: Origins And Implications, Dhruv Aggarwal, Albert H. Choi, Yoon-Ho Alex Lee

Law & Economics Working Papers

In 2021, several publicly traded companies, such as GameStop and AMC, became “meme stocks,” experiencing a sharp rise in their stock prices through a dramatic influx of retail investors into their shareholder base. Analyses of the meme stock surge and its implications for corporate governance have focused on the idiosyncratic creation of online communities around particular stocks during the COVID-19 pandemic. In this Article, we argue that the emergence of meme stocks is part of longer-running digital transformations in trading, investing, and governance. On the trading front, the sudden abolition of commissions by major online brokerages in 2019 reduced entry …

Comments On Federal Trade Commission Non-Compete Ban Proposed Rule, Matter No. P201200, Chaz D. Brooks

Scholarly Articles in Law Reviews & Journals

Within signed law professors and law students submitted this letter to the Federal Trade Commission, writing in their individual capacities, not as agents of their affiliated institutions, in support of the Federal Trade Commission’s proposed rule to ban most non-compete clauses (the “Proposal”) as an unfair method of competition.

This letter offers comments in response to areas where the FTC has requested public comment. To make our views clear, this letter contains the following sections: I. Summary of the Proposal; II. The Commission Should Consider Expanding Its Definition of Non-Compete Clauses to Prevent Employers from Requiring Workers to Quit Before …

U.S. Cryptocurrency Regulation: A Slowly Evolving State Of Affairs, Aaron Poynton

Notre Dame Journal on Emerging Technologies

After nearly a decade and a half since the creation of the first cryptocurrency, crypto regulation in the United States is fragmented, with different measures taken at the federal and state levels, and even within and among agencies. This sluggish speed is not necessarily a surprise as government regulation has always chased rapid advancements in technology and associated consumer and market behavior changes. However, this is a precarious position for the United States--and the world--as the U.S. is a leader in the global financial community, the high concentration of crypto-based wealth, and economies’ increasingly interconnected and interdependent nature. This working …

Blockchain Coming To A Block Near You: How Fintech Is Changing Real Estate Investing, Joseph Bizub, Justin Peralta, David Reiss

Cornell Law Faculty Working Papers

Until recently, real estate with a small footprint – one-to-four-family homes as well as small retail, office, and industrial buildings – were generally within the purview of small investors who invested locally. Today, because of technological advances, these owner-occupants and investors face competition from an emerging class of decentralized finance (DeFi) investors. Fintech companies are presenting DeFi investors with new approaches to the challenges that real estate investing traditionally poses: illiquidity, high capital requirements, lack of diversification, and opaque markets. This article focuses on how fintech companies are meeting those challenges and suggests that while much of their vaunted innovation …

The Dao Of Real Estate, Joseph Bizub, David Reiss

Cornell Law Faculty Working Papers

Real Estate Investment Trusts (REITs) have long proven their worth as liquid securities that give investors access to many real estate asset classes. Decentralized Autonomous Organizations (“DAOs”) are one of several blockchain real estate innovations seeking to provide a new path to those searching to invest in real estate. While the success of the DAO model of real estate investment is far from assured, these new investment options could offer real competition to REITs one day.

Capital Regulation As Climate Policy, Joel Michaels

Center for Law and the Economy

Federal banking regulators are grappling with how to confront the threats posed by climate change. There are increasingly loud calls for regulators to adjust the “risk-weights” used to calculate banks’ minimum capital requirements based on how exposed their counterparties are to climate-related risks. This action could reduce risks to the financial system, and potentially make it less desirable for banks to lend to carbon- intensive activities. But other scholars have challenged the legality and administrability of this proposal. They argue that it is difficult to gather reliable empirical data about climate-related risks, and that any risk- weights that are not …

Health Of Nations: Preventing A Post-Pandemic Emerging Markets Debt Crisis, Lev E. Breydo

Faculty Publications

Sixty percent of low-income countries are currently at “high-risk” of insolvency, necessitating debt relief, according to the International Monetary Fund. The enormity of the problem cannot be overstated; a prospective sovereign debt crisis and economic collapse threatens hundreds of millions of people around the world.

At the same time, the tools to address these challenges are wholly inadequate. Typically, debt reduction is effectuated through statutory systems; sovereign debt is a critical exception, as there is no bankruptcy court for countries. Historically, this void was filled through a complex architecture based on custom, ‘soft law,’ and contractual mechanisms. However, that construct …