Banking and Finance Law Commons^™

Law's Acceleration Of Finance: Redefining The Problem Of High-Frequency Trading, Frank A. Pasquale

Faculty Scholarship

High-frequency traders automate stock trading, placing thousands of orders over fractions of a second. Their algorithmic strategies are all too often mere rule manipulation or methods of using brute speed to gain advantages over rivals. Normative evaluation of finance’s algorithms must take into account the sector’s social function: to spur efficient, fair, and sustainable investment practices. The complex modeling deployed in high-frequency trading does not reliably contribute to these goals. Therefore, rather than straining to accommodate high-frequency trading strategies, regulators should eliminate many of them.

The New Global Financial Regulatory Order: Can Macroprudential Regulation Prevent Another Global Financial Disaster?, Behzad Gohari, Karen E. Woody

Scholarly Articles

This Article posits that the success of macroprudential regulation will depend on four factors. First, the economic philosophy of the central banker in charge of the domestic institution with jurisdiction over macroprudential regulation will prove crucial in the implementation of adopted regulation. If, like Chairman Greenspan, the banker is averse to the exercise of the Central Bank's regulatory oversight authority, then no amount or volume of policy or regulation will prevent or mitigate systemic risks and the accompanying shocks. Second, a sufficiently deep level of international cooperation is required to mitigate regulatory arbitrage, without being so broad that the ensuing …

The Extraterritorial Reach Of United States Securities Actions After Morrison V. National Australian Bank, Nathan Lee

Richmond Journal of Global Law & Business

No abstract provided.

Privileged Access To Financial Innovation, Cary Martin Shelby

Loyola University Chicago Law Journal

Access to private funds is limited to an elite class of investors—wealthy individuals and large institutions. Individuals of more modest means—“retail investors”—face more limited investment choices; generally they can only invest in mutual funds. Despite this inequitable division, the current regulatory climate will lead to an even further expansion of the private fund industry. This Article argues that this loosening regulatory climate could lead to a talent drain amongst registered funds, could narrow the investment choices available to retail investors, and could deepen the already troubling income gap between wealthy and average earners. With respect to a possible talent drain, …

Sac Capital: Firm Criminal Liability, Civil Fines, And The Insulated Ceo, Frances E. Chapman, Marianne Jennings, Lauren Tarasuk

American University Business Law Review

No abstract provided.

Disaggregated Classes, Benjamin P. Edwards

Faculty Scholarship

No abstract provided.

Pause And Harmonize: Issues On The Dodd-Frank Act And Its Cross-Border Applications, 3 J. Marshall Global Mkt. L.J. 89 (2015), Yankun Guo

John Marshall Global Markets Law Journal

The 2008 financial crisis was a rude awakening for global financial regulators. The lack of transparency and regulation of the derivatives market was a major contributing factor to the global economic recession. As a response, world leaders pledged to bring economic and regulatory reform to their respective nations. In order to meet these goals, the United States proposed the Dodd-Frank Act and, in 2010, the Act was signed into law by President Obama. One of the purposes of Dodd-Frank is to allow financial regulators to police all derivative contracts that may affect the United States; unfortunately, the extraterritorial reach of …

Municipal Bondage: The Undisclosed Disclosure Obligations On Municipal Securities Issuers, 3 J. Marshall Global Mkt. L.J. 111 (2015), Claymore Hardman

John Marshall Global Markets Law Journal

The municipal securities market has recently become the target of increased regulatory scrutiny. Once considered a “sleepy market,” the market is now burdened by new regulations, increased oversight, and heightened enforcement, which place direct disclosure obligations on municipal securities issuers. As such, the clear provisions of the 1975 Tower Amendment, which limit regulation of the municipal securities market to anti-fraud actions, have been cut off at all corners. This Article examines the fundamental discord between regulating the municipal securities market with the same structure and intensity as the corporate securities market. This Article proposes limiting the reach of federal regulatory …

Charting A New Revolution In Equity Crowdfunding: The Rise Of State Crowdfunding Regimes In Response To The Inadequacy Of Title Iii Of The Jobs Act, 3 J. Marshall Global Mkt. L.J. 135 (2015), Christopher Douglas Mitchell

John Marshall Global Markets Law Journal

States, through the recent implementation of intrastate crowdfunding exemptions, have become significant players in the creation of an equity crowdfunding industry in the United States. Crowdfunding is an alternative capital-raising source for businesses and entrepreneurs, where investing and capital-raising takes place through solicitations of small amounts of money from a large number of people, typically via the Internet. While the federal crowdfunding provisions in Title III of the federal Jumpstart Our Business Startups Act (“JOBS Act”) have received much publicity, states are taking a leading role in enacting equity crowdfunding laws. State-enacted intrastate crowdfunding laws authorize securities offerings by residents …

National Company Disclosure Regulatory Frameworks: Superficially Similar But Substantively Different, 3 J. Marshall Global Mkt. L.J. 187 (2015), Gill North

John Marshall Global Markets Law Journal

The United States has led the world for many decades with regard to company disclosure rules and standards; other national company disclosure structures are based largely on the U.S. model. In December 2013 the U.S. Securities and Exchange Commission (the “SEC”) indicated that it intended to review Regulation S-K, which contains many important rules governing listed company reporting in the United States. This Article calls for the SEC to maintain its comprehensive approach to corporate disclosure regulation and practice as an essential platform for the future health of global financial markets. This Article highlights the importance of the global leadership …

Mission Impracticable: The Impossibility Of Commercial Impracticability, Jennifer Camero

The University of New Hampshire Law Review

[Excerpt] “Residents of Chicago’s Streeterville neighborhood certainly cannot forget the recent financial crisis thanks to a gaping hole in their midst. That hole is to be the home of the Spire, the tallest building in the Northern Hemisphere, at 2,000 feet high with 1,194 residences ranging in price from $750,000 for a studio to $40 million for the penthouse. The developer, Shelbourne Development Group, Inc., began construction in 2007 using its own funds. It also obtained “starter” funds from Bank of America via a loan agreement that required Shelbourne to demonstrate proof of a construction loan by November 1, 2008. …

The Logic And Limits Of Liens, Edward Janger

Faculty Scholarship

No abstract provided.

Taming The Wild West Of Wall Street: Regulating Credit Default Swaps After Dodd-Frank, 48 J. Marshall L. Rev. 565 (2015), Benjamin O’Connor

UIC Law Review

No abstract provided.

Arbitrage For Property Rights: How Foreign Investors Create Substitutes For Property Institutions In China, Weitseng Chen

Washington International Law Journal

This article revisits the prevailing wisdom regarding property rights based on empirical research on the behavior of foreign investors in China. The Property Law did not exist in China until 2007—four years after China replaced the United States as the most popular foreign direct investment destination worldwide. This seems to contradict the conventional wisdom about the indispensable role of property rights in economic growth. This article argues that China’s experiences in fact do not overrule the orthodox view, but rather shed light on the evolution of the regulatory property regime. Property rights still matter in China, but the structure of …

The Value Of Uncertainty, Cathy Hwang, Benjamin P. Edwards

Faculty Scholarship

No abstract provided.

Closed-End Fund Ipo Considerations, Benjamin P. Edwards

Faculty Scholarship

No abstract provided.

Data Breach (Regulatory) Effects, David Thaw

Cardozo Law Review de•novo

Breach notification laws have been a major driver of data protection efforts in U.S. organizations for more than a decade. This form of disclosure-based regulation exists in 47 of 50 U.S. states, as well as four other U.S. jurisdictions, but has yet to be adopted as a law of general applicability at the federal level.

This Essay considers the effects the structure of existing disclosure-based cybersecurity regulation has on the efficacy of U.S. firms’ cybersecurity measures. Drawing on previous empirical work and analysis of firm incentives, it suggests two modest conclusions about the most efficacious legal structures: (1) that any …

Keynote Reflections: The Public Governance Duty, Steven L. Schwarcz

Faculty Scholarship

Firms must take ever greater risks to try to innovate and create value in our increasingly competitive and complex global economy. Corporate governance law generally delegates control over excessive risk-taking to the firm’s investors, principally its risk-seeking shareholders. But this does not cover the type of risk-taking that led to the global financial crisis and that is becoming ever more common - risk-taking that could have systemic consequences to the financial system. I argue for a “public governance duty,” requiring managers of systemically important firms to assess the impact of risk-taking on the public as well as on investors, and …

When Governments Write Contracts: Policy And Expertise In Sovereign Debt Markets, W. Mark C. Weidemaier, Mitu Gulati, Anna Gelpern

Faculty Scholarship

At least three times in the past two decades, national governments and institutions at the regional and international levels have tried to reform sovereign bond contracts to facilitate debt restructuring. Increasingly, these efforts have focused on promoting majority modifications clauses, a species of collective action clause (CAC) that facilitates a binding debt restructuring. Rather than legislate or regulate, governments have convened expert commissions, produced model CACs, and aggressively marketed these clauses to debtors and creditors. When events prove the existing CAC template inadequate or irrelevant, the process begins anew. This paper considers this mode of government intervention, which has a …

Variable Interest Entities: Alibaba's Regulatory Work-Around To China's Foreign Investment Restrictions, Kaitlyn Johnson

Loyola University Chicago International Law Review

No abstract provided.