Banking and Finance Law Commons^™

A Better Madden Fix: Holistic Reform, Not Band-Aids, To Modernize Banking Law, Matthew J. Razzano

University of Michigan Journal of Law Reform Caveat

Historically, state usury laws prohibited lending above certain interest rates, but in 1978 the Supreme Court interpreted the National Bank Act (NBA) to allow chartered banks to issue loans at rates based on where they were headquartered rather than where the loan originated. States like South Dakota virtually eliminated interest rate ceilings to attract business, incentivizing national banks to base credit operations there and avoid local usury laws. In 2015, however, the Second Circuit decided Madden v. Midland Funding, LLC and reversed long-standing banking practices, ruling that non-chartered financial institutions were not covered by the NBA and were therefore subject …

Towards A Data-Driven Financial System: The Impact Of Covid-19, Nydia Remolina

Centre for AI & Data Governance (2019-2025)

The COVID-19 outbreak has a growing impact on the global economy and the financial sector, which plays a critical role in mitigating the unprecedented macroeconomic and financial shock caused by the pandemic. Given the unprecedented nature of the current crisis, financial regulators and supervisors, central banks, along with governments and legislatures face challenges to maintain financial stability, preserve the well-functioning core markets, and ensure the flow of credit to the real economy. Even though the COVID-19 has slowed down our daily lives and stopped the operation of many industries, it did not have the same effect in the data-driven finance …

The Promises And Perils Of Insurtech, Lin Lin, Christopher C. H. Chen

Research Collection Yong Pung How School Of Law

The insurance sector, in riding the wave of the FinTech phenomenon, has been rapidly expanding, with a slew of firms having emerged to provide so-called “InsurTech” services. These services incorporate concepts such as blockchain, artificial intelligence, digitalisation and the sharing economy to various aspects of the insurance industry. This profusion of technology brings with it the promise of various benefits including increasing efficiency and lowering costs for not only insurers and intermediaries, but also businesses or consumers as end-users of insurance. However, the development of InsurTech comes with corresponding risks and regulatory concerns not currently accounted for by the traditional …

The Tax Treatment Of Haircuts In Financial Reorganizations, Aurelio Gurrea-Martinez, Vincent Ooi

Research Collection Yong Pung How School Of Law

Over the past few years, Singapore has implemented various ambitious insolvency reforms aimed at making the country an international hub for debt restructuring. This article argues that while Singapore has put in place one of the most sophisticated restructuring frameworks in the world, some tax reforms might be useful to maximise the potential of this new restructuring framework. Namely, it will be pointed out that the tax treatment of debt forgiveness granted by creditors in corporate reorganisation (‘haircuts’) should be reviewed. Under the current legislation, these haircuts may be treated as taxable income. As a result, financially distressed debtors may …

Valuing Young Startups Is Unavoidably Difficult: Using (And Misusing) Deferred-Equity Instruments For Seed Investing, John L. Orcutt

Law Faculty Scholarship

In a well-functioning market, reasonable investors are less likely to invest in companies when they cannot confidently value the opportunity. This presents a serious problem for young startups because they are unavoidably difficult to value. Partly in response to the valuation challenge, specialized startup investors evolved how they contract for young-startup investments. Around 2005 they began using deferred-equity instruments (first convertible notes, and later safes and the KISS). Deferred-equity instruments offer a partial solution to the valuation challenge by allowing specialized startup investors to thoughtfully invest in venture capital-eligible young startups without valuing them at the time of investment. Deferred-equity …

The Folly Of Credit As Pandemic Relief, Pamela Foohey, Dalie Jimenez, Chrisopher K. Odinet

Articles by Maurer Faculty

Within weeks of the coronavirus pandemic appearing in the United States, the American economy came to a grinding halt. The unprecedented modern health crisis and the collapsing economy forced Congress to make a critical choice about how to help families survive financially. Congress had two basic options. It could enact policies that provided direct and meaningful financial support to people, without the necessity of later repayment. Or it could pursue policies that temporarily relieved people from their financial obligations but required that they eventually pay amounts subject to payment moratoria later.

In passing the CARES Act, Congress primarily chose the …

Unmasking The Villain: Exposing Scammers’ Identities To Defeat Harmful Calls, Katherine Teng

Brooklyn Journal of Corporate, Financial & Commercial Law

Since 1991, Congress has attempted to limit unwanted phone calls through legislative efforts. However, past and current laws remain ineffective as scam call complaints continue to increase while the harm of these calls remains severe. Currently, the laws affecting telecommunication regulation focus on reactive measures rather than preventative solutions. Most recently, Congress has passed the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act, which will require telecommunication companies to implement SHAKEN/STIR technology to end scam calls before they reach consumers. While this is the most progressive legislation addressing scam calls, this Note will suggest that phone numbers be registered to …

“Estonia’S Gift To The World”: The Implementation Of A Blockchain Protocol For Corporate Governance In New York, Sydney Lauren Abualy

Brooklyn Journal of Corporate, Financial & Commercial Law

The traditional procedures of corporate governance are not designed to resolve issues related to close outcomes of corporate votes, empty voting practices, the proxy voting protocol, verification of shareholder identities, and access to corporate records. Blockchain technology allows all corporate shareholders to participate in corporate governance more conveniently, with increased transparency, on a secure network. Estonia sought to revolutionize corporate governance by facilitating the development of a blockchain based e-voting protocol for shareholders of companies listed on the Tallinn Stock Exchange to vote in shareholder meetings. After unsuccessful attempts, New York stands well behind other states, such as Delaware, in …

Revising The Debt Limit For “Small Business Debtors”: The Legislative Half-Measure Of The Small Business Reorganization Act, Michael C. Blackmon

Brooklyn Journal of Corporate, Financial & Commercial Law

Bankruptcy law changed drastically in 2019 with the passage of several bills. This Note will examine two of them. First, the Family Farmer Relief Act of 2019 raised the debt limit of the family farmer from $4,411,400 to $10,000,000. This enables more financially distressed family farmers to be eligible for Chapter 12 relief, a reorganizational tool designed for farmers. Second, the Small Business Reorganization Act of 2019 created Subchapter V – Small Business Debtor Reorganization in Chapter 11. This new Subchapter streamlined the reorganization process for small business debtors by removing roadblocks which often derail a reorganization of a small …

The Criminal, Regulatory, And Civil Issues Surrounding Intellectual Property And Cybersecurity, Ernest Edward Badway, Christie Mcguinness

Brooklyn Journal of Corporate, Financial & Commercial Law

Cyber-attacks have affected all organizations and individual consumers. Dissemination of relevant information and attention to strong information security practices is an important tool in fighting this cyber “pandemic.” Additionally, the legal and regulatory liability companies face from cyber-attacks as well as general strategies and practical solutions companies may implement to protect against cyber-intrusions and respond effectively in the event of an attack are considered. There are many iterations of cyber-crime, and we address the various methods cybercriminals use and the many ways cyber-attacks can take place, as well as the entities and victims affected. Moreover, the legal liability and regulatory …

A Taxonomy Of Cryptocurrency Enforcement Actions, Peter J. Henning

Brooklyn Journal of Corporate, Financial & Commercial Law

This article looks at how the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) have pursued cases involving cryptocurrencies. A number of prosecutions have been brought against defendants who misled investors into believing that they were obtaining cryptocurrencies when in fact there were simply false statements and schemes to defraud, such as Ponzi schemes. When a company has attempted to issue a cryptocurrency to investors, the SEC has relied on Section 5(a) and 5(c) of the Securities Act of 1933 to require that issuers file a registration statement with the Commission. This is not an easy process …

Front Matter, Michigan Business & Entrepreneurial Law Review

Michigan Business & Entrepreneurial Law Review

Front matter for Volume 9, Issue 2 of the Michigan Business & Entrepreneurial Law Review.

Gatekeeping The Gatekeepers: The Need For A Licensing Requirement For Crowdfunding Portals In The Wake Of The Dreamfunded Decision, Nick Worden

Michigan Business & Entrepreneurial Law Review

Most people are familiar with crowdfunding sites such as Kickstarter and GoFundMe—sites that allow users to part with their money in exchange for products or donate their capital to organizations they believe in. However, these sites have one trait in common: they do not offer contributors equity or a promise for future profits. For a long time, selling equity meant complying with the costly requirements of federal securities laws, which was cost-prohibitive for many small businesses; it was illegal for businesses to offer equity over a site in the way businesses on Kickstarter offered products. The Jumpstart Our Business Startups …

Securitizing Digital Debts, Christopher K. Odinet

Faculty Scholarship

The promise of financial technology (“fintech”) and artificial intelligence (“AI”) in broadening access to financial products and services continues to capture the imagination of policymakers, Wall Street, and the public. This has been particularly true in the realm of fintech credit where platform companies increasingly provide online loans to consumers, students, and small businesses by harnessing AI underwriting and alternative data. In 2019 alone fintech lenders represented nearly 50% of total non-credit card, unsecured consumer loan balances in the United States. One of the most prevalent ways fintech credit firms operate is by securitizing the online loans they help originate. …

The Folly Of Credit As Pandemic Relief, Pamela Foohey, Dalié Jiménez, Christopher K. Odinet

Faculty Scholarship

Within weeks of the coronavirus pandemic appearing in the United States, the American economy came to a grinding halt. The unprecedented modern health crisis and the collapsing economy forced Congress to make a critical choice about how to help American families survive financially. Congress had two basic options. It could enact policies that provided direct and meaningful financial support to people, without the necessity of later repayment. Or it could pursue policies that temporarily relieved people from their financial obligations, but required that they eventually pay amounts subject to payment moratoria later.

In passing the CARES Act, Congress primarily chose …

China's Belt And Road Initiative: An Examination Of Project Financing Issues And Alternatives, August Nelson Dinwiddie

Brooklyn Journal of International Law

In 2013, China launched the Belt and Road Initiative (BRI) to realize the vision of revitalizing the ancient Silk Road. The BRI can be characterized as a vast infrastructure development initiative spanning over sixty-five countries that total almost half of the world's GDP. Since its launch, BRI projects have primarily been financed through commercial loans provided by Chinese banks, creating concerns over debt sustainability. At the top of these concerns are fears over whether participation in the BRI will lead to a "debt-trap scenaro." Public-Private Partnerships (PPPs) provide an alternative financing option. In project development under a PPP, particularly the …

Buyer Beware: Variation And Opacity In Esg And Esg Index Funds, Dana Brakman Reiser, Anne Tucker

Cardozo Law Review

Evidence of the tremendous rise in the significance of environmental, social, and governance (ESG) investing is coming from all quarters. Fund flows into ESG investment vehicles are growing at a sustained and sometimes exponential pace. Fund complexes are rushing to design products, creating and rebranding scores of mutual funds and exchange traded funds (ETFs), including lower-cost indexed options. Industry leaders, critics, and commentators are all heralding the sea change as a shift in investing-and corporate governance-to more broadly consider environmental and social factors.

This Article provides vital context for this conversation. Its descriptive account of the ESG investment landscape drawn …

Patent Eligibility And Investment, David O. Taylor

Cardozo Law Review

Have the Supreme Court's recent patent eligibility cases changed the behavior of venture capital and private equity investment firms, and if so how? This Article provides empirical data about investors' answers to those important questions. Analyzing responses to a survey of475 investors at firms investing in various industries and at various stages of funding, this Article explores how the Court's recent cases have influenced these firms' decisions to invest in companies developing technology. The survey results reveal investors' overwhelming belief that patent eligibility is an important consideration in investment decision making, and that reduced patent eligibility makes it less likely …

The Efficacy Of Choice-Of-Law And Forum Selection Provisions In Third-Party Litigation Funding Contracts, Robert Glenn

Cardozo Law Review

No abstract provided.

Proving Equal Access To Capital In The Age Of The Startup: The Case For Federal Pre-Emption Of State Blue-Sky Laws, Gerry Griffith

The Journal of Business, Entrepreneurship & the Law

Section I of this comment examines the global opportunities available to startups in the digital economy and how startups’ capital demands evolved in the new era of business. Section II analyzes the differences between merit-based securities regulation existing at the state level and disclosure-based regulation, which is the federal regulatory scheme. This Section provides an overview of the three most common methods of restricted securities registration at the state level. Section III examines the development of blue sky laws and the role states originally played in protecting investors. This Section further explores the evolving relationship between state and federal securities …