Mutual fund investors have been and continue to be without representation in the fee negotiation room. This should come as no surprise since a mutual fund is the creation of its adviser. As a result, mutual fund advisers are handsomely rewarded to the point of excess. This article discusses the conflicted nature of the mutual fund structure, traces the development of law directed at remedying the problems faced by investors, and offers a new approach that is tailored to correct the shortcomings of the industry.
{"title":"Jones v. Harris Associates L.P.: The Search for Investor Protection Continues...","authors":"Mark Andreu, Ryan John Bollman","doi":"10.2139/SSRN.1627369","DOIUrl":"https://doi.org/10.2139/SSRN.1627369","url":null,"abstract":"Mutual fund investors have been and continue to be without representation in the fee negotiation room. This should come as no surprise since a mutual fund is the creation of its adviser. As a result, mutual fund advisers are handsomely rewarded to the point of excess. This article discusses the conflicted nature of the mutual fund structure, traces the development of law directed at remedying the problems faced by investors, and offers a new approach that is tailored to correct the shortcomings of the industry.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-06-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127876110","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Financial regulatory reform undertaken without an understanding of the true causes of the recent crisis, awareness of lessons from abroad and knowledge of our own regulatory history is doomed to fail. This paper, (which is excerpted from a speech given by the author on April 8, 2010, in Washington, DC), attempts to provide a perspective for successful, enduring regulatory reform.
{"title":"Washington: The New Wall Street?","authors":"W. Gruver","doi":"10.2139/SSRN.1587751","DOIUrl":"https://doi.org/10.2139/SSRN.1587751","url":null,"abstract":"Financial regulatory reform undertaken without an understanding of the true causes of the recent crisis, awareness of lessons from abroad and knowledge of our own regulatory history is doomed to fail. This paper, (which is excerpted from a speech given by the author on April 8, 2010, in Washington, DC), attempts to provide a perspective for successful, enduring regulatory reform.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133446240","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Code came to limelight after the legendary Lehman filing. The instant work outlines the basic framework of bankruptcy proceedings in the United States. Discharge rules in United States are inclined towards preserving the economic interests of an honest debtor.
{"title":"Debtor’s Discharge Under United States Bankruptcy Code: Mechanisms and Consequences","authors":"V. Malhotra","doi":"10.2139/SSRN.1646608","DOIUrl":"https://doi.org/10.2139/SSRN.1646608","url":null,"abstract":"The Code came to limelight after the legendary Lehman filing. The instant work outlines the basic framework of bankruptcy proceedings in the United States. Discharge rules in United States are inclined towards preserving the economic interests of an honest debtor.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"199 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-03-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115558811","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Financial regulatory reform remains high on global and national political agendas. Some proposals call for the consolidation of regulatory structures by merging or eliminating existing regulatory agencies. Financial supervisory consolidation has occurred in a number of developed countries over the past two and a half decades. This paper seeks to explain why a substantial number of developed countries have opted to reform their financial regulatory structures from a sector-based to a consolidated model. Based on an ordered logistic regression analysis of a newly created cross-national financial dataset, this paper argues against the prevailing literature in globalization that has discounted the influence of multinational firms on domestic politics. It moreover disputes the assumptions of realist-based and policy diffusion perspectives that prioritize hegemonic market power. This paper demonstrates how the internationalization of finance, through the spread of global financial services firms (“conglomerates”), has driven supervisory consolidation in developed countries. These global firms prefer reduced compliance costs through the elimination of duplicative regulation. Motivated by competitiveness concerns, politicians and regulators in highly internationalized countries are pressured to consolidate financial supervision, lest they cause global firms to move elsewhere because of unfavorably duplicative regulation. A consolidated supervisor offers lower compliance costs compared to a system of sector-based supervisors by eliminating duplicative regulation. In sum, the higher the level of financial internationalization in a country, the greater the level of supervisory consolidation. This paper revises the undergraduate thesis, "And Then There Was One: Conglomeration, Internationalization, and the Formation of Consolidated Financial Supervisors": (http://papers.ssrn.com/abstract=1368797).
{"title":"Globalized Finance and National Regulation: The Influence of Internationalization on Supervisory Consolidation","authors":"R. Prabhakar","doi":"10.2139/ssrn.1574484","DOIUrl":"https://doi.org/10.2139/ssrn.1574484","url":null,"abstract":"Financial regulatory reform remains high on global and national political agendas. Some proposals call for the consolidation of regulatory structures by merging or eliminating existing regulatory agencies. Financial supervisory consolidation has occurred in a number of developed countries over the past two and a half decades. This paper seeks to explain why a substantial number of developed countries have opted to reform their financial regulatory structures from a sector-based to a consolidated model. Based on an ordered logistic regression analysis of a newly created cross-national financial dataset, this paper argues against the prevailing literature in globalization that has discounted the influence of multinational firms on domestic politics. It moreover disputes the assumptions of realist-based and policy diffusion perspectives that prioritize hegemonic market power. This paper demonstrates how the internationalization of finance, through the spread of global financial services firms (“conglomerates”), has driven supervisory consolidation in developed countries. These global firms prefer reduced compliance costs through the elimination of duplicative regulation. Motivated by competitiveness concerns, politicians and regulators in highly internationalized countries are pressured to consolidate financial supervision, lest they cause global firms to move elsewhere because of unfavorably duplicative regulation. A consolidated supervisor offers lower compliance costs compared to a system of sector-based supervisors by eliminating duplicative regulation. In sum, the higher the level of financial internationalization in a country, the greater the level of supervisory consolidation. This paper revises the undergraduate thesis, \"And Then There Was One: Conglomeration, Internationalization, and the Formation of Consolidated Financial Supervisors\": (http://papers.ssrn.com/abstract=1368797).","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-03-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127937069","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The paper will attempt to describe and critically analyse efficiencies’ regulation in horizontal merger control at both the EC and US, emphasizing the differences between both systems when necessary. After doing so, I will endeavour to contribute to the academic discussion by suggesting improvements to the current regulation on efficiencies in horizontal mergers, in the EC as well as in the US.
{"title":"Efficiencies and Horizontal Merger Regulation: Is There Any Room for Further Reforms?","authors":"Mario Ybar","doi":"10.2139/ssrn.1737812","DOIUrl":"https://doi.org/10.2139/ssrn.1737812","url":null,"abstract":"The paper will attempt to describe and critically analyse efficiencies’ regulation in horizontal merger control at both the EC and US, emphasizing the differences between both systems when necessary. After doing so, I will endeavour to contribute to the academic discussion by suggesting improvements to the current regulation on efficiencies in horizontal mergers, in the EC as well as in the US.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"29 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-03-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115138296","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Regulators are seeking ways to reduce the procyclical effect of the current capital regulatory regime and the spillovers associated with financial firm distress. This paper examines one set of proposed solutions: ex post mechanisms that would automatically recapitalize systemically important financial institutions during periods of distress. Such mechanisms include contingent capital notes (CCNs) and capital insurance.
{"title":"Automatic Recapitalization Alternatives","authors":"R. Collender, Forrest W. Pafenberg, Robin Seiler","doi":"10.2139/ssrn.1568302","DOIUrl":"https://doi.org/10.2139/ssrn.1568302","url":null,"abstract":"Regulators are seeking ways to reduce the procyclical effect of the current capital regulatory regime and the spillovers associated with financial firm distress. This paper examines one set of proposed solutions: ex post mechanisms that would automatically recapitalize systemically important financial institutions during periods of distress. Such mechanisms include contingent capital notes (CCNs) and capital insurance.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"63 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-03-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130660997","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this Article, I argue that we lack a satisfactory theory about how disclosure, the centerpiece of securities regulation, serves investor interests. To close this gap, I contend that the regulations should be viewed as part of a broader societal framework that protects individuals from stock-market risk. I flesh out this notion in three ways. First, I set out to justify protection from market risk as a valid societal goal. To do so, I appeal to Rawlsian and utilitarian notions of justice. These moral theories contain the principle that a just society helps individuals manage risk. I argue that this principle applies to the risk in the stock market - its volatility. Second, I describe how society currently protects investors from market swings. I contend that securities regulation provides one form of protection. Beyond that, I argue, we rely on a largely market-based paradigm, where individuals are expected to manage volatility on their own by diversifying their portfolios and investing for the long term. In the final part of the Article, I look at the normative implications of this analysis. I ask whether today’s risk-management framework is effective, efficient, and fair. I argue that it comes up short in these regards and consider avenues of reform. I posit that reforms to securities regulations offer little upside, but that we can help investors through the creation of institutions exogenous to the market that facilitate better portfolio diversification and the equitable sharing of market risk across society and generations.
{"title":"Fairness, Utility, and Market Risk","authors":"Jeff E. Schwartz","doi":"10.2139/ssrn.1565834","DOIUrl":"https://doi.org/10.2139/ssrn.1565834","url":null,"abstract":"In this Article, I argue that we lack a satisfactory theory about how disclosure, the centerpiece of securities regulation, serves investor interests. To close this gap, I contend that the regulations should be viewed as part of a broader societal framework that protects individuals from stock-market risk. I flesh out this notion in three ways. First, I set out to justify protection from market risk as a valid societal goal. To do so, I appeal to Rawlsian and utilitarian notions of justice. These moral theories contain the principle that a just society helps individuals manage risk. I argue that this principle applies to the risk in the stock market - its volatility. Second, I describe how society currently protects investors from market swings. I contend that securities regulation provides one form of protection. Beyond that, I argue, we rely on a largely market-based paradigm, where individuals are expected to manage volatility on their own by diversifying their portfolios and investing for the long term. In the final part of the Article, I look at the normative implications of this analysis. I ask whether today’s risk-management framework is effective, efficient, and fair. I argue that it comes up short in these regards and consider avenues of reform. I posit that reforms to securities regulations offer little upside, but that we can help investors through the creation of institutions exogenous to the market that facilitate better portfolio diversification and the equitable sharing of market risk across society and generations.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"106 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-03-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122514293","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The SEC phase-in of XBRL financial statement filings began June 2009, and by 2011, all public registrants will be required to file XBRL disclosures. While the SEC expects the interactivity of XBRL-tagged data to add value to financial reports, this benefit will materialize only if the XBRL statements are accurate and reliable. If inaccuracies or other significant problems occur in initial XBRL filings, registrants stand to lose credibility and users will lose confidence in the data, potentially forcing the abandonment of the XBRL reporting initiative. This study evaluates the accuracy of early voluntary filings and develops an expectation about the accuracy of mandated filings. While improvements in the XBRL standard and related technology will mitigate certain errors, other errors, related to inexperience, will persist. This study identifies those errors and makes recommendations about how to reduce experience-related errors.
{"title":"A Comparison of XBRL Filings to Corporate 10-Ks - Evidence from the Voluntary Filing Program","authors":"Jon W. Bartley, Y. A. Chen, E. Taylor","doi":"10.2139/ssrn.1397658","DOIUrl":"https://doi.org/10.2139/ssrn.1397658","url":null,"abstract":"The SEC phase-in of XBRL financial statement filings began June 2009, and by 2011, all public registrants will be required to file XBRL disclosures. While the SEC expects the interactivity of XBRL-tagged data to add value to financial reports, this benefit will materialize only if the XBRL statements are accurate and reliable. If inaccuracies or other significant problems occur in initial XBRL filings, registrants stand to lose credibility and users will lose confidence in the data, potentially forcing the abandonment of the XBRL reporting initiative. This study evaluates the accuracy of early voluntary filings and develops an expectation about the accuracy of mandated filings. While improvements in the XBRL standard and related technology will mitigate certain errors, other errors, related to inexperience, will persist. This study identifies those errors and makes recommendations about how to reduce experience-related errors.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-02-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129114545","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Since the 1930s, when the U.S. Congress interposed government regulation of banks for market discipline, the role of the state in the American financial system has steadily grown. While politicians and executives from the financial services industry characterize the relationship as a 'partnership,' the degree of control exercised by state and federal government over banks and other financial intermediaries has grown enormously over the years – even as the influence exercised over Washington by the largest banks has increased to the same degree. The growth of government involvement in finance, coupled with the growing federal debt and the rising political sway of the large, 'too big to fail' banks that act as dealers in U.S. government debt, raise troubling questions about the future of American democracy. This paper briefly reviews the growth in the role of the government in regulating and supporting the operations of banks and other financial intermediaries since the Great Depression and before. The paper concludes by asking whether this socialization of the risks taken by financial institutions and risk in general, and the growing political power of some of the largest financial services corporations in the world, can be reversed or even should be if consolidation and ever larger banks are the norm.
{"title":"Is it Possible to Re-Privatize the U.S. Financial System?","authors":"R. C. Whalen","doi":"10.2139/ssrn.1525008","DOIUrl":"https://doi.org/10.2139/ssrn.1525008","url":null,"abstract":"Since the 1930s, when the U.S. Congress interposed government regulation of banks for market discipline, the role of the state in the American financial system has steadily grown. While politicians and executives from the financial services industry characterize the relationship as a 'partnership,' the degree of control exercised by state and federal government over banks and other financial intermediaries has grown enormously over the years – even as the influence exercised over Washington by the largest banks has increased to the same degree. The growth of government involvement in finance, coupled with the growing federal debt and the rising political sway of the large, 'too big to fail' banks that act as dealers in U.S. government debt, raise troubling questions about the future of American democracy. This paper briefly reviews the growth in the role of the government in regulating and supporting the operations of banks and other financial intermediaries since the Great Depression and before. The paper concludes by asking whether this socialization of the risks taken by financial institutions and risk in general, and the growing political power of some of the largest financial services corporations in the world, can be reversed or even should be if consolidation and ever larger banks are the norm.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131369974","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The takeover of substantial number of shares, voting rights or control in a listed Indian company attracts the provision of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997. The regulations have been amended nearly 20 times since inception, though the amendments have mainly concentrated on areas which needed no amendment. At the same time a vast number of obvious problems have not been rectified in the regulations. The large number of amendments have also created requirement of a compulsory tender offer of such unnecessary complexity as to make it virtually unintelligible to even a well qualified professional. This paper argues that the complexity in the trigger points for disclosure and tender offer introduced over the years lacks a philosophy, and most of the amendments can not only be deleted but a very simple structure can be introduced making compliance of the regulations straight forward and easy to understand by management of listed companies. Certain other areas which need amendments have also been discussed. Chief amongst these are the provisions relating to consolidation of holdings, conditional tender offers, hostility to hostile acquisitions, definitional oddities, payment of control premium in the guise of non compete fees, treatment of differential voting rights, treatment of Global Depository Receipts and disclosure enhancements. This paper does not try to portray a particular combination of numbers as the best possible set of trigger points and compulsory acquisition numbers but advocates that whatever numbers are adopted should not be changed for several decades. Arguments that state that the changing economic condition requires constant changes with these numbers, it is argued is wrong. [W.P. No. 2009-11-06]
{"title":"Indian Takeover Regulation - Under Reformed and Over Modified","authors":"Sandeep Parekh","doi":"10.2139/SSRN.1517017","DOIUrl":"https://doi.org/10.2139/SSRN.1517017","url":null,"abstract":"The takeover of substantial number of shares, voting rights or control in a listed Indian company attracts the provision of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997. The regulations have been amended nearly 20 times since inception, though the amendments have mainly concentrated on areas which needed no amendment. At the same time a vast number of obvious problems have not been rectified in the regulations. The large number of amendments have also created requirement of a compulsory tender offer of such unnecessary complexity as to make it virtually unintelligible to even a well qualified professional. This paper argues that the complexity in the trigger points for disclosure and tender offer introduced over the years lacks a philosophy, and most of the amendments can not only be deleted but a very simple structure can be introduced making compliance of the regulations straight forward and easy to understand by management of listed companies. Certain other areas which need amendments have also been discussed. Chief amongst these are the provisions relating to consolidation of holdings, conditional tender offers, hostility to hostile acquisitions, definitional oddities, payment of control premium in the guise of non compete fees, treatment of differential voting rights, treatment of Global Depository Receipts and disclosure enhancements. This paper does not try to portray a particular combination of numbers as the best possible set of trigger points and compulsory acquisition numbers but advocates that whatever numbers are adopted should not be changed for several decades. Arguments that state that the changing economic condition requires constant changes with these numbers, it is argued is wrong. [W.P. No. 2009-11-06]","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"29 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-11-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132578873","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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