Europe’s Regulatory Playbook for ESG Rating Providers

As individual and institutional investors move toward investing according to environmental, social, and governance (“ESG”) criteria, ESG ratings – scores given to companies or financial instruments on the basis of meeting these criteria – are becoming critically important in guiding investment portfolios.  While substantial work has been put into designing clear ESG standards that would […]

SEC Effort to Regulate State Sponsors of Terrorism (SST) Disclosure

The SEC Division of Corporation Finance (DCF) reviews financial filings of publicly traded corporations to ensure compliance with accounting standards and disclosure requirements.  If the SEC has any questions after reviewing the financial reports, the SEC will send a comment letter asking about perceived deficiencies.  Firm responses to SEC inquiries vary from simply answering questions posed via a response letter to amending their financial reports.  […]

The “Musk Effect”: How influential and well-known individuals can influence Bitcoin and other cryptocurrencies

On January 29, 2021, the price of one Bitcoin rose from $32,000 to $38,000 within a few hours. The catalyst for this jump appeared to be an update to Elon Musk’s Twitter bio. Musk used #bitcoin for his account description followed by a tweet that said: “In retrospect, it was inevitable.” At the time, the world was unaware that Tesla, Inc. had […]

Falling Short: The Unintended Consequences of the Corporate Tax Cuts

Since the enactment of the Tax Cuts and Jobs Act (“TCJA”) in 2017, changes to the United States system of corporate taxation has gained more attention among policymakers and the public. Promised to be the solution to a stagnant economy, the TCJA was the largest tax overhaul in decades. My recent article, “Falling Short: The […]

Restoring Order in Crypto’s Wild West

Last week marked another milestone in the evolution of cryptocurrency. Visa announced they would let USD Coin, a stablecoin pegged to the U.S. dollar, settle on its payment network, and PayPal launched “Checkout with Crypto,” a service that allows customers to pay with cryptocurrency at checkout. These moves represent the latest brick to be removed […]

Unsecured to the Satisfaction

When engaging in 13(3) lending, the Federal Reserve must be “secured to [its] satisfaction,” which it has generally (and reasonably) taken to mean that its ex ante expectation should be that it will be fully repaid.i However, the Fed also interprets the legislative history of 13(3) as suggesting that this standard cannot be met with an entirely unsecured loan—a loan in which the Fed takes no collateral, third-party guarantee, or […]

A comparative comment on the banking bailout literature

In the past decade, the literature on banking, financial law and regulation, the most recent financial crisis, financial stability, and bank insolvency has grown substantially. However, there is still a strong need for additional legal analysis of these topics for several reasons.1 First, much of the scholarly work pertains to the area of finance and economics and does not directly address legal considerations. Second, given the overwhelming […]

How Much Insider Trading Happens in Stock Markets?

Substantial regulatory and enforcement resources are spent combatting insider trading in financial markets. In 2020 alone, the US Securities and Exchange Commission (SEC) employed approximately 1,300 staff members in its Enforcement Division and committed $550 million in resources to investigating and prosecuting illegal insider trading.   While it is clear that insider trading occurs, opinions vary significantly as to the […]

Financial Lawmaking and the Incoherence of Antinovelty Doctrine

Courts do not look kindly on innovative financial regulatory institutions. In 2010, the Supreme Court struck down a provision providing dual-level for-cause removal protection for members of the Public Company Accounting Oversight Board (PCAOB), reasoning that the measure’s “lack of historical precedent” was “[p]erhaps the most telling indication of [its] severe constitutional problem.” Ten years later, the Court wrote nearly […]

Corporate Social Responsibility and Corporate Financial Performance: The Moderating Role of Absorptive Capacity

On different occasions, scholars have suggested that stakeholder theory is bound up with corporate social responsibility (CSR). An extension of the CSR construct is corporate social performance (CSP). In general, the CSR/CSP analyses have usually tried to understand why managers or firms engage in CSR. In this regard, the basis to formulate a CSR and […]