Wednesday, September 17, 2014

Bank Directors May Find Themselves With a Heightened Standard of Care

To What Extent Should Regulators Dictate How Bank Boards Oversee Risk?

Author: David Schwartz J.D. CPA
A recent address by Federal Reserve Governor Daniel Tarullo has raised the specter of expanded fiduciary duties for bank directors.  Referencing a recent academic paper proposing a simple negligence standard for expanded board oversight responsibility for risk-taking by systemically important financial institutions, Mr. Tarullo discussed how the nature of finance and financial regulation affects corporate governance and why, in turn, special corporate governance measures are needed as part of an effective prudential regulatory system.
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Sunday, June 15, 2014

Italy’s Mediobanca Equity Sell-off and Privatization Spark Renaissance in Corporate Governance

Author: David Schwartz J.D. CPA
The Economist reports that Mediobanca, an Italian investment bank formed in 1946 assist in the reconstruction of Italian industry, has commenced a planned sell-off of $2.2 billion in equity holdings as part of an effort to refocus the firm on its core mission of providing medium-term financing in the Italian sector. Mediobanca’s sales of these shares as part of its unwinding of webs of cross-shareholdings and pacts among big shareholders, as well as the privatization of Fincantieri and Poste Itliane, have released large volumes of shares on to the markets, allowing institutional and other investors to add them to their portfolios. This sudden flow of Italian equities in to the hands of new investors has, it seems, increased participation in corporate governance.
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Wednesday, May 21, 2014

FSOC's 2014 Annual Report Addresses Some Securities Lending and Repo Risks

Author: David Schwartz J.D. CPA
The US Financial Stability Oversight Council has published its 2014 Annual Report which highlights, among other things, the activities of the Council, significant financial market and regulatory developments, an assessment of those developments on the stability of the financial system, and potential emerging threats to the financial stability of the United States. The report highlights two forward-looking risks specifically in securities finance and collateral management, and remarks on uncertainties that remain for money fund regulation.
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Wednesday, November 27, 2013

Global Bank Supervisors Call for Uniform Derivatives Contract Language

Author: David Schwartz J.D. CPA
In a joint letter issued on November 5th, the FDIC, Bank of England, German Federal Financial Supervisory Authority, and Swiss Financial Market Supervisory Authority requested that the International Swaps and Derivatives Association adopt language in derivatives contracts to delay the early termination of those instruments in the event of the resolution of a global systemically important financial institution.
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Tuesday, October 15, 2013

Do Credit Derivatives Make the Concept of Insider Trading Meaningless?

Author: David Schwartz J.D. CPA
Though scholarly debates continue, the impact of credit derivatives on the law and policy of insider trading is still unexplored. This Article fills this gap to demonstrate that the emergence of credit derivatives marks a profound development for the prohibition against insider trading. It argues that the growth of credit derivatives problematizes traditional insider trading jurisprudence like never before. With the feasibility of current rules subject to question, this Article advocates for a radical rethinking of the present regulatory framework for one better suited to modern markets.

In his paper published August 28, 2013, Yesha Yadav of Vanderbilt Law School posits that the rise of derivatives like credit default swaps (CDS) has made the concept of insider trading inoperable in markets where these derivatives trade.  Yadav's paper, "Insider Trading in the Derivatives Market (and What it Means for Everyone Else)," asserts that the credit derivatives markets actually may be more efficient by factoring in insider knowledge and transmitting this information more freely.
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Number of views (9423)
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