All - Center for the Study of Financial Market Evolution (CSFME)

US Cross-Border Swaps Regs Draw International Criticism

by David Schwartz J.D. CPA | Sunday, May 19, 2013 | All, Change Overview and Rationale, Formal Regulatory Remedies

Newly proposed cross-border regulations issued by the US Commodity Futures Trading Commission have made waves across the globe, with nine overseas finance officials urging US Treasury Secretary Jacob J. Lew to limit the cross-border reach of Dodd-Frank Act swaps rules. In an April 18, letter, finance officials from Brazil, France, Germany, Italy, Japan, Russia, South Africa, Switzerland, the UK, and Michel Barnier, the European Commissioner for Internal Market and Services, said that new US swaps regulations are fragmenting the $639 trillion global market.

How Do You Regulate Locally on a Global Scale?

by David Schwartz J.D. CPA | Sunday, May 12, 2013 | All, Change Overview and Rationale, Formal Regulatory Remedies

Over the past few decades, US and other financial regulators have had to think more and more about their regulations not just from a domestic standpoint, but from a global perspective as well. One prime example is the US Securities and Exchange Commission, whose regulatory mandate has been broadened by the Dodd-Frank Act to include regulation of certain kinds of over the counter (OTC) derivatives.

The Truth About Securities Class Action Lawsuits is in the Numbers

by David Schwartz J.D. CPA | Saturday, April 27, 2013 | All, Cross-Post

Stanford law professor Michael Klausner, and his colleagues Jason Hegland and Matthew Goforth, have published an update to their 2011 studies reporting data on the timing of dismissals and settlements in securities class actions. In this latest update published in the April 2012 PLUS Journal, the authors address the factors that affect the timing of securities class action lawsuit dismissals and that affect the timing and size of securities suit settlements.

Klausner, Hegland, and Goforth’s analysis uses statistics derived from all securities class actions filed between 2006 and 2010, 82% of which have been resolved one way or another, and 18% are still open. The sample size consisted of 653 cases, of which 253 have settled, 206 were dismissed with prejudice (preventing their refiling), 74 were voluntarily dropped by the plaintiffs, and 119 are ongoing.

With Power Comes Responsibility. Institutional Investors’ Role In Corporate Governance.

by David Schwartz J.D. CPA | Monday, April 22, 2013 | All, Change Overview and Rationale, Commentary, Lender Directed Voting

Over the past sixty years, as more and more people in the US have begun to participate in the capital markets through retirement plans, mutual funds, ETFs and other pooled investment vehicles, institutional investors have grown from bit players in the markets, owning about 5% of US equities prior to 1945, to being major players today, owning greater than 67% of US equities. This growth in the proportion of assets managed by institutional investors has also been accompanied by a dramatic growth over the same period in the market capitalization of US listed companies.

FASB Tries to Eliminate Shenanigans When Accounting for Repos

by David Schwartz J.D. CPA | Friday, April 19, 2013 | All, Disclosure Regimes, Formal Regulatory Remedies

On January 15, 2013, the Financial Accounting Standards Board (FASB) proposed changes to accounting standards for repos intended to improve financial reporting disclosures and more properly reflect a company’s obligations and risks. They also will clarify guidance for distinguishing between transactions that are essentially sales that can be moved off the balance sheet and on-balance sheet secured borrowings.

Proposed Tax Legislation Will Raise a Lot of Eyebrows On Wall Street and in Board Rooms

by David Schwartz J.D. CPA | Friday, April 19, 2013 | All, Formal Regulatory Remedies

“These loopholes are bad policy even in the best of circumstances, but it would be unconscionable to allow them to continue if we can use revenue from closing them to avoid the devastating effect sequestration would have on national security, homeland defense, law enforcement, public safety, education and other important priorities”

Fed Departs from Traditional Approach to Foreign Banks in the US

by David Schwartz J.D. CPA | Friday, April 19, 2013 | All, Formal Regulatory Remedies

On December 14, 2012, the Board of Governors of the Federal Reserve System (Fed) issued for public comment a rule proposal that, if adopted, could drastically alter the structure and operations of foreign banking organizations (FBOs) in the U.S. The Fed’s proposal drastically limits the flexibility FBOs have historically had in structuring their U.S. banking and financial operations.

Can the Right Statistics Help Us Avoid the Next Titanic Disaster?

by David Schwartz J.D. CPA | Wednesday, April 17, 2013 | All, Change Overview and Rationale, Disclosure Regimes, Traditions

The latest financial crisis was marked by a spectacular lack of understanding about the astounding levels of risk that had been allowed to build up throughout the system. Regulators and risk managers realized after the fact that the data they needed to understand the scale, let alone the nuances, of what went wrong just had not been collected, or was obscured or insufficient. With the benefit of hindsight, and as we move into recovery, it is time to think about what role could new statistics play in heading off the next big market crisis. Claudio Borio of the Bank for International Settlements has put together an interesting treatise exploring the priorities we should be setting for new statistics and data sets that may very well help us avoid the next iceberg.

Is the Dodd-Frank “Cure” Worse than the Disease?

by David Schwartz J.D. CPA | Sunday, March 24, 2013 | All, Formal Regulatory Remedies

“Rather than responding appropriately to the crisis, which would include developing a modern regulatory system with the flexibility to adapt to changes in the global financial system, we instead have been saddled with an increasingly prescriptive and inflexible regulatory environment that is characterized far more by more regulation than by smart regulation.” –SEC Commissioner Daniel M. Gallagher

CFTC May Have No Choice But to Extend Cross-Border Derivatives Implementation

by David Schwartz J.D. CPA | Wednesday, March 20, 2013 | All, Formal Regulatory Remedies

CFTC Commissioner Mark Wetjen has signaled that the CFTC may extend the July effective date for its cross-border derivatives rules. Speaking at a Futures Industry Association conference on March 12, 2013, Wetjen said the European Securities and Markets Authority’s announcement that they would delay their implementation timeline into 2014 creates problems for the CFTC’s own schedule.

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