Monthly Archives: October 2019

Federal Reserve Supervision and Disclosure of Enforcement Data

By | October 24, 2019

Courtesy of Gaurav Vasisht At an open meeting of the Federal Reserve Board (“Fed”) held earlier this month, Vice Chair for Supervision, Randal Quarles, said he was eager to identify changes to the Fed’s supervisory framework. Following these comments, the Fed solicited input on the supervisory ratings system used to evaluate the condition of depository… Read More »

Should Federal Law Regulate Short Selling by Underwriters in IPOs? Lessons from a New Behavioral Theory of IPO Pricing

By | October 22, 2019

Courtesy of Patrick M. Corrigan Since 1980, the average stock price of IPO firms has popped about 18 percent over the offering price on the first day of trading. This well-known phenomenon constitutes the basis of the IPO underpricing puzzle. Snapchat and its selling stockholders, to take one example, left almost $1.75 billion on the… Read More »

The Impact of Liquidity Regulation on Broker-Dealer Stability

By | October 17, 2019

Courtesy of Marco Macchiavelli and Luke Pettit At the peak of the cycle in 2006, broker-dealers (dealers hereafter) were involved in originating, distributing and financing mortgage-related instruments, which exposed them to significant risks at the turn of the housing cycle in early 2007. To make things worse, they were financing a significant portion of these… Read More »

Does Board Independence Reduce Informed Short Selling Prior to Earnings Announcements? Evidence from Quasi-Natural Experiment

By | October 16, 2019

Courtesy of Suchismita Mishra, Anisur Rahman, and Arun Upadhyay In a new paper, we argue that the transparency created by independent boards prevents informed short sellers from taking advantage of nonpublic information, and thus results in a lower likelihood of surprise predictions of informed short selling prior to upcoming earnings announcements. Short sellers—those who sell… Read More »

Regulating Federal Securities Law Claims In Corporate Charters: The Dilemma Confronting Delaware

By | October 14, 2019

Courtesy of Mohsen Manesh In Sciabacucchi v. Salzberg, the Delaware Supreme Court confronts a thorny question at the intersection of state corporate law and federal securities law. Specifically, the case asks whether a Delaware corporation may include a forum selection provision in its corporate charter governing shareholder claims brought under federal securities law. But that narrow… Read More »

Not Everything is About Investors: The Case for Mandatory Stakeholder Disclosure

By | October 10, 2019

Courtesy of Ann Lipton Businesses that operate in the United States are constantly required to disclose information. Both state and federal law require merchants to disclose product and service information to consumers.  Federal law requires employers to disclose workplace hazards to employees.  Data on the racial and gender makeup of a firm’s workforce must be… Read More »

Building Fintech Ecosystems: Why Regulatory Sandboxes Tend to Get the Plaudits and Innovation Hubs Do the Work of Promoting Development, Innovation and Competition in Financial Services

By | October 8, 2019

Courtesy of Ross Buckley, Douglas Arner, Robin Veidt, and Dirk Zetzsche Regulatory sandboxes are the flavor of the month. Over 50 countries have now established or announced a “financial regulatory sandbox” since the UK Financial Conduct Authority established the first one in 2016. Sandboxes are safe spaces in which FinTech start-ups and other innovative enterprises… Read More »