Business Law Society

Pending foreclosures in the U.S. have exposed significant deficiencies in our system of land ownership. But in comparison to many other countries, our system is a model of efficiency. Hernando De Soto reports that 92% of Egyptians hold their real estate without legal title. Egypt’s underground economy, with 9.6 million workers, is larger than its legal private and public sectors (6.8 and 5.9 million workers, respectively). There are many project opportunities for Society members relating to cross-border, business law issues. Business law is a global social issue.

Egypt’s Economic Apartheid (2/3/11) (subscription required)

Allegations that thousands of loan documents relating to delinquent mortgages were signed by back-office employees who did not read them (can you blame them?) have frozen foreclosure proceedings across the country. States are investigating banks for violating state laws. Purchasers of illegally foreclosed on homes may not have good title. The “robosigner” mess has become banks’ biggest legal headache.

Wells Fargo to Refile Some Foreclosures in Maryland 1/19/11 (subscription required)

Judges Berate Bank Lawyers in Foreclosures (1/10/11)

Senate Banking Committee Hearing: Problems in Mortgage Servicing From Modification to Foreclosure (11/16/10)

Bono’s private-equity firm, Elevation, is breaking up. In a nutshell: Roger met Mark through Sheryl who is married to Marc who is breaking up with Roger. That’s Roger McNamee (Elevation’s head and singer in the band “Moonalice” under the stage name “Chucky Wombat.”) who met Mark Zuckerberg (Facebook’s head and Elevation’s most successful investment) through Sheryl Sandberg (Facebook’s COO) who is married to Marc Bodnick (Elevation partner) who is breaking up with Roger. There must be a project in here somewhere.

A Nasty Battle Over Money Is Breaking Up Bono’s Silicon Valley Private-Equity Firm, Elevation Partners 1/28/11

 

Issuers of municipal bonds often completely disregard their filing obligations. Violations that would result in severe sanctions if committed by a private issuer go ignored. For example, a recent study of 17,000 issues showed that more than half did not file financials in any given year between 2005 and 2009. The SEC’s hands are partly tied. It cannot regulate the securities directly, although it can and does regulate municipal dealers. Perhaps this is an area of the law that could benefit from investigation?

Bondholders Left in the Dark 1/26/11 (subscription required)

Illinois Confirms Inquiry by SEC 1/25/11 (subscription required)

The Supreme Court’s decision in Citizens United v. FEC is one of its most contentious decisions in recent memory. In that case, the Court struck down on First Amendment grounds a federal law restricting corporate political speech. President Obama criticized the decision in his 2010 State of the Union address, to which Justice Alito famously responded with a mouthed “not true.” Some commentators view a constitutional amendment as a viable response.

Citizens United: The Amendment Option Gains Momentum 1/21/11

Social media have created a minefield in employment law. Employees may be fired for posting what they thought was private information. Employers may be liable to improperly terminating employees for what the employer thought was public, actionable information. The role of social media promises to play a major role in developing employment relations law. Do employers know how to handle it?

Employers Tread a Minefield 1/21/11

Money market funds (MMFs) have been the most stable cash vehicle in history. Since MMFs arrived on the scene three decades ago, thousands of banks have failed, while MMFs have lost principal twice. In each case, losses ultimately suffered by investors were minuscule. And this record was achieved without FDIC insurance. Notwithstanding MMFs’ sterling record, the CFT has proposed to limit the use of MMFs: as collateral in swap transactions and for holding customers’ cash.

Federated letter to FSOC

Federated Letter to CFTC

Fund Democracy money market fund letter

Links related to proposed amendments to CFTC Rule 1.25:

Investment of Customer Funds and Funds Held in an Account for Foreign Futures and Foreign Options Transactions

Investment of Customer Funds and Funds Held in an Account for Foreign Futures and Foreign Options Transactions

CFTC Fact Sheet: Proposed Rule on Regulations 1.25 and 30.7 Regarding Investment of Customer Funds and Credit Ratings

CFTC Q&A: Regulation 1.25

Proposed Swaps collateral rules incorporating Rule 1.25

Protection of Cleared Swaps Customers Before and After Commodity Broker Bankruptcies, 75 FR 75162 (proposed rule)

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17 CFR Part 190

Comments Open Date: 12/2/2010

Comments Closing Date: 1/18/2011

Proposed Rule 75 FR 75432 //

17 CFR Parts 23 and 190 Protection of Collateral of Counterparties to Uncleared Swaps; Treatment of Securities in a Portfolio Margining Account in a Commodity Broker Bankruptcy

Comments Open Date: 12/3/2010

Comments Closing Date: 2/1/2011

A number of Chinese companies have recently listed their shares on American exchanges, often after going public by purchasing a shell company that is already listed. This kind of transaction, known as a reverse takeover, is reportedly being investigated by the SEC. According to the WSJ, a new report finds that a “spike in lawsuits against Chinese issuers” has contributed to a rise in securities litigation. Of the 12 Chinese companies sued in 2910, nine had listed through a reverse takeover.

Congress and SEC Hit Stocks Made in China (12/20/10) (subscription required)

Suits Versus Chinese Firms Drive up Securities Cases (1/20/11) (subscription required)

Citron Research Accuses China Valve of Fraudulent Financials, Acquisitions (1/14/11)

Going Public, Chinese Style (3/5/07)

There are big picture issues, and then there are big, big, big picture issues. This is one of the latter. The most important part of the Dodd-Frank financial services legislation enacted in 2010 may turn out to be the creation of the Financial Stability Oversight Council. These developments are of special importance to current law students because current students, unlike any of the lawyers they will ultimately be working for and/or with, have the opportunity learn about new law and regulation in law school and build a mental working model of financial services regulation that is based on its most current design. Every other lawyer is busy learning reams of new law, reconstructing the models under which they have worked for years, sometimes decades, while trying to maintain their legal practices. New law presents a great opportunity for law students. Carpe diem!

Panel Begins to Set Rules to Govern Financial System 1/19/11

FAQs on the FSOC

The FSOC’s Study and Recommendations Regarding Implementation of the Volcker Rule (1/11)

FSOC Study & Recommendations Regarding Concentration Limits on Large Financial Companies (1/11)

Some money managers land public pension clients by using well-connected placement agents. The regulation of these agents has been the source an extended regulatory debate, particularly in the wake of a major “pay-to-play” scandal in New York. The SEC recently relented under industry pressure in deciding not to prohibit investment advisers from using placement agents, but it did require that agents themselves generally be registered with the SEC. Some states have imposed new regulations on placement agents.

New California Lobbyist Law Upsets Hedge Funds and Political Contributions by Certain Investment Advisers

Rattner to Pay $10 Million in Settlement With Cuomo

Some banks have raised fees and blamed new regulations. Some suggest that “some customers may end up unbanked.” What are the new regulations, what do they require, what is their connection to rising fees? What does it mean to be unbanked? The spectrum across which basic financial services are being provided is shifting constantly; it is not clear that regulations can keep pace.

As Banks Raise Fees, You Have Options

Federal law prohibits banks from effecting garnishment orders against Social Security assets in bank accounts. This issue has received a lot of press, primarily because some accountholders’ Social Security assets have been illegally garnished. The garnishment issue is also of concern to banks because their accounting systems may not be designed to distinguish Social Security assets from other assets. of Soc. Sec. from bank accts, creating probs for accountholders and banks. On April 19, 2010, various agencies proposed a rule to implement statutory restrictions on the garnishment of Social Security payments and other federal benefit payments.

Proposed Rule on Garnishment of Social Security

Update:
New rule protects Social Security benefits 5/4/11

Many homeowner facing foreclosure have successfully challenged lenders’ claims on grounds that may affect thousands of cases nationwide. Claims based on faulty paperwork call into question the system by which interests in real estate and held and transferred. In many reports, however, it is not exactly clear what went wrong.

Judges Berate Bank Lawyers in Foreclosure 1/10/11