Recent Articles:
The Crystallization of Hedge-Fund Regulation
Jeff Schwartz: Eleven months after Dodd-Frank was signed into law, the SEC issued final rules pertaining to Title IV of the Act, which calls for the registration of advisers to hedge funds and similar private investment vehicles. This brief essay looks at the legislation and the rulemaking that followed from a procedural perspective. Namely, I focus on how much discretion Congress delegated to the SEC in shaping the final rules and the SEC’s use of that discretion. I find that the legislation granted a great deal of rulemaking authority to the SEC—authority that extended to the central elements of the regulatory scheme—and that the Commission used this power to extend federal oversight to a wide swath of the private-fund marketplace.
...continue reading: The Crystallization of Hedge-Fund Regulation
A Consultant’s View of Dodd-Frank
David Mader: The Dodd-Frank Wall Street Reform and Consumer Protection Act is ambitious and complex legislation designed to significantly transform the way the financial system operates. Yet in a year’s time, the rule-making and regulatory process has not yet delivered the kind of detail or clarity anyone expected. A big reason: The sheer scale of the law—more than 2,300 pages, requiring more than 290 new regulations and 13 new agencies.
This is the kind of systemic challenge strategy consultants face frequently. We typically stand on the periphery of a complex and often conflicted system. From that position, we help public and private sector clients bring clarity, definition, and potential solutions to the key players who otherwise are focused on meeting daily challenges. We are able to help key players visualize the emerging regulatory universe, raise questions about intended and unforeseen consequences, and help all players understand their greatest priorities and how to achieve desired outcomes.
...continue reading: A Consultant’s View of Dodd-Frank
The SEC’s New Dodd-Frank Advisers Act Rulemaking: An Analysis of the SEC’s Implementation of Title IV of the Dodd-Frank Act
Kenneth W. Muller, Jay G. Baris, and Seth Chertok: The Title IV of the Dodd-Frank Act substantially changes the registration regime under the Investment Advisers Act. Investment advisers that previously did not have to register may now have to, while investment advisers that previously registered may now be unable to. Many non-U.S. investment advisers that were previously exempt may now have to register as well. Furthermore, registration and exemption issues will affect compliance obligations.
...continue reading: The SEC’s New Dodd-Frank Advisers Act Rulemaking: An Analysis of the SEC’s Implementation of Title IV of the Dodd-Frank Act
Dodd-Frank at One Year: Growing Pains
J.C. Boggs, Melissa Foxman, and Kathleen Nahill: In the year since Dodd-Frank was enacted, Republicans have launched countless attacks against it, claiming that it is too costly and unnecessarily increases the size of government. They have argued that the Volcker rule and derivative regulations harm U.S. competitiveness overseas, that regulatory agencies are overfunded, and that the Consumer Financial Protection Bureau and Office of Financial Research have too much power and are not subject to enough oversight. Republicans, especially those in the House, have introduced bills to repeal Dodd-Frank in its entirety or scale back, defund, delay or otherwise prevent regulators from implementing individual provisions.
...continue reading: Dodd-Frank at One Year: Growing Pains
Regulating Payday Loans: Why This Should Make the CFPB’S Short List
Nathalie Martin: While the CFPB has been controversial with politicians, its approval rating is high among every-day Americans. Conversely, as every public referendum on the subject shows, high interest loans like title loans and payday loans are very unpopular with Americans. This is understandable, given that such loans take advantage of society’s most needy, costing them money they cannot afford to lose. Lenders who make these loans charge interest rates and fees so high that when they hear the details, most Americans insist that the loans must be illegal.
...continue reading: Regulating Payday Loans: Why This Should Make the CFPB’S Short List
The SEC’s Whistleblower Program: What the SEC Has Learned from the False Claims Act about Avoiding Whistleblower Abuses
Douglas W. Baruch and Nancy N. Barr: The Dodd-Frank Act’s sweeping overhaul of the financial system now requires the SEC to pay substantial monetary awards to whistleblowers who disclose wrongdoing by publicly traded companies, financial services institutions, and other covered entities, and it prohibits employers from retaliating against SEC whistleblowers. The SEC’s new whistleblower program borrows heavily from the whistleblower provisions of the civil False Claims Act, albeit with important distinctions that reflect an attempt by the SEC to distance itself from some of the problems plaguing FCA enforcement.
...continue reading: The SEC’s Whistleblower Program: What the SEC Has Learned from the False Claims Act about Avoiding Whistleblower Abuses
Debit Interchange Regulation: Another Battle or the End of the War?
Stacie E. McGinn and Mark Chorazak: Still reeling from the financial crisis and preoccupied with defending innumerable other measures in the Dodd-Frank Act, retail bankers big and small watched as an unprecedented government rate-setting amendment was approved in the U.S. Senate by a bipartisan vote of 64 to 33. Under the so-called Durbin Amendment, an estimated $7.2 billion—or roughly 45%—of interchange revenue paid to banks for facilitating debit card transactions will be eliminated.
...continue reading: Debit Interchange Regulation: Another Battle or the End of the War?
Straight Talk from a Practitioner: Notes from Under the Wall
Steven Lofchie and Theresa Perkins: As a financial regulatory lawyer, I am accustomed to being cautious in my pronouncements. Equivocal and timid. When clients ask me for hard advice, rather than answer them, I often just rub my hands together like Uriah Heep and mumble, “that is a very good question.” If you search me on the Internet, you will see that my writing resulted in one commenter describing me as “the world’s most boring man.”
Nonetheless, I can tell you with absolute certainty, flat opinion—none of those scrivener “it’s the better view” qualifications—that Dodd-Frank just does not work. It’s a horrorshow. In fact, sometimes I get so agitated in my opposition to the statute that, when I speak, my hands tremble as with palsy, my eyes redden with little flecks, and I let fly bits of spittle.
Dodd-Frank Act Has its First Birthday, But Derivatives End Users Have Little Cause to Celebrate
Michael Sackheim and Elizabeth M. Schubert: A year has passed since the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Title VII of the Dodd-Frank Act, entitled the Wall Street Transparency and Accountability Act of 2010 (“Title VII”) created a new transparent exchange-type trading marketplace for over-the-counter swaps subject to regulation by the Commodity Futures Trading Commission (“CFTC”) and security-based swaps subject to regulation by the Securities and Exchange Commission (“SEC”) (collectively, “OTC derivatives” or “swaps”). This article will discuss the significant impact Title VII has, and will continue to have, on the end user, or “buy” side, of the derivatives markets.
...continue reading: Dodd-Frank Act Has its First Birthday, But Derivatives End Users Have Little Cause to Celebrate
Dodd Frank Act Will Transform the Investment Management Industry in Coming Years
John Schneider: A year after its enactment, the passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act will likely result in the most comprehensive overhaul of financial market regulation since the Great Depression. Under Dodd-Frank, US regulatory agencies are required to adopt a total of 243 separate rules. . . . Although Dodd-Frank’s scope is significant, the legislation marks only the beginning of a broader regulatory sea of change that will transform the investment management industry in coming years. Some changes are underway.
...continue reading: Dodd Frank Act Will Transform the Investment Management Industry in Coming Years
We are pleased to announce our partnership with the Harvard Law School Program on Corporate Governance. The Program and its director, Professor Lucian Bebchuk, collaborate with the Review in the selection of articles and organization of symposia. More information on the Program can be found 
