Craig Eastland

Thomson Reuters Survey Finds New Structures, but no Decline in Inversions

The pending mergers of Johnson Controls, Inc. with Tyco International plc and Pfizer Inc. with Allergan plc means the value of inversions in the pipeline ($185B) has nearly reached the total value of all inversions completed between January 1, 2010 and September 24, 2014 ($197B) – the day the Internal Revenue Service (IRS) released its first passel of rules aimed at curbing inversions (Rules Regarding Inversions and Related Transactions, Notice 2014-52, 2014-42 I.R.B. 712 (2014), Anti-Inversion Rules, AIR1). Our fortuitously timed survey comparing inversion activity before and after AIR1 found that while IRS rules appear to have inspired … Read more

Gwynne L. Skinner

Rethinking Limited Liability of Parent Corporations for their Subsidiaries’ Extraterritorial Violations of Human Rights Law

In order to ensure that victims of business-related human rights and gross environmental abuses in countries that host transnational business (host countries) are able to have the ability to seek and obtaining a remedy for their harm, courts should ignore the separate legal personality of parent corporations operating in countries with weak or corrupt judicial systems where the victims cannot otherwise obtain a remedy against the subsidiary, allowing corporate parents to be held liable for such harm. In such situations, the corporate parents are the entities that can best, and normatively should, remedy the victims’ harm, even if they do … Read more

Shearman & Sterling explains SDNY Bankruptcy Court Holding That Avoidance Powers Can Be Applied Extraterritorially, and Resulting Split Within the SDNY

On January 4, 2016, the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) deviated from SDNY precedent and held that, despite the absence of clear Congressional intent, the avoidance powers provided for under Section 548 of the Bankruptcy Code can be applied extraterritorially. As a result, a fraudulent transfer of property of a debtor’s estate that occurs outside of the United States can be recovered under Section 550 of the Bankruptcy Code. This ruling creates a split among courts within the Southern District of New York regarding the reach of avoidance powers when it … Read more

Mayer Brown discusses EU and US Agreement on Scheme to Replace Safe Harbor: EU – US Privacy Shield

In October 2015, the Court of Justice of the European Union (“CJEU”) held that transfers of personal data from Europe to the United States made under the so-called US Safe Harbor scheme were invalid as those transfers did not ensure an adequate level of protection under European data protection law.

In the aftermath of that decision, the Article 29 Working Party, the organisation that represents the data protection authorities of the European Union, set 31 January 2016 as the deadline by which the representatives of the European Union and the United States had to find solutions to address the significant … Read more

Yockey Headshot

Entity Choice and Anti-Corruption Compliance

Entrepreneurs are sometimes guilty of letting compliance slip down their list of priorities. They prefer to “move fast and break things”—an ethos that doesn’t always find time for bureaucratic niceties like employee handbooks and contracting guidelines.[1]

This dynamic raises issues on numerous fronts, but of particular concern to me is what it means for anti-corruption compliance. As American entrepreneurial activity continues to permeate developing economies, many of the most promising markets in Europe, South America, and Asia feature widespread corruption. Actions as simple as subscribing to Internet service or receiving goods through customs often come part and parcel with … Read more

Latham & Watkins explains US Loan Market Adaptations to European Bail-In Directive

European Economic Area (EEA) financial institutions are now subject to a new set of regulatory requirements designed to avoid taxpayers bailing out banks in the event of another banking crisis — a central component of which is that EU member state bank regulators have been provided with broad new “bail-in” powers to write down (including to zero), convert to equity or otherwise modify unsecured liabilities of failing financial institutions.
These new rules require an “EEA financial institution” (defined below) to include a “contractual recognition of bail-in clause” in almost every document to which it is a party that is governed … Read more

CEO Power Author Photo

CEO Power, Government Monitoring, and Bank Dividends

In September 2007, Northern Rock, a British bank, sought and received liquidity support from the Bank of England because of financial difficulties resulting from the global financial crisis. As a result of mounting political pressure that Northern Rock was exploiting taxpayers’ money to pay its shareholders, the bank decided to scrap a £59m interim dividend payout, which had been announced before the beginning of the crisis (Financial Times, 2007).

Recent academic literature (Acharya et al., 2011; Onali, 2014) shows that banks in financial distress pay dividends to exploit government support, and this results in a transfer of bank default risk … Read more

Cruces & Samples Photo

Time to Settle Sovereign Debt’s “Trial of the Century”?

Once again, NML v. Argentina is in the spotlight. Sovereign debt’s “trial of the century”[1] has been the focal point of intense academic and policy debates, prompted a Supreme Court decision, and even triggered a contested default by Argentina in 2014. But the spotlight now points in a different direction. With a newly elected government, Argentina’s decade-long standoff with holdout creditors is set for negotiations—and potentially—a final settlement. In our article, we analyze key economic and legal factors underlying the NML litigation, with a particular emphasis on issues relevant to a potential settlement.

Argentina’s Holdout Litigation

Argentina’s … Read more

Davis Polk explains SEC’s Proposal of New Transparency Requirements for NMS Stock Alternative Trading Systems

On November 18, 2015, the Securities and Exchange Commission (“SEC”) proposed amendments (the “Proposal”) to Regulation ATS and related rules under the Securities Exchange Act of 1934 (the “Exchange Act”) to impose extensive new transparency requirements on, and greatly increase the SEC’s active oversight of the design of, alternative trading systems (“ATSs”) that facilitate transactions in National Market System stocks (generally, exchange-listed equities) (“NMS Stock ATSs”).

The extensive level of disclosure that would be required under the Proposal and the SEC’s ongoing involvement in approving or reviewing the design and … Read more

Steven Schwarcz, J.D.
Stanley A. Star Professor of Law & Business

Securitisation and Post-Crisis Financial Regulation

There are few types of debt as internationally issued and traded as the debt securities issued in securitisation (in the United States, spelled securitization) transactions. European investors commonly invest in securities issued in U.S. securitisation transactions, and vice versa.

It is generally agreed that securitisation’s abuses contributed to the global financial crisis. Repayment of securities issued in certain highly leveraged securitisation transactions was so sensitive to cash-flow variations that, when the cash-flow assumptions turned out to be wrong, many of these highly rated securities defaulted or were downgraded. That, in turn, sparked a loss of confidence in the value of … Read more

Morrison & Foerster explains Long-Awaited Cyber Information Sharing Bill Enacted

After more than four years of congressional consideration of cyber issues, legislation to authorize companies to share cyber threat information has finally been enacted. On December 18, 2015, President Obama signed into law the omnibus federal government spending and tax bill for 2016, the Consolidated Appropriations Act, 2016 (H.R. 2029), passed by the Senate and House earlier in the day, thereby avoiding the short-term prospect of a government shutdown. Among the bill’s nearly 900 pages is the long-awaited cyber information sharing bill broadly supported by industry. Specifically, Division N of H.R. 2029 includes the Cybersecurity Act of 2015 (the “Cybersecurity … Read more

Sullivan & Cromwell discusses The Cybersecurity Act of 2015

On December 18, 2015, President Obama signed into law the Cybersecurity Act of 2015. The Act, arguably the most significant piece of federal cyber-related legislation enacted to date, establishes a mechanism for cybersecurity information sharing among private‑sector and federal government entities. It also provides safe harbors from liability for private entities that share cybersecurity information in accordance with certain procedures, and it authorizes various entities, including outside the federal government, to monitor certain information systems and operate defensive measures for cybersecurity purposes. The Act also contains provisions designed to bolster cybersecurity protections at federal agencies, assess the federal government’s cybersecurity … Read more

PwC discusses Key Points from Basel’s Re-proposed Standardized Approach for Credit Risk

The Basel Committee on Banking Supervision (BCBS) on December 10th issued the second iteration of its proposed revisions to the standardized approach (SA) for credit risk measurement. Following up on last year’s initial issuance, the proposed revisions are intended to amend BCBS’s currently applicable SA in order to achieve a better balance between risk sensitivity, simplicity, and comparability.

While the latest proposal includes significant changes from last year’s version in response to BCBS’s quantitative impact study (QIS) and industry comments, several important issues remain. Most importantly, the revised proposal does not include an implementation timeline, and kicks the can … Read more

Paul Davies

The Fall and Rise of Debt in Bank Capital Structures

Debt has undergone a remarkable resurrection in relation to banks’ capital structures. In the immediate aftermath of the crisis it was uncertain whether debt would survive at all in the Basel Committee’s minimum capital requirements for internationally active banks. Today, however, debt is heavily promoted by bank regulators as an essential ingredient in the resolution arrangements for global systemically important banks (GSIFIs). In my article, The Fall and Rise of Debt in Bank Capital Structures, I chart how this remarkable change came about.

In the aftermath of the financial crisis of 2007-9 much criticism was directed at the low … Read more


Is High Frequency Trading Good For Capital Markets?

High frequency trading is all of a go,
With joy to the traders and profits that grow,
It brings to investors an unhappy blow.

Investors and traders in capital markets have always sought to be better informed and to trade more quickly than their competitors. Thus new information technologies have been quickly adopted. As technology has evolved there has been a transition from carrier pigeons and semaphores, through telegraph, ticker tape and telephones, to fast computers and optic fibre links. The resulting evolution in capital markets has been towards faster and faster trading. High frequency trading, where milliseconds matter, is … Read more

A Plan of Action to Save the Brazilian Infrastructure System

The oil sector is believed to represent approximately 13% of the Brazilian economy. Petrobras, the state-controlled, corruption stricken oil producer and by far the country’s largest corporation, is an important component of the current economic crisis. Due to mismanagement and embezzlement, the company has been forced to cut around 40% of all capital investments projected for this year, and such reduction will cause a 2.4% reduction in the country’s GDP.

Several suppliers, contractors and subcontractors of Petrobras are under investigation in the so-called Operation Car Wash. High executives of the oil producer are believed to have taken bribes for granting … Read more

David Millon

Corporate Social Responsibility and Environmental Sustainability

In a recently published book chapter,[1] I explore the prospects for corporate social responsibility (CSR) as a partial solution to the environmental sustainability challenge. Many large corporations affect the environment through their operational activities and their choices about product design. Legal regulation is no doubt necessary for furthering environmentally responsible behavior. The question here is whether CSR can play a meaningful role in its absence.

I outline two models or theories of CSR in this paper. What I term the ‘ethical’ model focuses on corporate management’s duty to balance conflicting stakeholder interests even where doing so may come at … Read more

Millstein Governance Forum on December 10, 2015 at CLS

On December 10th, Columbia Law School’s Millstein Center on Global Markets and Corporate Ownership will be hosting its 10th annual Millstein Governance Forum.

For the past decade, the Forum has served as one of the premiere venues for business leaders to engage in debate and dialogue on the effects of developments in the capital market on corporate governance. This year’s Forum will focus on the board-centric model of corporate governance functioning in an array of shareholders. Speakers and panels will explore how changing expectations and dynamics in the capital markets impact the way boards govern.

Along … Read more

WilmerHale reports ALJ Dismisses FTC’s LabMD Complaint for Lack of Actual or Probable Consumer Harm from Cybersecurity Incidents

On Friday, November 13, Federal Trade Commission (“FTC” or the “Commission”) Chief Administrative Law Judge (“ALJ”) D. Michael Chappell issued an Initial Decision in In the Matter of LabMD, Inc. (FTC Docket No. 9357), dismissing the Commission’s Complaint against LabMD, Inc. (“LabMD”), upon a finding that the FTC had failed to “demonstrate a likelihood that [LabMD’s] computer network will be breached in the future and cause substantial computer injury.”1 The ALJ held that showing consumer harm is merely possible is insufficient to prove unfairness under Section 5(n) of the FTC Act.


The FTC’s Administrative Complaint against LabMD alleged … Read more

Andrew Ceresney

SEC Director of Enforcement’s, Andrew Ceresney’s, Remarks on Market Structure Enforcement: Looking Back and Forward

At the outset, let me give the requisite reminder that the views I express today are my own and do not necessarily represent the views of the Commission or its staff.[1]

Today I thought I would speak about our path-breaking enforcement work in the past few years in connection with equity market structure.  Ten years ago, there was very little enforcement focus on market structure issues.  Equity trading was highly centralized at a small number of trading venues and much of the trading was conducted manually, by people, on the floor of an exchange.  Time was measured in seconds, not … Read more