Dodd Frank

Company failures and penalties due to ethical shortcomings have increased the need to promote, encourage, and enforce ethical principles in organizations. Such enforcement helps reduce unethical practices, increase corporate social responsibility, and foster a sain business and collaboration environment. This article identifies the two most common types of ethics programs namely integrity-based and compliance-based ethics programs. After defining these terms, the article analyzes the key differences between them based on the phases of program management that include initiation, planning, implementation, and control. The article also synthesizes key findings related to staffing for the program’s management, ensuring a fit between the selected program and the organization structure, implementing appropriate staff training, and deploying processes to evaluate the program. The article also presents some implications for organizations in the current business climate and critically analyzes prior quantitative studies that were focused on the implementation of ethics programs in various industries. In concluding the work presented, the article suggests some opportunities for further research related to a possible combination of the two types of integrity programs.

İngiltere’nin dünya kapitalizminde Birinci Dünya Savaşı’na kadar oynadığı rolü devralan ABD özellikle İkinci Dünya Savaşı’ndan bu yana küresel ekonomik düzenin temel kural koyucusu ve yönlendiricisidir. Özellikle 1980’lerle birlikte sermaye piyasalarını ön plana çıkaran bir yaklaşımla küresel etkinliğini pekiştiren ABD ekonomisi, 2007 yılının ortalarında başladıktan sonra küresel nitelik kazanan finansal kriz ile birlikte önemli açmazlarla karşı karşıya kalmıştır. Finansal sektörün diğer finansal aracıları
ile birlikte, özellikle yatırım bankacılığı sektöründe ortaya çıkan geniş ölçekli finansal başarısızlıklar ve kamu müdahalesine dayalı çözümler ABD kapitalizminin niteliğinin sorgulanmasına neden olmuştur. Bu çalışmada özellikle son finansal krizle birlikte ABD’li finansal aracılarda ortaya çıkan dikkat çekici finansal başarısızlık hikâyelerinin erken dönem analizleri ile bu dönem öncesinde yaşanan finansal başarısızlıklara yönelik olarak kamu müdahalesi yoluyla verilen tepkinin niteliklerinden hareketle, ABD kapitalizminin yakın geleceği değerlendirilmektedir.

Many commentators have argued that securitization – where investment banks pool receivables, such as mortgages, and then resell them as a collection of securities – creates investments so complex that even sophisticated investors cannot determine asset quality. Securitization’s critics often cite evidence of widespread fraud in the securitization of subprime residential mortgage loans as an exemplar of this argument. Relying on recent work in behavioral economics and social psychology, these critics conclude that mandatory disclosure will be insufficient to protect investors from overpaying for lower quality assets because of limitations endemic to human behavior.

However, loans securitized in the $800 billion market for commercial mortgage backed securities (“CMBS”) have not experienced widespread defaults or evidenced fraud. Even though few CMBS issuances took place during the financial crisis, the resiliency of commercial mortgage loans is an example of where, even under stress, investments created through securitization have met investors’ expectations. As a result, CMBS stand as an unexplored counterexample to securitization’s critics who contend that securitization makes accurate pricing of assets impossible. This Article fills an important gap in the literature by being the first to examine the CMBS market and its resilience during the Market Meltdown and one of the first to examine the effects of the Dodd-Frank Wall Street Reform Bill on securitization.

Even in a market with perfect information, some critics of securitization suggest that behavioral biases will prevent investors from acting rationally. I argue that these behavioral biases may be (i) culturally specific, (ii) overcome through use of technology, and (iii) mitigated through learning and cross checking.

Drawing on research of information asymmetries in economics and finance, I propose an alternate regulatory framework to determine, in a market where not all information is publicly available, at what point prices will inform investors about investment quality. In particular, I use the framework to show that, even in an illiquid market, sufficient publicly available information about substitute investments is the best investor protection. I conclude that protecting investors from themselves robs uninformed investors of the information necessary to transact with sophisticated investors and subsidizes sophisticated investors’ ignorance at the expense of all market participants.

"The Transparency Amendment, included in the Dodd-Frank Wall Street Reform and Consumer Protection Act, can be an important tool in curtailing the resource curse that so heavily burdens resource-rich developing countries by shedding light on opaque payments between the extractive sector and host countries. From the get-go, however, extractive industry companies have fiercely opposed the new mandatory disclosure requirements as set out in this regulation. The corporate opposition is for the largest part motivated by the fear of a competitive disadvantage that derives from the fact that the amendment is housed with the Securities and Exchange Commission (SEC) and thus only holds jurisdiction over those that report to the SEC. Although on the one hand watering down these corporate fears, this article draws on the “shared value approach” and empirical evidence to argue that there is a business case for transparency. This refreshing take on transparency regulation invites corporate leaders to reassess their current oppositional stance and to embrace new initiatives like the Transparency Amendment and to take a proactive stance in building a convincing global regulatory system of transparency."

A financial crisis is most likely to happen again due to a banking crisis caused by too little regulation. Numerous scholars have argued that the lack of regulation mixed with morally hazardous behaviour of investment banks played a large role in creating the 2008 crisis. Indeed, the Dodd-Frank Act was passed to safeguard against the possibility of another crisis to occur, and protect the consumers. It is essential to appreciate the importance of the financial sector to US economic growth, and to some, restraining this industry appears counterintuitive. Consequently, this policy brief will attempt to outline the correct balance between sufficient regulation and economic growth.

This paper, presented at the “Regulating Risk” symposium at the University of Connecticut School of Law, April 16, 2010, briefly reviews the connection between risk and corporate governance, then examines the “strengthening corporate governance” provisions of Subtitle G of the Restoring American Financial Stability Act of 2010 (also known as the “Dodd Bill”). The corporate governance provisions, covering majority voting for director elections, proxy access, and the separation of the roles of CEO and chairman of the board, seem likely to have one of two possible effects. On the one hand, the provisions may be pernicious, in that they further enhance shareholder power without a clear justification for increased shareholder power, and more particularly without a justification for shareholder power as a risk management device. Indeed, the Dodd Bill’s corporate governance provisions may work at cross-purposes to the risk management intent of the remainder of the Dodd Bill: the corporate governance provisions operate under the assumption that enhanced shareholder power will result in better monitoring of managerial behavior, which presumably will help to prevent future crisis, but both theory and evidence suggests that diversified shareholders generally prefer companies to take risks that other constituencies (including taxpayers) would not prefer.

On the other hand, the Dodd Bill may have very little effect on investor behavior or risk management. Increases in shareholder power over the past years (fundamentally the result of increased federal regulation) have made management more responsive to - and in some cases probably overly responsive to - shareholder concerns over agency costs. Indeed, some of the proposed reforms already have been or were likely to have been put in place at most public companies. If private ordering is already working, what is the point of imposing strict governance constructs across the market as a whole, especially when most of the affected firms are victims of, rather than contributors to, the Financial Crisis‘

Thirty years ago best-selling author Michael Lewis penned a damning indictment of the culture of Wall Street bond traders in the semi-autobiographical novel, Liar's Poker. Contempt for the rules and the ability to exploit weakness were the main characteristics of technologically-backward bond trading rooms, he argued. Further, an almost complete lack of transparency allowed traders free rein in setting prices and earning lucrative fees and commissions. In the decades since then, and despite massive technological advances in other areas of banking and finance, fixed income (corporate) bond trading remained alarmingly anachronistic and opaque. In the period since the global financial crisis however, the world that Lewis described has changed dramatically and the Wall Street cartel has been the biggest loser. The aim of this paper is to explain why.

A focus on corporate culture, especially at financial institutions, has emerged as a regulatory, public, and media priority in the aftermath of the 2008 financial crisis. With Dodd-Frank, Congress embraced whistleblower statutes as a key instrument to improve corporate culture and governance, and to extirpate undesired and unethical business practices. Despite the clear policy goals, Dodd-Frank’s unclear statutory text has created interpretative controversies. While Dodd-Frank adds anti-arbitration provisions to preexisting whistleblower statutes, it does not include a dedicated, standalone anti-arbitration provision for Dodd-Frank’s new whistleblower cause of action.This essay argues that courts should not allow employers to use pre-dispute arbitration agreements to compel whistleblowers to arbitrate their Dodd-Frank claims. To make the case, we review policy concerns for whistleblower actions that favor public actions in public courts. We argue for a pragmatic interpretation of th...

... of Material Information to Shareholders and the Privacy Concerns of Executive Officers 3/29/2011 Columbia University School of Law, New York Ufuoma Barbara Akpotaire Page 2. Electronic copy available at: http://ssrn.com/abstract=1855585 Research Page 2 ...

In May 2018, the US watered down some of the major financial sector regulations it had adopted in the wake of the 2008 global financial crisis. The dilution of the Dodd-Frank financial reforms should be seen within the broader historical context regarding the growth in the size and political power of the financial services industry in the US over the past four decades – and its ability to influence policy, even when this conflicts with democratic oversight and the public interest.

In order to facilitate greater reform in energy markets, Dodd-Frank granted the CFTC wide-ranging powers as part of the greater mandate given to the CFTC in relation to OTC-swaps and the daily derivatives trading activity in commodities futures and options markets. As a result, Dodd-Frank subjected electricity market transactions—which traditionally occur under the oversight of the Federal Energy Regulatory Commission in markets organized around independent system operators and regional transmission organizations—to the anti-manipulation prohibitions of the Commodity Exchange Act. Thus, differently from FERC’s regime, the post-Dodd-Frank statutory framework opened the way for enforcement of market discipline in electricity markets through a private right of action under Section 22 of the CEA.
This development drew strong opposition from the industry, and also caused a conflict between courts and the CFTC in the interpretation of the relevant law. In October of 2016, the CFTC stepped back by issuing a final exemptive order to the participants of seven national energy markets, which constitute almost the entire U.S. wholesale electricity market. The withdrawal of the private right of action conflicts with the position previously advocated by the CFTC itself. It also raises questions about the CFTC’s use of its exemptive powers, as the removal of a statutory right through agency rulemaking may potentially be in conflict with the text and statutory purpose of the CEA as amended by Dodd-Frank. The exemption not only removes an important tool in enforcing market discipline, but also has the potential to undermine the reform efforts in the transition of U.S. energy markets to a smart grid.
This Note will provide a history of the developments that have unfolded since the enactment of Dodd-Frank in relation to the availability of a private right of action under the CEA in energy markets. The Note also analyzes commonly raised arguments against the availability of a private right of action and presents the various counter-arguments.


Recommended Citation
Meric Sar, A Regulatory Retreat: Energy Market Exemption from Private Anti-Manipulation Actions Under the Commodity Exchange Act, 22 Fordham J. Corp. & Fin. L. 605 (2017).
Available at: http://ir.lawnet.fordham.edu/jcfl/vol22/iss4/3

This research applies the robust political economy framework to a comparative institutional analysis of large US financial institutions insolvency procedures. The regimes investigated will be the bailout of financial institutions, Dodd-Frank Act's Orderly Liquidation Authority, both through procedures that follow original intent and through a 'bail-in' route, and 3 bankruptcy possibilities including Chapter 11, a so-called "Chapter 14," and a mandatory auction mechanism used as a benchmark. We study the robustness of these regimes' procedures through 5 criteria, both ex ante and ex post. These are the initiation of insolvency procedures, Too-big-to-fail moral hazard, the filtering mechanism, the allocation of resources, and their alleged systemic externalities containment abilities.

... of Material Information to Shareholders and the Privacy Concerns of Executive Officers 3/29/2011 Columbia University School of Law, New York Ufuoma Barbara Akpotaire Page 2. Electronic copy available at: http://ssrn.com/abstract=1855585 Research Page 2 ...

This paper focuses on the topic of reforming the Dodd-Frank Act. The Dodd-Frank Act was passed in 2010, following the financial crisis of 2007-2009. The law was written to regulate the causes of the recession, which were attributed to overtly risky lending practices by banks and other mortgage lenders, with particularity, lending in the subprime mortgage market. The author discusses the complex relationship between mortgage lending and small business lending; moreover, gives poignant detail of the history of banks and market crashes in the United States. Certain protections put in place following the 1929 stock market crash, specifically, the Glass-Steagall Act, separated investment banking from commercial banking, but in 1999 those protections were repealed by the Gramm-Leach-Bliley Act. This forces banks to lend to small businesses for revenue, rather than create investment schemes on Wall Street, which have historically undermined the entire financial system.

Lax financial regulation and supervision took the major blame for the recent Global Financial Crisis (GFC). This initiated the most far-reaching reform in advanced economies since the Great Depression under the watchful eyes of the G20, supplemented by national initiatives in major jurisdictions.

The G20 approach was comprehensive, logical, and progressive, based on four pillars: agreeing new regulations, supervising their implementation across major jurisdictions to avoid regulatory arbitrage, formulating resolution mechanisms to avoid taxpayer bailouts in case systemically important financial institutions (SIFIs) failed, and periodically stress testing the new structure for robustness.

The G20 financial reform agenda is undoubtedly ambitious. But will this time be different? Six years on, the outcome is mixed—WIP at best, and a tale of progressive dilution at worst on account of the putative incestuous relationship between the Treasury and Wall Street. The overwhelming concern is that as normalcy returns, business would be as usual. Basel III might be diluted. The moral hazards inherent in the banking emolument and credit rating systems remain unaddressed. Shadow banking is back on its feet even as commercial banks struggle with new regulation. The issues of pro-cyclicality and over-leverage continue to haunt regulators.    Banks today are bigger than what they were before the crisis due to M&A. In the Eurozone, with its flawed monetary union, several banks are too big to be bailed out by their sovereigns, and no FI seems small enough to be allowed to fail because of interrelatedness of the financial system. An unreformed monetary policy framework also continues to put financial stability at risk.

This paper analyzes the impact of the Dodd-Frank Act on hedge fund performance, risk, fund flows, and liquidation. The data indicate that, relative to non-US hedge funds, US hedge funds that are regulated under Dodd-Frank have lower fund alphas, lower information ratios, and higher risk in the post-Dodd-Frank implementation period. We find evidence that capital flows out of US hedge funds after the implementation of Dodd-Frank, including US hedge funds that have better prior performance. Poorer performing hedge funds in the US were more likely to liquidate after the announcement of Dodd-Frank and before its implementation, but not after implementation. We show some differences in these findings depending on fund size and strategy. The findings are robust to difference-in-differences analyses comparing US to non-US funds, among other things.

On observe- l’on semble s’en réjouir - de la part grandissante du droit dans la régulation "post-crise" qui se met en place, à travers les nouveaux textes, les pouvoirs dont l’ampleur s’est accrue notamment les sanctions.
Encore faut-il que ce droit soit de qualité. Ce droit désormais omniprésent, ce "triomphe" du droit, ne révèle-t-il pas sa faiblesse, en ce qu’il résulte d’un mauvais maniement de l’art de créer du droit ? En effet, l’art législatif demeure gouverné par des règles immuables. Or, le droit de la régulation bancaire et financière qui se met en place dénote un droit qui veut montrer sa toute-puissance, mais révèle en réalité sa grande faiblesse. En effet, il se contente de multiplier les mécanismes qui ont montré leurs limites, plutôt que de revenir à un droit plus raisonnable. Cette croyance dans un droit tout-puissant est "prométhéenne". Ainsi, les sanctions se multiplient dans les textes et dans l’usage qui en est fait. Mais ce sont des sanctions dégradées, qui ne sont au centre qu’en tant qu’accessoire de dispositions ordinaires, que les opérateurs contournent, et pour la satisfaction desquelles l’on méconnait des principes classiques de la répression. Plus encore, l’empilement des textes et leur complication a permis à des financiers astucieux de profiter de leurs failles pour mettre en danger le système. Et l’on ne songe qu’à écrire des textes plus nombreux et plus compliqués encore. Cela n’est pas censé et va favoriser la prochaine crise. Pourquoi ne pas considérer les principes classiques d’écrire le droit, que sont la clarté, la cohérence entre les principes posés par un législateur qui manie des mots et non de sigles et des renvois ? C’est engendrer l’incertitude, des opportunités à des comportements dangereux et finalement un pouvoir arbitraire aux juges et la fortune aux avocats. Cela n’équivaut en rien à la définition classique du droit.