By: Adam Levy Everybody wants to know the significance of “Occupy Wall Street,” including CEOs and a presidential candidate who believes the protest is a “natural outcome of a bad education system teaching them really dumb ideas.” A more reasonable explanation for the civil unrest is the continuous collision between high life expectations and a debilitated job market, concurrent with Wall Street posting record profits after a massive government bailout. Still, some young entrepreneurs are raising outstanding amounts of capital through Wall Street giants such as Goldman Sachs, to fill new market niches. Advances in technology have also made it…
Author: Online Managing Editor
By: Samantha Cornell Bank of America (BofA) recently announced that it will begin charging customers a five dollar monthly fee for use of their debit cards. The implementation of this fee will launch in January 2012, making BofA the first major national bank to charge customers a monthly fee to shop with their debit cards. The fee will only apply to its basic checking accounts, leaving its premium and platinum accounts unaffected by this change. The fee will be triggered on a monthly basis if customers use their debit cards for any purchase. The fee however will not be triggered…
By: Christopher Santopolo The SEC has hardened its stance on insider trading in recent years. Within the past two years, Preet Bharara, the United States Attorney in Manhattan, has brought charges of insider trading crimes against 54 people. 50 of these individuals have either pled guilty or been convicted at trial, three are pending trial and the fourth is a fugitive. Those convictions include the two longest prison sentences ever for insider trading charges. Zvi Goffer, a former trader at hedge fund giant Galleon, received 10 years in prison while his former boss, Raj Rajaratnam, was sentenced to 11 years…
By: Tim K On October 20, Daniel Tarullo, the Federal Reserve Board Governor, made his first speech focusing solely on economic outlook since joining the Fed in 2009. In that speech, Tarullo said, “housing continues to hang like an albatross around the necks of homeowners and the economy as a whole.” The Fed, under Tarullo’s leadership and guidance, has advocated for the Fed to increase its mortgage bond position. I am no economist and cannot weigh on the merits of such a plan, but it is nice to see members of government indicating that they are thinking about different approaches…
By: Thomas E. Holber The United States Securities and Exchange Commission (the “SEC”) has issued Proposed Rule 127B, implementing Section 621 of the Dodd-Frank Act, which amended Section 27B of the Securities Act of 1933 (the “Securities Act”), barring material conflicts of interest in securitization transactions. Rule 127B would ban hedge funds and banks from assembling risky securities, marketing them to investors and then immediately betting against their own creations, reaping profits when they fail. The rule would also ban firms from setting up risky securities for the benefit of an undisclosed third party. The prohibition against short-selling would last…
By: Jordan F. Last week the Delaware Chancery Court dismissed a derivative suit filed against Goldman Sachs. The suit alleged that the company’s compensation system wrongfully rewarded employees for taking risks that harmed the firm’s stock price. The suit was filed in the wake of the most recent mortgage crisis. The plaintiffs lawyers argued that the firm’s board of directors breached their fiduciary duties by establishing a compensation structure that improperly encouraged highly “risky trading practices and over-leveraging of the company’s assets” which led to illegal business practices. Goldman Sachs employees received billions of dollars in pay and bonuses last…
By: Thomas Michael The ongoing battle between regulators and the financial industry took a significant step forward last week, as the Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve, and the Securities and Exchange Commission (“SEC”) all unanimously approved an initial version of a regulation designed to prevent banks from trading for their own profit. This proposal, known as the “Volcker Rule,” has the potential to initiate a major overhaul of the banking industry and drastically change how trading on Wall Street is conducted. However, the initial draft of the rule released last week has proved to reveal more problems than…
By: Jayson Lewis As the largest non-governmental regulator for securities firms doing business in the United States, the Financial Industry Regulatory Authority (FINRA) is committed to protecting investors and safeguarding market integrity. FINRA accomplishes these goals through regulation, compliance, training, instruction, and enforcement. One of the most significant means by which FINRA strives to ensure that the securities industry continues to operate fairly and honestly is through its administration of the largest dispute resolution forum for securities brokers and dealers doing business with the public. Traditionally, under FINRA rules, arbitrations had to take place in financial centers and the arbitration…
By: Sofya Abdurakhmanova To address the Great Depression, Congress passed significant legislation, which helped stabilize the rapidly failing banks at a time when they were falling like a set of dominos. Several banks closed, others reevaluated their balance sheets, and President Roosevelt pushed for passage of the Glass-Steagall Act and creation of regulatory agencies. Three years ago, banks once again started faltering. A run on Washington Mutual was an eerie reminder for many economists. The banks and investment groups were found to be “too big to fail” and the U.S., along with nations across the world, was left in the compromising…
By: Ramona Ortega On June 23, 2011, the Supreme Court ruled 5-4, in Stern v. Marshall that Bankruptcy courts no longer have authority to make final judgments on state law counterclaims, even where the claims are “core proceedings.” The opinion by Chief Justice Roberts found that under Article III of the Constitution, a bankruptcy court does not have constitutional authority to decide on a common law cause of action even if the court has statutory authority under the bankruptcy code. The holding has stirred up a wave of controversy and speculation about the long term impact on bankruptcy courts and…