Finance Law

3 Key excerpts on "Finance Law"

• 

  eBook - ePub

  Corporate Governance and Finance Law

  • R. Girasa(Author)
  • 2013(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  CHAPTER 1 Overview of the Law of Finance

  Introduction

  Law has been described as a seamless web that for convenience and specialization is divided into a number of categories. Thus, students taking an introductory course in the study of law may be taught that the subject is divided into the categories of public or private; substantive or procedural; civil or criminal; national, regional, or international; and other artificial distinctions. Persons who have studied law for many decades see its unifying aspects as well as the subtleties of its categories. Just as a physician may specialize in one category of the human body, most lawyers tend to become competent in one particular area of the law such as criminal law, tort law, or corporate law. Nevertheless, in today’s complex society an attorney must also understand the interrelationship of legal aspects outside of their competence. Corporate attorneys in the past concentrated on legal aspects of mergers and acquisitions, reorganizations, duties of corporate directors and officers, contractual issues relating to public and private offerings, and the many other substantive areas in which executives are engaged. However, today they must become aware of the possible criminal and tortious behavior of their clients.

  The scandals of the past decade, which have been discussed exhaustively ad nauseam in corporate offices by corporate attorneys, and in accounting firms, led to the passage of significant congressional enactments that affect finance. These include the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010. When this author attended law school in the late 1950s, criminal law was given very low priority, consisting of a two-credit course that mainly covered acts of violence by poor individuals living in slum-like conditions. There was no discussion of white-collar crime inasmuch as such behavior almost never resulted in prosecution and/or imprisonment. The enactment of the Sarbanes-Oxley Act, with its very significant provisions of 20-year imprisonment for certain offenses, and the conviction of Enron’s chief executive officer (CEO) and other senior executives who did receive or faced such terms, finally caught the attention of corporate executives.

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Financial Sector Assessment : A Handbook

  • International Monetary Fund(Author)
  • 2005(Publication Date)
  • INTERNATIONAL MONETARY FUND

    (Publisher)

  Chapter 9 Assessing the Legal Infrastructure for Financial Systems The legal infrastructure plays a pivotal role in the operation of financial markets, as well as in the efficient intermediation of capital flows and domestic savings. Banks and other financial institutions hold claims on borrowers, the value of which depends on the certainty of legal rights and the predictability and speed of their fair and impartial enforcement. The legal framework that empowers and governs the regulator and the rules for the regulation of the various markets form the cornerstone of the orderly existence and development of the financial markets. In this respect, the key laws are (a) the law governing the formation and operation of the central bank and (b) the law regulating banking and financial institutions and markets. The key components of an effective legal framework for the regulation and supervision of the financial system are laid out in various international standards for financial sector supervision and are discussed in chapter 5. In particular, the core principles of supervision relating to regulatory governance (box 5.1) explicitly cover the key legal underpinnings. In addition, the effective governance and operations of the regulator and the regulated also depend on the broader legal framework governing insolvency regime and creditor rights, financial safety nets, ownership, contracts, contract enforcement, accounting and auditing, disclosure, formation of trusts and asset securitization, and so forth

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  International Insolvency and Finance Law

  Legal Constants in Times of Crises

  • Daniele D'Alvia(Author)
  • 2022(Publication Date)
  • Routledge

    (Publisher)

  1 The Times of Crisis between Insolvency and Financial Law

  DOI: 10.4324/9781003278320-2

  1.1 The Legal Theory of Finance

  In 2013, Katharina Pistor wrote a working paper at Columbia Law School titled “A Legal Theory of Finance”.1 In it, Pistor claims that finance is legally constructed; this means that finance does not stand outside the law. For example, Pistor makes the case that financial assets are disciplined by legal rules and regulators. Although this can vary from jurisdiction to jurisdiction, the legal enforcement of financial commitments is present in every jurisdiction and can influence the scope of the entire financial system. In other words, without legal enforcement, contractual promises cannot be honoured, and the capital outflows or inflows between jurisdictions cannot be effective. For this reason, market participants often design financial instruments that are not in conflict with the existing rules in different jurisdictions. It means that contract law plays a major role in contemporary financial markets, and contractual rules are able to provide financial operators as well as the financial industry with new contractual devices, which – according to Pistor – in turn, seek legal vindication.

  1 Katharina Pistor, “A legal theory of finance” (2013) Paper Number 13-348 Columbia Law School – Public & Legal Theory Working Paper Group 13.

  In claiming legal vindication, financial operators can try to mitigate uncertainty and prevent liquidity volatility. According to Pistor, liquidity is not a free asset, and when the future shows a liquidity scarcity, the refinance of financial commitments becomes more challenging. This is because every financial system is inherently unstable, and the exercise of discretionary power to enforce legal commitments can bring about a new theory of political economy of finance.

  Sign up to read

  Learn more about book