Category:

Finance & Banking

Investing in Income Sharing: Why Regulators Should Pay Attention to the Innovative Set Up Now

As of November 8, 2020, the student debt crisis reached $1,769,280,155,524. There’s no easy way to address a $1.7 trillion problem and the increasing cost of higher education, coupled with the necessity of a four-year degree, will only exacerbate the issue. From 2000 to 2016, the average annual cost of college more than doubled, from around $15,000 a year to nearly $32,000. The New York Fed most recently identified a phenomenon acknowledging that when you flood the marketplace with subsidies, like grants, loans, etc., it enables higher education to continue to raise prices. For every dollar of new public subsidy, prices for college have risen between 60 and 70 cents. There are a number of proposals as to how to address this crisis – from federal statutes to private intervention – but income sharing agreements (ISAs) have largely been left out of the conversation. ISAs are not without criticism, particularly because of concerns about excessive interest. However, many of the criticisms could and should be addressed by comprehensive regulation, as any other type of lending has been. ISAs will likely be part of the future solutions of financing education and, as a result, regulators need to pay attention.

Feeling Lucky (or Manipulated)?

Sports betting is now just as easy as opening up an app and playing a game on your phone. But should it?

Of course not. Sports gambling, with the potential to waste away thousands of dollars, should feel more like gambling at a casino than making a few clicks on a phone.

The Professional and Amateur Sports Protection Act of 1992 (PASPA) effectively outlawed sports betting nationwide. However, in Murphy v. National Collegiate Athletic Association, the Supreme Court struct down PASPA, launching the phrenzy towards nationwide legalization. Sports betting is fully legal and operational in 18 states in addition to Washington D.C. with the possibility of 13 more states joining the national trend by the end of 2021.

In June 2019, Governor Pritzker signed the Sports Wagering Act into law, ushering in legal sports gambling in Illinois. The law initially required users to submit applications for sports wagering services in person. However, due to the pandemic Governor Pritzker issued several Executive Orders suspending this requirement through at least November 14. With the pandemic still in full swing, there is little reason why this suspension will not be extended again.

How Proxy Access for Shareholders Can Hold Corporations Accountable

Proxy access is not about giving shareholder’s rights, it is about checking C-suite power so that everyone wins instead of just the CEOs. Proxy access has the potential to address some of the pressing issues with corporate power. Corporate power and influence are concentrated in the board of directors, proxy access gives shareholders the opportunity to infiltrate this exclusive “inner circle” of power. Shareholder access to the board can push change towards greater diversity in the boardroom and demand greater transparency and compliance.

SEC Adopts New Rules for Whistleblower Program

Twelve years after the 164-year-old brokerage firm Lehman Brothers collapsed during the global financial crisis that had been sparked by the subprime mortgage catastrophe, last month the U.S. Securities and Exchange Commission (SEC) adopted a new rule changing parts of the agency’s whistleblower program. The program, which was established by the Dodd-Frank Act in 2010, permits the agency to provide financial awards to whistleblowers who provide it with original information about fraud and securities violations. At issue in this new rule is how the SEC will evaluate and apply its award criteria based on the circumstances in each case. Commissioners voted 3-2 to adopt the final rule – which is effective 30 days after publication in the Federal Register – during their Sept. 23 meeting. The SEC said the new rule was aimed at more efficient claim processing, increased transparency to the structure used by the Commission in determining award amounts and making other changes that reflect the Commission’s experience overseeing the program.

The New SEC Whistleblower Rules and their Impact on Whistleblower Litigation

Whistleblowers are crucial to the Securities and Exchange Commission’s (SEC) ability to enforce regulatory standards. Because of their knowledge, they can help the SEC protect investors and capital markets, as well as hold those performing unlawful conduct accountable. Through Section 21F of the Exchange Act the SEC has power to award whistleblowers for the information they provide. Last month, an amendment was added to this section altering the rules of whistleblower award allocations.

A New Housing Crisis: Navigating Changing Guidelines and Relief in a Pandemic

Patrick Gilsenan Associate Editor Loyola University Chicago School of Law, Weekend JD 2023 Americans looking for relief and regulatory protections in the face of an eviction and foreclosure crisis have been met with a patchwork system of confusing, temporary, and difficult to navigate government programs. The eviction ban established by the CARES Act has expired, …
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The S&P 500 Index Committee Does Not Extend an Invitation to Tesla

Tesla satisfied the final requirement to join the S&P 500 when it announced its fourth consecutive quarter of profitability on July 22, 2020. As a result, investors speculated that the electric car maker would be added to the index in short order. However, on September 4, 2020, the U.S. Index Committee, the group responsible for managing the index, announced the addition of three new companies without mentioning Tesla. The news led to a 21% decline in Tesla’s stock price, the largest drop in the company’s history.

High-Frequency Trading and its Need for Increased Regulation

With the rapid innovation of technology penetrating our lives comes the need for increased regulation on the industries that are being impacted, and the stock market is no different. In the late nineties, the Securities and Exchange Commission (SEC) approved the use of an electronic stock exchange system and by 1998, they authorized the use of High- Frequency Trading (HFT). HFT is a method of electronic stock trading where the trader uses high powered technology to complete automated trading at a large volume and speed. Because these trades are not made by people, but instead computers, they can be executed within millionths of a second. As the speed that HFTs have allowed for stocks to be traded at has decreased over time, their popularity has increased. By 2012, it was estimated that HFT accounted for almost 50 percent of all U.S. equity trades. Their popularity is contributed to HFT’s ability to allow traders to ensure they have the most up to date information on the market and ensure that they get the lowest price. This gives traders the power to buy and sell at high speeds, increasing liquidity in the market.

Financial Regulation During COVID-19

Coronavirus (COVID-19) has shaken the world economy, not the least of which the financial industry.  As the financial industry has adapted to work-from-home life under the coronavirus pandemic, industry regulators such as the SEC and the Financial Industry Regulatory Authority (FINRA) have been forced to adapt rules to changing circumstances and shift their enforcement priorities to pandemic related fraud. 

Bipartisan Bill Seeks to Force Chinese Companies to Play by the Rules

On Wednesday May 20, the Senate unanimously passed legislation aimed to curb the ability of Chinese companies to avoid audit requirements. The bill was introduced by Republican Senator John Kennedy of Louisiana and Democratic Senator Chris Van Hollen of Maryland. Senator Kennedy provided the following comment in a press release announcing the legislation: “It’s asinine that we’re giving Chinese companies the opportunity to exploit hardworking Americans—people who put their retirement and college savings in our exchanges—because we don’t insist on examining their books. I hope my colleagues in the House will immediately send this bill to the President’s desk so we can protect Americans and their savings.”