Category:Finance & Banking
The Problem With Financial Transaction Taxes: When It Pays to Leave, Instead of Comply
Chicago has a number of nicknames and “Derivatives Capital of the World” is one of them, as the city is home to CME Group and CBOE, two major U.S. exchange operators. The city risked this title in 2020 with the push for the LaSalle Street Tax, a financial transaction tax (“FTT”) that would impose a tax on trades made by Chicago exchanges. This tax was an attempt to fill the city’s billion dollar 2021 budget shortfall, but failed in large part because the evolution of trading has made these operators incredibly mobile. In a Chicago City Council meeting, Terry Duffy, CEO of CME Group, made it clear the imposition of the LaSalle Street Tax wouldn’t result in more revenue for the city, but a great deal of empty office space instead. For now, the LaSalle Street Tax is off the table in Chicago, but other governments, like New Jersey, are considering similar taxes. States considering FTTs ought to look at the pushback in Chicago and understand that mobility is the inevitable defense to such a tax.
Lawmakers and Regulators Call for Action After Archegos Meltdown
Last week, the finance industry watched one of the biggest implosions of an investment firm since the 2008 financial crisis. Archegos Capital Management rocked the industry when it was forced to liquidate huge positions in blue-chip companies after some risky investment strategies went south. The financial instruments used in this risky investment strategy are called total return swaps. The Archegos meltdown has lead lawmakers and regulators to call for increased scrutiny of the swaps.
The Freedom to Retire Sustainably: Biden takes on Trump-era rules regarding ESG funds
In the last days of the Trump administration, the Trump Department of Labor (“DOL”) finalized a rule that made it more difficult for socially conscious investments to be included in retirement plans. The Trump-era rule discouraged employer 401(k) and other retirement plans from offering funds from managers that consider Environmental, Social and Governance (“ESG”) factors over investment returns or risk in their due diligence. Despite this, ESG funds continue to gain in popularity, and the new Biden administration has stated that it will not enforce the Trump-era rule as it considers reversing it.
The Cash Crop King: How U.S. Federalism Makes It Difficult to Insure the World’s Most Lucrative Crop
On June 25, 2019, Governor Pritzker signed the Illinois Cannabis Regulation and Tax Act, legalizing cannabis for adult use in Illinois. Cannabis is the most lucrative crop globally and the cash-making abilities of cannabis have been proven true in Illinois. Sales in the state exceeded $1 billion in the first full year of legalization, resulting in a $205.4 million tax windfall for Illinois. This success, however, is no small feat for cannabis companies considering the banking and insurance obstacles they must overcome to start this type of business. Federalism is at the heart of many of these hurdles.
McKinsey Reveals Management Issues in Rejecting Top Partner’s Bid for Reelection
In February 2021, McKinsey and Company’s 650 global partners turned down Kevin Sneader’s bid for a second three-year term as the firm’s lead partner. The rejection marked the first time in 40 years the storied consulting firm has opted not to offer its leader a second term. The vote came as McKinsey struggles to reconcile its lucrative business model with a series of ethical lapses that have been widely reported in the press, litigated in the courts, and questioned by some of the firm’s next generation of leaders.
An Update on the Gamestop Frenzy: Calls for Regulation and a Congressional Hearing
Cora Leeuwenburg Associate Editor Loyola University of Chicago School of Law, JD 2022 The controversy surrounding the unprecedented movement by retail investors and Gamestop has not died down in the last month following the stock’s meteoric rise in price and dramatic fall. The wildly volatile stock has lost hedge funds millions and resulted in …
Read more
In the Aftermath of Identity Theft: What You Need to Know About the Fair Credit Reporting Act
For me, it started with a phone call. Normally I do not answer calls from unknown numbers. But that day I did. The woman on the other end of the line informed me that she was calling on behalf of a debt collection agency. Sensing my confusion, she explained, “We’ve been trying to reach you regarding your outstanding balance with Sprint.” That did not make sense, I insisted. I had never been a Sprint customer in my life. After a brief pause, she asked, “Have you ever been the victim of identity theft?”
One of Wall Street’s Hottest Trends: The SPAC
SPACs have been around for decades and often existed as last resorts for small companies that would have otherwise had trouble raising money on the open market. But they’ve recently become more prevalent because of the extreme market volatility caused, in part, by the global pandemic.
While many companies chose to postpone their IPOs due to the pandemic, others chose the alternate route to an IPO by merging with a SPAC. A SPAC merger allows a company to go public and get a capital influx more quickly than it would have with a conventional IPO.
Market Regulation Issues Raised by the Gamestop Buying Frenzy
The regulation of hedge funds has largely been unchecked allowing big Wall Street players to manipulate the market for the benefit and at the detriment of other investors. But forced by an unprecedented movement of retail investors, Wall Street is being forced to reckon with the hypocrisy of their practices.
Bitcoin, Tesla, and GameStop: Regulatory Challenges Posed by the New Retail Investor
GameStop started 2021 with a stock price below $20 but saw its stock price skyrocket to well above $300 a share towards the end of January. The rally would be hard to explain by solely relying on the company’s financial reports or underlying fundamentals. Instead, the rally has to be explained through a combination of external factors involving a popular fintech company’s app, manic speculation by retail investors, and Reddit. Although at first glance this may seem like a new phenomenon, the same factors have been at play for years with a huge interest in Tesla and Bitcoin – and they pose a risk to the markets that regulators and Wall Street together can’t ignore.