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Winning Losses: Trading Injunctions and the Treatment of Net Operating Loss Carryovers in Chapter 11

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Bankruptcy judges routinely enjoin debt and equity trading during Chapter 11 proceedings in order to protect bankrupt corporations’ net operating loss (NOL) tax credits. These credits disappear if a corporation changes ownership. Firms and judges reason that Chapter 11’s automatic stay prohibits any trading that would imperil NOL credits by causing a change in ownership. […]

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Licensee Patent Challenges

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We analyze contractual clauses which limit the ability of licensees to challenge patents at the basis of their licensing agreements. In particular, we study no-contest clauses, which prohibit licensees from contesting the validity of the patent, and challenge-penalty clauses, which penalize licensees for doing so. We develop a model that we use to compare three […]

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Managing Regulatory Blindspots: A Case Study of Leveraged Loans

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Leveraged loans have reached new peaks in the post-crisis period. This Article assesses U.S. leveraged loan regulation and highlights the ways in which the entity- or institution-based focus of regulation have been the source of critical blindspots that have limited the ability of regulators to monitor and address the risks of leveraged lending. First, the […]

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Adjudicating Corporate Auctions

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In light of recent developments in auction theory, this Article re-examines Delaware corporate law governing directors’ actions when structuring the sale of a corporation. A foundational doctrine of Delaware law is that when the board of directors resolves to sell a corporation, it must obtain the highest price reasonably available. Auction theory posits that, in […]

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The Flawed Mechanics of Mutual Fund Fee Litigation

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In this Article we identify a number of serious mechanical flaws in the statutes and judicial doctrines that govern fee liability for mutual fund managers. Originating in Section 36(b) of the Investment Company Act, mutual fund fee liability allows investors to sue managers for charging fees above a judicially created standard. Commentators have extensively debated […]

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The Development of Opacity in U.S. Banking

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An examination of U.S. banking history shows that economically efficient private bank money requires that information-revealing securities markets for bank liabilities be closed. That is, banks are optimally opaque, which is why they are regulated and examined. This Article examines the transition from private bank notes, the predominant form of money before the U.S. Civil […]

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Shadowy Banking: Theft By Safety Net

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Shadowy Banking is financial activity that is engineered to extract implicit subsidies from government safety nets. It substitutes innovative corporate entities and products for activities that could be performed more straightforwardly within a traditional banking firm. The shadows obscure organizational forms and transaction strategies that circumvent regulatory restraints and extract subsidies by regulation-induced innovation. Because […]

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Capital and Liquidity Requirements: A Review of the Issues and Literature

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In this Article I review the literature on the conceptual and analytical arguments for and against capital adequacy and liquidity requirements for banks, in light of historical and recent experiences and evidence. Much research argues for higher capital adequacy requirements given their beneficial effects in terms of better incentives, greater buffers, and improved interventions in […]

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Dynamic Loss Probabilities and Implications for Financial Regulation

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Much of financial regulation and supervision is devoted to ensuring the safety and soundness of financial institutions. Such micro- and macro-prudential policies are almost always formulated as capital requirements, leverage constraints, and other statutory restrictions designed to limit the probability of extreme financial loss to some small but acceptable threshold. However, if the risks of […]

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Disclosure Universes and Modes of Information: Banks, Innovation, and Divergent Regulatory Quests

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In 2013, a new system for mandatory public disclosure came into effect, the first since the creation of the Securities and Exchange Commission (SEC) in 1934. Today, major banks and certain other entities must make disclosures mandated not only by the SEC, but also by a new system developed by the Federal Reserve Board and […]

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Getting Incentives Right: Is Deferred Bank Executive Compensation Sufficient?

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In the wake of the global financial crisis, attention has often focused on whether incentives generated by bank executives’ compensation programs led to excessive risk-taking. Post-crisis, compensation reform proposals have taken broadly three approaches: long-term deferred equity incentive compensation, mandatory bonus clawbacks upon accounting restatements and financial losses, and debt-based compensation. In earlier articles we […]

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Merging and Dissolving Special Districts

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Special district governments exist in every state, providing services ranging from protection against fire to protection against fire ants. These governments are easy to form, but often they are difficult to dissolve or consolidate. Nevertheless, in many states, the number of special district governments is declining. This Comment draws on statistical analyses and interviews with […]

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Don’t Bury the Competition: The Growth of Occupational Licensing and a Toolbox for Reform

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In recent years, states have subjected more occupations to burdensome regulatory requirements that are often imposed to fetter competition. There is broad agreement that many such restrictions reduce consumer welfare and impose particular burdens on economically disadvantaged groups. This Note examines why existing tools have failed to constrain this protectionist trend. Drawing upon U.S. and […]

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Search, Antitrust, and the Economics of the Control of User Data

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This Article argues for reorienting many antitrust investigations–and more generally regulatory approaches–to focus on how control of personal data by corporations can entrench monopoly power in an economy shaped increasingly by the power of “big data.” What is largely missed in analyses defending Google from antitrust action is how Google’s ever expanding control of user […]

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Off the Record: The National Security Council, Drone Killings, and Historical Accountability

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The central and expanding role of the National Security Council in compiling the “kill list” of U.S. citizens and others approved for drone killing outside of recognized battlefields highlights the largely overlooked fact that, since the mid-1990s, the U.S. government has taken the categorical position that the National Security Council is exempt from both the […]