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For my second blog posting, I thought I would get into a bit of what I am working on in my research.

As Anne said in her intro, my work is interdisciplinary. The other discipline in which I work is moral philosophy and the branch of it that has to do with institutions, political philosophy. I believe that moral and political philosophy can help a great deal in our understanding of the law on banking, finance, and corporate governance, adding insights that often get overlooked in the dominant interdisciplinary approaches related to these areas of law. I have only a subsidiary interest in legal philosophy and to this end I would direct your attention to “Analytical Jurisprudence and the Concept of Commercial Law,” published in the Penn State Law Review in 2009, in which I developed a concept of a transnational commercial law on legal positivist grounds.

Some questions of interest to me are:

  • What is the moral responsibility of individual agents in mitigating collective harm associated with the financial system? “Individual agent” refer to any person with moral capacity, from homeowner to senior bank manager. Once we get clear on how to allocate moral responsibility, we can then decide whether regulation by law is required or preferred or whether ethics alone is enough.  
  • What is a fair or just distribution of systemic financial risk? How shall we structure institutions to get this distribution right?
  • Issues of egalitarian justice associated with debt and access to credit. Debt has a disproportionately greater adverse effect on the less well off, who tend to rely on it more to buy things necessary for a decent life in their society, such as housing, education, cars to get to work, health care (in the USA) etc.

See my article, “Luck, Justice and Systemic Financial Risk,” published in the Journal of Applied Philosophy. (email to request a copy). I am also working on another piece more for the law audience entitled “Debt in Just Societies”.  The abstract follows:

A post-Great Recession consensus has emerged that persons, firms, banks, and governments have too much debt. The article deals with legal solutions to the dilemma that debt presents to societies: successful societies benefit from a substantial

The latest example of dramatic institutional failure – that somehow was entirely accidental – comes to us from MetLife.

The story begins with variable annuities, a product that might be suitable if you’re trying to shelter your assets from a lawsuit, but otherwise one whose chief virtue lies in its capacity to serve as a litmus test for the honesty of your broker. 

After the financial crisis, insurance companies decided that their outstanding variable annuities were too good for existing customers, and began offering very high commissions to any brokers who could persuade their clients to exchange an older one for a newer, less generous model.

Enter MetLife.  From 2009 to 2014, MetLife brokers churned $3 billion worth of variable annuities, resulting in $152 million in dealer commissions.  Customers were told that the newer annuity was less expensive or comparable, when in fact, 72% of the time, this was, shall we say, not so much true.   For example, 30% of the replacement applications falsely stated that the new contract was less expensive than the old one.  Applications also failed to disclose benefits and guarantees that the customer would forfeit in making the exchange, understated the value of existing…

With this post I warmly welcome John Linarelli to the Business Law Professor Blog as a guest blogger for the month of May.  Professor Linarelli, Chair in Commercial Law at Durham Law School, has crossed the Atlantic and different disciplines throughout his career.  His research engages with issues of inequality, specifically focusing on economic and commercial issues.  Recent scholarly publications include his forthcoming co-authored book, to be published with Oxford University Press, Beyond Global Capitalism: Reclaiming the Future of International Law and his 2015 article Concept and Contract in the Future of International Law, 67 Rut. U. L. Rev. 61.  Interested readers can view Professor Linarelli’s full academic bio and his SSRN page for more information.  Look for new BLPB content from Professor Linarelli later this month.

Understanding that American academics and practicing lawyers may be unfamiliar with Durham University, Professor Linarelli provided us with an overview.  He writes a helpful introduction and provides a charming view into some different academic traditions:

Durham Law School usually ranks as one of the top 5 law schools in the UK.  In the UK-wide Research Excellence Framework (REF) exercise in 2014, of which all university participate, we ranked third.  Our students are incredible and a good number go off to the big City of London law firms upon completion of their practice qualifications. Lord Justice Hughes on the UK Supreme Court is an alum. We also run several LLM programmes, including in Corporate Law, International Trade and Commercial Law, European Trade and Commercial Law, and International Law and Governance.  

Securities regulations have increasingly required disclosure of, and shareholder input into, corporate executives’ pay.  For years, public corporations have been required to disclose the salaries of named executive officers, Dodd-Frank instituted (nonbinding) shareholder say-on-pay votes, and very soon, companies will be required to disclose the ratio of the CEO’s pay to median employee pay.

Many have argued that disclosure creates a Lake Wobegon effect:  No one wants to admit that their CEO gets below-average pay, and so disclosure ends up causing pay levels to rise across the board.

Now, a new study by Hongyan Li and Jin Xu looks at the effect in the context of CFO pay.  

Prior to 2006, the SEC required disclosure of the pay of five highest paid executive officers, including the CEO.  In 2006, however, the SEC changed its regulations to require disclosure of CFO pay, regardless of whether the CFO was one of the most highly paid.  The authors used the change as a natural experiment to discover the effect of disclosure on both CFO salary levels and CFO behavior.

Using a sample of S&P 1500 firms from 1999 through 2013, they find that at firms that had not previously disclosed CFO pay…

I wanted to drop a quick plug for the latest addition to the blawgosphere:  The Surly Subgroup: Tax Blogging on a Consolidated Basis.  My colleague, Shu-Yi Oei, is one of the founding members, and they’ve put together a really nice group of professors with a variety of interests who will post about a range of tax-related issues.  They just went live this week, but already there are a couple of posts up that may be of interest to BLPB readers, including one on the new regulations for Uber and Lyft drivers in San Francisco, one on whether organizations that distribute marijuana are eligible for charitable organization status for tax purposes, one on Donald Trump’s tax proposals, and one on Prince’s tax dispute with the French government.

If you’re like me, you have no idea what the phrase “Surly Subgroup” means.  No matter; Shu-Yi’s helpfully posted an explanation here.  Basically, affiliated corporate groups may file a consolidated tax return, raising questions about the extent to which losses in one can offset the income of another.  “Separate Return Limitation Year” (SRLY) rules govern that question for corporations that have losses prior to their affiliation with…

The Fulbright Scholar Program offers teaching, research or combined teaching and research awards in over 125 countries for the 2017-2018 academic year. Opportunities are available for college and university faculty and administrators, as well as for legal professionals and independent scholars.

This year, the Fulbright Scholar Program is offering over 90 awards in the field of Law. Exciting opportunities are available in many countries, including but not limited to:

We recently hosted a webinar on Fulbright opportunities in law. Staff provided an overview of awards open to academics and professionals, and a 2015-16 Fulbright alumnus spoke about his experiences and answered questions. Please follow this link to listen to the recording.

For further awards in the field of Law, please visit our new Opportunities in Law webpage. There you will find award highlights and examples of successful…