Search Results

Wall Street Meets the New Deal (1930–35)

Charles R. Geisst

in Wall Street: A History

The reaction from Washington to Wall Street woes. Hoover calls Senate investigation into market practices, Roosevelt wins White House, short selling depresses market, F. Pecora becomes lead counsel ... More

The reaction from Washington to Wall Street woes. Hoover calls Senate investigation into market practices, Roosevelt wins White House, short selling depresses market, F. Pecora becomes lead counsel for hearings. Wall Streeters give testimony. Congress passes banking and securities acts in 1933. Stock exchanges regulated in 1934 and SEC is created.Less

The Early Years (1790–1840)

Charles R. Geisst

in Wall Street: A History

The development of the NYSE from an outdoor market to the major marketplace in the country. The first major scandal after independence in NY; the role of private individuals in financing the war of ... More

The development of the NYSE from an outdoor market to the major marketplace in the country. The first major scandal after independence in NY; the role of private individuals in financing the war of 1812; raising cash for canals and turnpikes; and the role of individual traders, mostly in New York, in giving the exchanges a reputation as gambling dens rather than serious places to raise money.Less

Alfred Winslow Jones: 1900–1989: Financial Hippie

Edward Morris

in Wall Streeters: The Creators and Corruptors of American Finance

The chapter describes Alfred Winslow Jones and the development of the first hedge fund.

Trading and Market Integrity

John Armour, Dan Awrey, Paul Davies, Luca Enriques, Jeffrey N. Gordon, Colin Mayer, and Jennifer Payne

in Principles of Financial Regulation

This chapter reviews the regulation of trading activity in financial markets, focusing on three particular forms of regulated conduct in the market, namely market manipulation, insider trading, and ... More

This chapter reviews the regulation of trading activity in financial markets, focusing on three particular forms of regulated conduct in the market, namely market manipulation, insider trading, and short selling. Market manipulation (in the form of trade-based manipulation and information-based manipulation, or securities fraud) and insider trading are prohibited in all major jurisdictions. If permitted to occur, these activities would be likely to cause systematic losses to market makers, who will increase their bid–ask spreads in order to compensate themselves. These costs will in turn be passed on to investors, making it more costly for them to buy and sell securities, which will correspondingly reduce investors’ willingness to participate in the market, meaning issuers will face a higher cost of capital. On the other hand, restrictions on short selling—which have been introduced, following the financial crisis, in a number of jurisdictions—are much harder to justify.Less

Short Selling and Jewish Law

Aaron Levine

in Economic Morality and Jewish Law

This chapter examines the definition, nature, and procedure of the short selling principle from the standpoint of Jewish law. It discusses the following applications of short selling: naked short ... More

This chapter examines the definition, nature, and procedure of the short selling principle from the standpoint of Jewish law. It discusses the following applications of short selling: naked short selling in the economic collapse of Lehman Brothers Holdings, Inc., vanilla variety, short selling a competitor's stock, and short selling that creates a false impression. It also presents the principle of short selling as a stability and economic efficiency tool used by the Jewish government.Less

Cum-Ex in Concept

Richard S Collier

in Banking on Failure: Cum-Ex and Why and How Banks Game the System

This chapter examines the essential features of the cum-ex trade and outlines the ‘base template’ which was the foundation for the later refinement and expansion of the trade. The chapter begins by ... More

This chapter examines the essential features of the cum-ex trade and outlines the ‘base template’ which was the foundation for the later refinement and expansion of the trade. The chapter begins by dealing separately with a number of the individual components that are relevant to the cum-ex trade: it explains the concept of dividend arbitrage, the workings of withholding taxes and tax credits, the distinction between cum-dividend and ex-dividend share sales, the idea of a settlement time lag, the workings of the dividend adjustment mechanism, and the concept of short selling. The discussion then explains how these individual components were assembled and synchronized in order to deliver the basic cum-ex trade.Less

Angry Shareholders

Lodewijk Petram

in The World’s First Stock Exchange

This chapter examines the dispute between shareholders and the Dutch East India Company over the Company’s policy. In the early seventeenth century, Isaac le Maire, one of the founders of the ... More

This chapter examines the dispute between shareholders and the Dutch East India Company over the Company’s policy. In the early seventeenth century, Isaac le Maire, one of the founders of the Company, became embroiled in a protracted lawsuit with the directors of the Amsterdam chamber—his former colleagues. Why was le Maire suddenly at loggerheads with his fellow directors? The whole affair started with the management of the Company of the Fourteen Ships (Compagnie van de veertien schepen), where he was one of the directors. However, another dispute between le Maire and the Company is of greater significance. It was about Company shares. To make life difficult for the directors, le Maire had devised a very cunning plan: utilize the trade in VOC shares. The first step in le Maire’s syndicate’s plan was the forward selling of shares, followed by naked short selling. A ban on naked short selling put an end to le Maire’s illicit practices as far as share trading was concerned, but other shareholders began to express their dissatisfaction with the Company’s policy.Less

The Legal Limits to Agencification

Merijn Chamon

in EU Agencies: Legal and Political Limits to the Transformation of the EU Administration

This chapter looks into the legal limits to the establishment and empowerment of EU agencies, firstly from the perspective of the principles of conferred powers, subsidiarity, and proportionality. ... More

This chapter looks into the legal limits to the establishment and empowerment of EU agencies, firstly from the perspective of the principles of conferred powers, subsidiarity, and proportionality. While the EU lacks the explicit competence to establish agencies, an implied competence to do so is found. Regarding subsidiarity and proportionality, a tension between the two principles and within proportionality is noted, whereby subsidiarity pushes the legislator towards significant empowerments of EU agencies, while proportionality requires the legislator to grant modest powers. However, granting only modest powers would also result in the disproportionality of establishing a new agency in the first place. The chapter then looks into the relevance of Meroni, Romano, and the institutional balance, clearly distinguishing these three ‘obstacles’ to further agencification. The analysis is juxtaposed with the Court’s ruling in Short-selling (C-270/12), showing how the Court has not paid sufficient attention to the institutional balance and the issue of control.Less

How Optimism and Positive Thinking Can Limit Learning

D. Christopher Kayes

in Organizational Resilience: How Learning Sustains Organizations in Crisis, Disaster, and Breakdown

Until the breakdown of Lehman Brothers in 2008, the single largest bankruptcy in history lay at the hands of a few overly optimistic executives at a company called Enron. Enron, one of the most ... More

Until the breakdown of Lehman Brothers in 2008, the single largest bankruptcy in history lay at the hands of a few overly optimistic executives at a company called Enron. Enron, one of the most highly regarded companies in the world, became the victim of its own optimism and a culture of optimism contributed to the company’s eventual bankruptcy. Overly optimistic projections and early wins can encourage overconfidence in an organization’s strategy and in turn, limit learning. Optimism can be countered by contrarian thinking, a form of learning that seeks to expose potential vulnerabilities and unintended consequences of actions. Competitive organizational intelligence, in the form of critical analysis of organizational capabilities and vulnerabilities, can help organizations overcome the perils of optimism and improve learning in organizations.Less

Controlling Agencification

Merijn Chamon

in EU Agencies: Legal and Political Limits to the Transformation of the EU Administration

Given the fourth chapter’s conclusion that the Court in Short-selling has not sufficiently taken into account the issue of controlling agencies, this chapter tries to identify the degree of control ... More

Given the fourth chapter’s conclusion that the Court in Short-selling has not sufficiently taken into account the issue of controlling agencies, this chapter tries to identify the degree of control that is appropriate and necessary. To do so, the chapter starts with a comparative excursion, looking at how independent agencies function in two other federal polities, the US and Germany. This is juxtaposed with the actual control over EU agencies currently exercised by the Member States and the institutions. It is then found that the control mechanisms of the Commission and the Parliament ought to be strengthened. Since judicial control complements political control, the chapter finishes by looking into the position of EU agencies in EU procedural law. While the Treaty of Lisbon has mended the most acute lacunae, it also leaves open some questions related to the EU agencies’ position in the EU institutional setup.Less

Conclusions and Proposal

Merijn Chamon

in EU Agencies: Legal and Political Limits to the Transformation of the EU Administration

The final chapter presents the key conclusions drawn from the preceding chapters. These chapters have shown that the EU agencies function in legal and political uncertainty, given the constitutional ... More

The final chapter presents the key conclusions drawn from the preceding chapters. These chapters have shown that the EU agencies function in legal and political uncertainty, given the constitutional vacuum in which they operate and given the lack of a binding framework in secondary law. While the Court’s sanctioning of agencification in Short-selling (C-270/12) could at first sight be seen as remedying this problem, it actually only makes it more pressing: EU agencies can exercise significant powers but the EU’s primary and secondary law framework do not fully recognize this. As a result, the present chapter concludes the volume by exploring the possibility of introducing a workable legal basis for the establishment and empowerment of EU agencies in EU primary law. To construct such a legal basis, previous suggestions (put forward by scholars or in intergovernmental conferences) are assessed and commented upon.Less