JOHN C. COFFEE, Columbia Law School
Email: jcoffee@law.columbia.edu
HILLARY A. SALE, University of Iowa - College of Law
Email: hillary-sale@uiowa.edu

The 2008 financial crisis has necessarily raised the question of regulatory redesign. Were regulatory failures responsible to any significant degree for the insolvency of the major investment banks? Even prior to the crisis's cresting, the Treasury Department issued a "Blueprint" in early 2008 concluding that the regulation of financial institutions in the U.S. was overly fragmented. This paper analyzes both the Treasury Department's proposals and the role of the SEC in the rapid increase of leverage at major investment banks in the 2005 to 2008 era that led to their insolvency. Finding the SEC to be more competent at consumer protection and anti fraud enforcement than at prudential financial regulation, this paper supports a "twin peaks" model for financial regulation in preference to either a universal regulator or the U.S.'s current system of "functional regulation." It disagrees, however, with the Treasury's recommendation of greater reliance on self-regulation and "principles" over "rules," finding that deference to self-regulation was at the heart of the SEC's recent failure in the Consolidated Supervised Entity Program and provides a paradigm of when self-regulation will fail. An alternative (and more modest) proposal is also made to Treasury's proposed preemption of state securities regulation. This article will appear in the 75th Anniversary SEC Symposium in the Virginia Law Review.

DIRK A. ZETZSCHE, Heinrich Heine University Duesseldorf - Faculty of Law - Center for Business & Corporate Law (CBC)
Email: zetzsche@uni-duesseldorf.de

This paper in German language summarizes recent developments in the law of collective investment schemes on the European level. It is structured in three parts. The first part deals with retail investment funds. In particular, it discusses the European Commission's proposal for a reform of Directive 85/611/EC published in July 2008 as well as the addendum proposed by CESR on 31 Oktober 2008 for the European passport for the UCITS management company. Moreover, the paper considers the extension of the UCITS framework into the sphere of non-harmonised Collective Investment Schemes (such as real-estate funds, hedge funds, commodities funds, and private equity). The second part summarizes the policy debate on a harmonized framework for sophisticated investments. This includes the proposals for a European private placement regime as well as a "Directive" on Hedge Funds and Private Equity, as suggested by the European Parliament's initiatives called Lehne-Report and Rasmussen-Report. The third part takes a look at the European approach towards Sovereign Wealth Funds and the legal embedding of the Santiago-Principles in the civil laws of the Member States. A brief look on financial stability funds established by the Member States in order to counter the financial markets and banking crisis completes the picture.

ULRICH NOACK, Heinrich Heine University Duesseldorf - Faculty of Law - Center for Business & Corporate Law (CBC)
Email: ulrich.noack@uni-duesseldorf.de

This is a manuscript in German language of my presentation held at the joint conference sponsored by the Verband der Hochschullehrer fuer Betriebswirtschaft (transl. Association of Business School Professors) and the Deutsches Aktieninstitut e.V. in October 2008. It analyzes which current trends impact on the legal framework for shares? I decipher three such trends, each of which refer to some form of dissolution. These include the dissolution of the share as 1. a materialized security, 2. a factor determining the size of shareholders' equity, and 3. a legal basis for members' rights.

With the dissolution of the share as materialized security, we experience difficulties in the transfer of shares as well as in defining and finding out who the shareholders are. Thus, I define as a first legal trend that banking law on custodians and depositories substitutes for securities law and supplements corporate law. With the dissolution of the share as factor for determining the size of shareholders' equity, characterized by a steady deviation from shareholders' nominal capital as a legal factor, the law substitutes for creditor protection formerly provided by the capital system through some kind of personal liability system. The dissolution of the share as a legal basis for members' rights is characterized by the deviation from the one share - one vote principle as well as the derogation of the individual right to contest a shareholders' meeting in favour of a threshold-based right which focuses on large and institutional investors. This third kind of dissolution is furthered by synthetic investment through derivatives. In return, legislators expand their legal regimes in order to include positions stemming from synthetic investment structures.

ANGELA B. ANDREWS, Wayne State University - Accounting Department
Email: angela.andrews@wayne.edu
SCOTT C. LINN, University of Oklahoma - Michael F. Price College of Business
Email: slinn@ou.edu
HAN YI, University of Oklahoma
Email: han.yi@ou.edu

The SEC amended its rules on executive compensation disclosure in 2006, providing transparent disclosures to investors regarding stealth compensation items (e.g., executive perks and pensions). Using 608 S&P 1500 firms' 2007 proxy statements, we provide three tests relating to the executive perquisite consumption. First, to provide further evidence on mixed results from prior research (Rajan and Wulf 2006, Yermack 2006), we re-examine whether executive perquisites reflect agency problems or serve a legitimate purpose. Consistent with the agency cost argument, we find that firms with weak corporate governance are more likely to award perquisites to executives. Second, we document that a small number of firms with abnormally high CEO compensation prior to the new rules reduce or eliminate perquisite programs following the new rules. Finally, we find some evidence that weakly governed firms that hid large amounts of CEO perquisites prior to the new rules experience a negative market reaction after their proxy statements are released. These results appear to be consistent with the idea that the SEC's increased compensation disclosure requirements can help investors to unravel managerial motives behind perquisite awards.

MARK HUMPHERY VON JENNER, Australian School of Business at UNSW, J.P. Morgan
Email: m.humpheryvonjenner@gmail.com

Corporations Act (Cth) 2001 s 1041E gives investors a right to trade in a market that is free of false statements. Section 1041I gives investors compensation for loss or damage caused 'by' conduct that breaches s 1041E. However, the court's current approach to when loss is caused 'by' breaches of s 1041E is confused and does not quadrate with the nature of false statements. This paper examines the interpretation of 'by' to determine the appropriate causal nexus between breach of s 1041E and compensation under s 1041I.