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Sovereigns as Shareholders

66 Pages Posted: 6 Mar 2008 Last revised: 4 Jun 2010

Paul Rose

Ohio State University - Moritz College of Law; Bocconi University - BAFFI Center on International Markets, Money, and Regulation; Tufts University - The Fletcher School of Law and Diplomacy; Fundación Instituto de Empresa, S.L. - IE Business School

Date Written: November 22, 2008

Abstract

This Article considers the increasing impact of equity investments made by sovereign wealth funds. Observers have increasingly viewed sovereign investments with a high degree of suspicion due to the potential for the investments to be used as political tools rather than traditional investment vehicles. While this risk is considerable, much of the discussion surrounding sovereign investment ignores or minimizes the mitigating effect of a number of regulatory, economic, and political factors. This Article argues that continued vigilance, but not additional regulation, is necessary to ensure that U.S. interests are not jeopardized by sovereign investment in U.S. enterprises. While the United States is able to protect its interests in domestic markets, it is limited in the steps it can take to ensure that its interests are not harmed by politically-motivated sovereign investments in other countries. Many countries outside the United States do not have the regulatory structure or political power to adequately defend national interests. Due to the potential political harms associated with sovereign investing, this Article argues in support of the Santiago Principles, an international code of conduct for sovereign investments.

Keywords: sovereign wealth, insitutional investors, foreign investment

JEL Classification: F13, G18, G38, K20, K22

Suggested Citation

Rose, Paul, Sovereigns as Shareholders (November 22, 2008). North Carolina Law Review, Vol. 87, p. 102, Fall 2008. Available at SSRN: https://ssrn.com/abstract=1102254

Paul Rose (Contact Author)

Ohio State University - Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States

Bocconi University - BAFFI Center on International Markets, Money, and Regulation ( email )

Milano, 20136
Italy

Tufts University - The Fletcher School of Law and Diplomacy ( email )

Medford, MA 02155
United States

Fundación Instituto de Empresa, S.L. - IE Business School ( email )

Calle Maria de Molina 12, Bajo
Madrid, Madrid 28006
Spain

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