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mutual recognition August 25, 2008

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The Australian Government, ASIC and the SEC today announced the signing of a mutual recognition agreement under which each of the two regulators will consider providing exemptions to broker-dealers and exchanges regulated in the other jurisdiction. SIFMA gave the announcement a cautious welcome:

SIFMA will provide more detailed comments on the mutual recognition proposal once the new framework has been analyzed by the industry.

SIFMA has some concern that this initiative might undermine the proposals for a more general relaxation of the conditions under which foreign broker-dealers interact with US persons.

upcoming events at um law August 23, 2008

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Tuesday, August 26, 2008, 12:30-2:00 p.m.
Alma Jennings Foundation Student Lounge at the Law School
1311 Miller Drive, Coral Gables

Prof. Pedro J. Tenorio Sanchez
Professor on the Law Faculty of the Universidad Complutense de Madrid
Constitución, derechos fundamentals, seguridad y paz: panorama comparativo
(Constitution, fundamental rights, security and peace: a comparative panorama)

Thursday, September 4, 2008, 12:30-2:00 p.m.
Room E352 at the Law School
1311 Miller Drive, Coral Gables

Dr. Francisco Fontecilla
Asesor del Defensor del Pueblo de España (Advisor to the Ombudsman of Spain)
La Corte Penal Internacional
(The International Criminal Court)

litigation and disclosure August 22, 2008

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On the face of it, it would seem that investors might reasonably want to have reliable information about the likelihood that securities issuers would incur significant litigation-related losses. But FASB’s Exposure Draft on Disclosure of Certain Loss Contingencies, which proposes some changes to the current approach to this issue, has been attracting a lot of flak. The big accounting firms don’t seem to like it much. SIFMA’s comment letter on the exposure draft raises some complex issues about the relationship between litigation and disclosure, and clearly shows the influence of the chief counsel and litigation counsel of financial firms (listed in the letter), members of SIFMA’s litigation committee, who were involved in the production of the comment letter. The letter claims to be particularly deserving of notice because the firms represented are both users and producers of financial statements. One concern is that disclosure would interfere with the ability of firms to defend themselves against law suits. Another is the claim that the new approach would weaken attorney-client privilege. But the claim I find most troubling is that litigation outcomes are so unpredictable that more detailed disclosures about litigation contingencies could only be misleading and might be worse than no disclosure at all. The letter makes the practice of law sound like some sort of mysterious and occult endeavor, rather than a professional activity.

reading ages August 19, 2008

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I was surprised to see that a large number of authors and others in the UK, led by Phillip Pullman, are campaigning against indications of age guidance on book covers. They have a number of reasons for doing so, one of which is that:

Everything about a book is already rich with clues about the sort of reader it hopes to find – jacket design, typography, cover copy, prose style, illustrations. These are genuine connections with potential readers, because they appeal to individual preference. An age-guidance figure is a false one, because it implies that all children of that age are the same.

I have no idea why they are so upset. The Publishers’ Association has been thinking for some time about this issue and thinks that age guidance will encourage people to buy books. US published books for young people are marked with suggested age ranges. They are often not very prominent – you can find them if you look, but they don’t jump out at you – but they can be useful. Do these authors really want children to learn to make purchasing decisions based on the manipulations of marketers who design the packaging for products rather than on data about what is inside?

tropical storm fay August 17, 2008

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We’re beginning the new school year watching tropical storm Fay via the national hurricane center. She seems to be heading west of us right now. But, as always, we can feel guilty for avoiding the pain that falls on others.

regulatory budgets and collective action August 8, 2008

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In the same week that the UK’s Department for Business published its consultation document on Regulatory Budgets – the latest chapter in the Better Regulation saga – the Civil Justice Council published this week a 483 page document on Improving Access to Justice through Collective Actions’ : A Series of Recommendations to the Lord Chancellor. Collective action is a hot topic in the EU right now. Key Finding 1 of the collective action report is that:

Existing procedure does not provide sufficient or effective access to justice for a wide range of citizens, particularly but not exclusively consumers, small businesses, employees wishing to bring collective or multi-party claims.

But the implications of the BERR consultation document would seem to include making improving access to justice more complex, as it includes discussion of:

how to identify and capture the specific costs arising from regulation (i.e. enforcement activities, self-funding regulations, contractual obligations and legal proceedings) within a system of regulatory budgets

On reading the consultation document I’m not clear whether the costs associated with litigation (as opposed to regulatory action) resulting from regulations would be included in the regulatory budgets. But if they were, any expansion of collective action rights that would make it easier for citizens to enforce their rights would increase the costs of new regulations granting rights to citizens, thus making such regulations less likely in a regulatory budgets environment.

silly season in parliament? August 8, 2008

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The UK’s Public Administration Select Committee’s Fourteenth Report on how to achieve a balance between the public interests in allowing former ministers and civil servants to publish information relating to their jobs and in keeping some of that information secret has a title with some rather unsavory connotations: Mandarins Unpeeled: Memoirs and Commentary by Former Ministers and Civil Servants.

credit and securitization August 7, 2008

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Before the collapse of the sub-prime lending market the securitization industry tried to fend off a lot of attempts to regulate sub-prime lending by arguing that to do so would deprive consumers of needed credit. The strategy worked reasonably well then so why not keep pushing it? The American Securitization Forum comments on proposals to regulate unfair or deceptive practices with respect to credit cards as follows:

We are concerned, however, that the Proposed Rule too greatly restricts issuers’ ability to re-price interest rates, apply payments, and charge appropriate and disclosed fees. As drafted, the impact of the Proposed Rule’s restrictions on pricing will likely limit the scope and increase the cost of credit products available to consumers because, in part, it will heighten risks and increase costs associated with credit card asset backed securities (“ABS”) for secondary market participants that will necessarily be passed on to consumers. In contrast, a proposal that preserves credit card issuers’ ability to re-price for borrower default risk, maintains their flexibility in applying payments, and protects issuers and investors from litigation risk in connection with existing accounts, will ensure that consumers enjoy continued access to low cost and convenient credit products and services.

Perhaps there’s a simpler solution – if consumers weren’t exploited they wouldn’t feel the need to litigate?

use of 'consequential loss' in consumer contracts unfair in uk August 7, 2008

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The FSA says:

Under the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations) firms must ensure that they express any written term of a standard-form consumer contract in plain, intelligible language. In our view, a term which excludes ‘consequential loss’ is not written in plain, intelligible language, as it refers to an expression that has a legal meaning. We do not believe that the average consumer would understand the terminology, and therefore what they are not covered for under the policy.

The FSA that the following formulation is clearer, although it seems to me to involve issues of interpretation of the word “direct”, and therefore to contain some (unavoidable) ambguity:

‘We will only pay costs which are incurred as a direct consequence of the event which led to the claim you are making under this policy’.

fairtrade in the city of london August 6, 2008

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The City of London Fairtrade Steering Group has a really beautiful website. But the latest item on the news and events page is dated March 2008. More form than substance?