The constant refrain of the regulators is that firms must reduce risk. It sounds good in theory (leaving aside the regulators' caveat that the major way to reduce risk seems to be to hold government securities), but if the banking regulators had their way, even private funds would be permitted only to take a limited amount of risk. Surely, someone must be allowed to take economic risks, but who will it be?

The fact that the government lost an insider trading case is likely to renew its legal focus on the Newman case (, 773 F.3d 438 (2d Cir. 2014)), in which the Department of Justice failed to demonstrate that traders who arguably had received inside information and traded on it were guilty of a crime. As in the present case, one element of the defense in Newman was the lack of any material benefit received by the tipper for the tip. However, the Newman defense had another significant prong –…

The ESA's report is bleak. It is interesting to note that many of the financial sector problems identified in the report are traceable to governmental action. For example, governments forced interest rates down to levels that make lending money unprofitable. Resulting bubbles in asset values are vulnerable to collapse. Governmental borrowing, like that of (but not limited to) Greece is allowed despite the fact that such entities are not financially solid in the long term. The report warns…

Leaving aside the issue of whether the stay initiatives are good policy for the markets overall, the MFA raises two interesting questions: (i) are the regulators overreaching by (essentially) attempting to amend the U.S. Bankruptcy Code by regulatory fiat?; and (ii) are bank regulators' favoring the entities that they directly regulate (i.e., banks) over market participants generally (i.e., including the buy side). Neither the policy question, nor the questions as to the authority and the…