LL.M. Graduate Research Papers Copyright (c) 2013 Cornell Law Library All rights reserved. http://scholarship.law.cornell.edu/lps_LLMGRP Recent documents in LL.M. Graduate Research Papers en-us Thu, 25 Apr 2013 01:47:06 PDT 3600 Restricted Investment in Private Equity: The Volcker Rule's Incursion Into Banking? http://scholarship.law.cornell.edu/lps_LLMGRP/3 http://scholarship.law.cornell.edu/lps_LLMGRP/3 Tue, 23 Apr 2013 08:23:09 PDT Investment in private equity originally came from individual investors and corporations. However, over the years institutional investors have become prominent in the investor pool with the hope of achieving risk adjusted returns. Banks have become significant sources of funds in the private equity market. Bank affiliate groups account for a significant share of the private equity activity as well as the banks’ own capital. A distinct feature of a leveraged buyout by a private equity firm as opposed to strategic buyouts and other transactions is the significant reliance on debt financing. Typically, shell companies with substantially no assets would be formed by the private equity firms to effect the buyout. A substantial portion of this buyout would be funded by investment banks or possibly commercial banks, issuing high yield debt and other related financial offerings. This structure makes the banks very crucial players in the buyout and exposes them directly to the risk of the upshot of the buyout. Private equity opens avenues for diversified and promising returns. But, investment in private equity, perceived as more risky and volatile as opposed to other publicly traded securities, is being viewed by the government as less favorable in the current market dynamics. The nature of these businesses being high leveraged, make them more likely to falter in a crisis, thus adding to the systemic risk of the investors. In 2007, the housing bubble burst and the economy took a hit, exposing a host of risky lending and investment practices. The banking sector was especially found at the center of the economic ruin. Banks involved in a variety of arenas outside the conventional commercial banking sphere became particularly critical in this economic situation. The regulators’ approach towards the banks has been censorious in various respects. Owing to the nature of private equity investment practice and the economic conditions of the US market, Section 619 of the Dodd Frank Act, known as the Volcker Rule, was proposed prohibiting banks from investing in proprietary trading and further banning investment in hedge funds and private equity, with the view that such funds can be alternative vehicles for proprietary trading. The regulatory agencies currently are in the process of formulating rules in connection with the new law. Having opened the floor for comment from various financial entities, experts, international organizations and individuals, the legislators have received mixed responses to the proposed rules. This paper critically examines the rules by putting forward different perspectives towards their implementation and effects.

]]> Manasa Reddy Gummi Comparative Foreign Direct Investment Law: Determinants of the Legal Framework and the Level of Openness and Attractiveness of Host Economies http://scholarship.law.cornell.edu/lps_LLMGRP/1 http://scholarship.law.cornell.edu/lps_LLMGRP/1 Fri, 23 Jun 2006 12:03:53 PDT Foreign direct investment, henceforth denoted FDI, constitutes a basic component of the ongoing economic globalization. The latter phenomenon refers to the increasing economic interdependence of countries in the sense that today goods, services, capital and technologies are exchanged or diffused on a truly global market, accompanied by an unprecedented cross-border flow of human resources.

A large majority of states on every continent have been liberalizing or further liberalizing their investment policies and laws over the last decades. The substantial impact and role of international instruments and organizations on this progressive liberalization process has been stressed on both the global and international regional levels. The narrow interrelation between international investment and international trade, which both constitute key components of the ongoing economic globalization, has accelerated this trend towards more FDI hospitability, i.e., less legal and regulatory FDI barriers.

A country’s FDI framework can theoretically be divided into a certain number of legal components or determinants, both national as well as international. A thorough understanding of those elements facilitates the efficient analyzing of national law in this field. Moreover, those factors constitute as many criteria to measure and define the degree of openness and attractiveness of a country towards FDI inflows and to compare its legal and regulatory framework with that of other states. Understanding the interaction between those different determinants and determining how they can serve to define the specific system of a host economy and its degree of hospitality towards FDI in comparison with other states constitutes the main objective of this paper.

]]> Jean-Yves P. Steyt Law and Economics