Modern capital and financial markets rely on a wide variety of complex instruments, including Treasury securities, structured debt and equity instruments, and derivatives of various kinds. Public awareness regarding these instruments has grown since the Financial Crisis of 2008 because they are thought to have played an important role in both the rapid growth of financial markets (“financialization”) and their destabilization. Yet these instruments and the role they play in modern markets remain little understood. A basic understanding of these instruments has now become important in modern financial law practice and any discussions on financial policy and regulation.
This course will review the workings of derivative instruments in the capital markets and how such instruments themselves are used. The relationship between banking and capital markets, and between government and the private markets, will be explored, as will the most important legal and fiduciary responsibilities involved. While not highly technical, the various principal types of government securities and derivatives will be examined.
Warren Buffet once called derivatives “weapons of mass financial destruction.” We will consider the numerous public policy issues relating to derivatives, their role in the Crisis of 2008 (and more recent financial distress such as the Eurozone crisis and the US debt ceiling controversy), the history of attempts to regulate these instruments, and the current regulatory structure.
The 3-credit graded requirements for the course will be:
- A final paper, about 25-30 pages in length, to be submitted by the Thursday, April 16, 2020 (last day of all classes) (75%); JD writing credit will be given to any JD students who present research proposals (see “Paper” above), approved by me, commit to completing their drafts for class presentation and subsequent comments by me (draft for comments by Friday March 20), and submit their final drafts in response to my comments by Thursday April 16, when all papers will be due.
- An individual class presentation, of 20 minutes in length (10%), on the early draft of the 3-credit paper; and
- Overall class participation (15%).The course will be highly interactive and graded on this basis. Class participants, probably in groups of two or three, will take turns in leading the class through the topic for the day (that will be found I the detailed syllabus as soon as it is completed). Class leaders can use slides or videos or both, and they will be expected to base their material on the assigned readings and subsequent updates.
The course will be highly interactive and graded on this basis.
|Course Areas of Practice|
Research paper, 25+ pages
Legal analysis and reasoning, legal research, problem-solving, and written and oral communication in the legal context