Civil liability of credit rating agencies - regulatory all-or-nothing approaches between immunity and over-deterrence

The European Commission recently put forward a proposal for a regulation to amend and strengthen the 2009 version of the EU's rules on the regulation of credit rating agencies ("CRA3"). Among other things, Art. 35a of the draft proposal introduces strict liability for rating agencies. This liability proposal is at odds with the aim to strengthen competition in the rating sector and could have a chilling effect on capital markets. The paper analyses existing rules on civil liability of rating agencies under different legal systems. Subsequently, the provision under Art. 35a of the Draft Proposal is examinded more closely. Suggestions on possible improvemts of the proposal are made

Normanerkennung, Normbefolgung und Economic Behavior : eine Studie zu Verbindlichkeitsstrukturen im Wirtschaftsrecht am Beispiel der Corporate Governance

Die Frage nach den Zusammenhängen zwischen Normanerkennung und ökonomischem Verhalten lassen sich anhand der Wirkung von Corporate Governance Kodizes schlaglichtartig beleuchten. Der vorliegende Beitrag liefert erste theoretische Bausteine zum Zusammenwirken von Corporate Governance Kodizes und verbindlichen gesetzlichen Normen auf der Grundlage des Comply or Explain-Grundsatzes, indem er zunächst die Wirkungsweise des Kapitalmarktes, wie sie von der ökonomisch fundierten Gesellschaftsrechtstheorie vorausgesetzt wird, dem Mechanismus des Comply or Explain gegenüberstellt. Die empirischen Studien zur Wirksamkeit des Kapitalmarktes bei der Durchsetzung des Deutschen Corporate Governance Kodex im Wege des Comply or Explain lassen Raum für weitere Normanerkennungs- und –befolgungsmechanismen, die sich in Parallele zur Diskussion im Bereich der Corporate Social Responsibility und den sogenannten „business cases“ hierfür verdeutlichen lassen. Die dabei aufscheinenden Berührungspunkte ökonomischer Motivation mit sozialen Interessen geben Gelegenheit, auf Fairnessnormen als Grenzen des traditionellen Rationalmodells einzugehen. Ein ähnliches Nebeneinander und Ineinandergreifen von Eigennutzinteresse und intrinsischer Motivation lässt sich anhand der Anreizwirkung bei der Managervergütung veranschaulichen. Ihre gesetzliche Regelung im VorstAG lässt zum Teil eine empirische Absicherung vermissen. Damit schließt sich der Kreis der Analyse der Verbindlichkeitsstrukturen im Wirtschaftsrecht, nach der sich diese einem einheitlichen theoretischen Modell entziehen und deren empirische Grundlagen noch nicht zweifelsfrei geklärt sind

Investor protection through model case procedures – implementing collective goals and individual rights under the 2012 Amendment of the German Capital Markets Model Case Act (KapMuG)

The German Capital Markets Model Case Act (KapMuG) and its amendment of 2012 highlight some fundamentals of collective redress in civil law countries at the example of model case procedures in the field of investor protection. That is why a survey of the ongoing activities of the European Union in the area of collective redress and of its repercussions on the member state level forms a suitable basis for the following analysis of the 2012 amendment of the KapMuG. It clearly brings into focus a shift from sector-specific regulation with an emphasis on the cross-border aspect of protecting consumers towards a “coherent approach” strengthening the enforcement of EU law. As a result, regulatory policy and collective redress are two sides of the same coin today. With respect to the KapMuG such a development brings about some tension between its aim to aggregate small individual claims as efficiently as possible and the dominant role of individual procedural rights in German civil procedure. This conflict can be illustrated by some specific rules of the KapMuG: its scope of application, the three-tier procedure of a model case procedure, the newly introduced notification of claims and the new opt-out settlement under the amended §§ 17-19

Financial regulation in the EU - cross-border capital flows, systemic risk and the European Banking Union as reference points for EU financial market integration : [Version June 2014]

This is a chapter for a forthcoming volume Oxford Handbook of Financial Regulation (Oxford University Press 2014) (eds. Eilís Ferran, Niamh Moloney, and Jennifer Payne). It provides an overview of EU financial regulation from the first banking directive up until its most recent developments in the aftermath of the financial crisis, focusing on the multiple layers of multi-level governance and their characteristic conceptual difficulties. Therefore the paper discusses the need to accommodate cross-border capital flows following from the EU internal market and the resulting regulatory strategies. This includes a brief overview of the principle of home country control and the ensuing Financial Services Action Plan. Dealing with the accommodation of cross-border capital flows and their regulation necessarily require an orchestration of the underlying supervisory structures, which is therefore also discussed. In the aftermath of the financial crisis of 2007-09 an additional aspect of necessary orchestration has emerged, that is the need to control systemic risk. Specific attention is paid to microprudential supervision by the newly established European Supervisory Authorities and macroprudential supervision in the European Banking Union, the latter’s underlying drivers and the accompanying Single Supervisory Mechanism, including the SSM’s institutional framework as well as the consideration of its rationales and the Single Resolution Mechanism closely linked to it

Impressions of the First RICAFE Conference: Risk Capital and the Financing of European Innovative Firms

In diesem Beitrag berichtet die Autorin von einer Konferenz zur Innovationsfinanzierung, zu der sie von der Financial Markets Group der London School of Economics and Political Science eingeladen wurde. Das der Veranstaltung zugrunde liegende Projekt geht auf den Aktionsplan der Europäischen Kommission von 1998 zum Risikokapital zurück. Letzterer bildet den Ausgangspunkt für das Risk Capital and the Financing of European Innovative Firms-Forschungsnetzwerk, das die Tagung konzeptionell vorbereitet hatte. Dank der Vielfalt der vorgestellten Forschungsergebnisse bildet die Konferenz eine erste Basis für die Umsetzung des genannten Aktionsplans

Freedom of contract and financial stability through the lens of the legal theory of finance (LTF) - LTF approaches to ABS, pari passu-clauses, CCPs, and Basel III

This paper is the outcome of a related broader project, exploring the explanatory power of the Legal Theory of Finance, which proposes a new institution-based analytical framework for the analysis of phenomena of financial markets. One of its most important theoretical assumptions, the legal construction of financial markets, is highlighted by the example of the private creation of money by structured finance products in this paper. Further implications can then be shown referring to pari passu clauses and collective action clauses, which are both exhibit a differential application of these legal rules according to the hierarchical status of the respective market participant, and can therefore endanger sovereign debt restructurings. Legal instruments to avoid this are briefly explored. An example of another key role of the law in crisis that is the task to resolve the tension between market discipline and financial stability is exemplified by the regulation of the OTC derivatives market and proposals of effective loss-sharing among CCPs. Related questions about the significance of legal rules to ensure financial stability are raised in the analysis of minimum capital requirements under Basel III

Collective action between regulatory goals and individual claimants’ rights – Collective redress mechanisms in EU Member States as points of departure for procedural innovation

The EU Collective Redress Recommendation has invited Member States to introduce collective redress mechanisms by 26 July 2015. The well-known reservations claim potentially abusive litigation and potential settlement of not well-founded claims resulting from controversial funding of cases by means of contingency fees and from ‘opt-out’ class action procedures. The paper posits that there may also be some fear that the European Commission may try to pursue the enforcement of its regulatory agenda in this way at the expense of individual claimants’ interests. Therefore a comparative analysis is carried out to see to what extent concerns about individual rights as opposed to regulatory goals are reflected in the different newly revised systems in place across Europe. As an iterim result the Dutch settlement procedure for mass damage claims, the English Group Litigation Order and the German test case procedure turn out to be relatively well-suited to deal with mass damage claims. At the same time, none of them can quite reach an optimal balance between individual rights and regulatory goals and therefore each of them is subject to criticism. That is why the further question is raised in how far these procedures could complement each other, thus contributing to the enforcement of individual rights without overregulating markets in Europe

Shareholder wealth vs. stakeholder interests? : evidence from code compliance under the german corporate governance code

In order to better differentiate the drivers of corporations’ actions, in particular shareholder wealth and stakeholder interests, the paper explores the significance of the comply or explain-principle and its underlying enforcement mechanisms more generally. Against this background, compliance rates with specific provisions may shed a light on companies’ reasons for following the code. An analysis of these rates at the example of distinct provisions of the German Corporate Governance Code is therefore entered into. In light of the current corporate governance debate and the legitimacy problems that are raised, among the code provisions that exemplify these questions very well are those regulating incentive pay, severance pay caps, and age limits for supervisory board members. Their analysis will lay a basis for an answer to the question about what motivates companies to comply with the code. The motivation then paves the way to arrive at a further specification of the determinants of the regulatory evolution of the Code and the range of stakeholders and their concerns that enter into it

Verbraucherschutz durch Informationsregeln beim Verbrauchsgüterkauf – Zur Struktur der Garantie gem. § 477 Abs. 1 BGB

Bei der Analyse der Informationsregel des § 477 Abs. 1 BGB zur Garantie beim Verbrauchsgüterkauf weist der Beitrag über die gängigen Konzepte eines „sozial“ verstandenen Verbraucherschutzes sowie die an Informationsungleichgewichten orientierten Verbraucherschutzüberlegungen hinaus. Der Beitrag unternimmt erstmals den Versuch, die Wirkungszusammenhänge der Informationsaufdeckung nach § 477 Abs. 1 BGB im Lichte der neueren Erkenntnisse der behavioral economics konzeptionell einzuordnen. Hierbei wird die beschränkte menschliche Kognition als Grenze des effizienten Informationsmodells, wie es in der neueren Literatur zugrunde gelegt wird, deutlich. Die Heranziehung verhaltenswissenschaftlicher Untersuchungen zum Hang des Verbrauchers zur irrationalen überteuerten Garantievereinbarung beleuchtet schlaglichtartig die Zielrichtung der Informationsregel des § 477 Abs. 1 BGB, den typischen Defiziten des Willensbildungsprozesses beim Verbraucher Rechnung zu tragen. Im Ergebnis läßt sich hier der neue Befund einer asymmetrisch wirkenden Verbraucherregulierung feststellen, die die typischen Grenzen der menschlichen Kognition berücksichtigt, ohne den von solchen Kognitionsproblemen unberührten Verbraucher in seiner Kaufentscheidung zusätzlich zu beeinträchtige