Saving Disgorgement from Itself: SEC Enforcement After Kokesh v. SEC

Disgorgement is under threat. In Kokesh v. SEC , the Supreme Court held that disgorgement—a routine remedy that allows the SEC to recoup ill-gotten gains from financial wrongdoers—is subject to a 5-year statute of limitations because it functions as a “penalty.” This ruling threatens to upend the traditional conception of disgorgement as an ancillary remedy granted by the court’s equity power, because there are no penalties at equity. With the possibility that Kokesh’s penalty reasoning could be adopted beyond the statute of limitations context, the future of disgorgement in federal court is in doubt. This Note proposes a way forward that allows for disgorgement’s continued viability. The SEC should moderate its use of disgorgement for three reasons: because of a trend of suspicion toward strong government enforcement power by the Supreme Court, because it has been improperly used punitively, and because the rise of other statutory schemes has displaced disgorgement’s original justification. At the same time, disgorgement should be saved because of the uncertain future of administrative disgorgement proceedings, the intuitive notion of recovering money from wrongdoers, and the much-needed ability to compensate victims. To save disgorgement, the SEC should limit its use only to restoring the status quo of injured investors, thereby ensuring a remedial—not penal—purpose

Race, culture, and skill: interracial wage differentials among African Americans, Latinos, and whites

This article examines the interrelationships among race, culture, skill, and the distribution of wages. I utilize a three-equation system to explore this process: skill is a multidimensional productive attribute measured by years of education and work effort; educational attainment is a function of class background and individual effort; and individual wage rates are a function of skill and class background. By further assuming that effort is differentially distributed across individuals and social groups, I am able to estimate reduced form equations for educational and earnings attainment, where both equations are functions of the class backgrounds and race of individuals. The collective results of this article challenge the conventional wisdom among economists that African American and Latino job skills are of a lower quality than white job skills. To the extent that effort is an important element of worker skill, our results suggest that neither African American nor Latino labor is of lower quality than white labor. The results regarding differences between African Americans and whites in educational attainment, i.e., African Americans are able to translate a given level of resources into higher levels of educational attainment, reaffirm previous findings in the literature. The results on Latino versus white educational attainment are novel. Additionally, unlike previous research, this article connects racial differences in the skill acquisition process to the economics of discrimination.African American; Latino; Hispanic; discrimination; culture; social capital; culture; effort; education; skill

Downside risk of derivative portfolios with mean-reverting underlyings

We carry out a Monte-Carlo simulation of a standard portfolio management strategy involving derivatives, to estimate the sensitivity of its downside risk to a change of mean-reversion of the underlyings. We find that the higher the intensity of mean-reversion, the lower the probability of reaching a pre-determined loss level. This phenomenon appears of large statistical significance for large enough loss levels. We also find that the higher the mean-reversion intensity of the underlyings, the longer the expected time to reach those loss levels. The simulations suggest that selecting underlyings with high mean-reversion effect is a natural way to reduce the downside risk of those widely traded assets.Monte Carlo simulation; mean-reverting underlyings

Annual income, hourly wages, and identity Among Mexican Americans and other Latinos

This article examines heterogeneity and income inequality among Hispanic Americans. Two processes that influence Hispanic heterogeneity include acculturation and labor market discrimination because of skin shade/phenotype. I focus on Hispanics because of their variation in phenotype, color, nativity, and language usage and also because of their recent large-scale integration into a society that historically has been characterized by bipolar racial categories that are putatively based on phenotype. This process provides a natural experiment for appraising the relative importance of acculturation, discrimination, and income inequality. I use data from two periods, 1979 and 1989, to determine the stability of identity formation among Mexican-Americans and other Hispanics. I find strong incentives favoring acculturation among Mexican- and Cuban-Americans. Americans of Mexican and Cuban descent but less so Puerto Ricans are able to increase annual income and hourly wages by acculturating into a non-Hispanic white racial identity. However, neither the abandonment of Spanish nor the abandonment of a specifically Hispanic racial self-identity is sufficient to overcome the penalties associated with having a dark complexion and non-European phenotype.Hispanic; Latino; Mexican-American; inequality; phenotype; identity; discrimation; wage inequality; wage disparity

An empirical derivation of the industry wage equation

This paper utilizes the Box-Cox transformation of variables technique to empirically derive an industry wage equation. Section I presents the determinants of potential wage differentials between and within industries. Section II estimates a Box-Cox industry wage equation. Likelihood ratio tests on alternative specifications of this equation affirm that competitive structure is a significant determinant of the industry wage rate and that human capital specifications of the industry wage equation (for the manufacturing sector) are not statistically valid. Section III summarizes the results.Box-Cox; functional form; wage equation; labor market inequality; efficiency wage

The janus face of race: Rhonda M. Williams on orthodox economics schizophrenia

This paper provides an evaluation the intellectual contributions of Rhonda M. Williams. Specifically, we focus on Williams' theoretical and empirical contributions to the political economy of race.intellectual history; black political economy; political economy of race; discrimination