The Wider Context: The Future of Capital Markets Regulation in Developed Markets

At a time of such great turbulence, looking to the future directions of capital markets and their regulation in developed economies is a particularly risky business. We are in the midst of a great sea change. Nevertheless, there are several current, and readily observable, phenomena which are likely to shape capital markets regulation in the near future. First of all, the blurring of the distinctions between developed and developing markets themselves, as well as that between domestic and international markets, has put into question the adequacy of existing regulatory frameworks. Also, the transatlantic dialogue, London – New York, has given way to the rise of “multipolarity”; in an age of instantaneous transmission of information, capital and risk, competing centres of gravity have emerged. In addition, centuries-old market institutions are undergoing a period of dynamic change, producing the equivalent of regulatory jetlag. Among international actors, there are calls for what may be the somewhat indiscriminate widening of the “perimeter” of regulation; costs of compliance mount, regulatory uncertainty sets in. To the numerous, conflicting and perhaps unrealisable, goals associated with capital markets regulation has been added detection and prevention of systemic risk. The two great, albeit quite different, capital market regulatory models (those of the United States and the United Kingdom) have taken a beating; it is an open question as to what will take their place. Finally, in face of the virtually insurmountable difficulties of actually creating a World Financial Regulator (to say nothing of its desirability), two organisations, one created in direct response to the Global Financial Crisis, and the other, decades-old, are filling the void. None of these factors operates independently, of course; all interact, contributing to the potential uncertainty and complexity of outcomes

Cracking Down on Cutting Sleeves: A Historical Analysis of “Homosexuality” in China as a Comparison to Present Day LGBTQ+ Rights

Over the past more than a decade of Xi Jinping’s leadership, the space for civil society in China has shrunk dramatically. One of the main, yet often overlooked, victims of this shift in policy has been China’s LGBTQ+ community. This thesis examines the current crackdown on LGBTQ+ peoples and organizations in China and attempts to place it within a broader context of China’s current state in the world order. The lenses of queer International Relations theory and the long history of “homosexuality” in China will both be applied to help contextualize the current state of Chinese LGBTQ+ rights. This analysis will also present a comprehensive timeline of the various events and actions taken by the current Chinese state to suppress this community to demonstrate the systemic level nature of this crackdown. Drawing on these two frameworks, this thesis argues that the political deployment of homophobia and associated suppression of LBGTQ+ rights in China is used to consolidate identities, enforce heteronormative forms of behavior, and ultimately to consolidate the power, legitimacy, and control of Xi Jinping and the Communist Party of China

Wirecard and Greensill Scandals Confirm Dangers of Mixing Banking and Commerce

The pandemic crisis has accelerated the entry of financial technology (“fintech”) firms into the banking industry. Some of the new fintech banks are owned or controlled by commercial enterprises. Affiliations between commercial firms and fintech banks raise fresh concerns about the dangers of mixing banking and commerce. Recent scandals surrounding the failures of Wirecard and Greensill Capital (Greensill) reveal the potential magnitude of those perils. The Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) have encouraged commercial enterprises to acquire fintech banks. The FDIC has authorized commercial firms to acquire FDIC-insured industrial banks in reliance on a controversial loophole in the Bank Holding Company Act (BHC Act). The OCC is seeking to charter nondepository fintech national banks, which commercial firms could own under a separate exemption in the BHC Act. The FDIC’s and OCC’s initiatives undermine – and could potentially destroy – the BHC Act’s longstanding policy of separating banking and commerce. The disasters at Wirecard and Greensill demonstrate the importance of maintaining a strict separation between banking and commerce. Regulators in Germany and other countries allowed banks controlled by Wirecard and Greensill to engage in risky and abusive transactions that benefited their parent companies and other related parties, including commercial firms connected to their major investors. Wirecard Bank provided financial support to its parent company and CEO, and it also made fraudulent transfers of funds to insiders and their controlled entities. Greensill Bank made preferential and unsound loans that benefited its parent company and leading investors. Greensill Bank securitized many of its reckless loans, and Greensill Capital sold the resulting asset-backed securities as “safe” and “liquid” investments to misinformed investors. Regulators failed to take timely enforcement actions against Wirecard and Greensill because they did not exercise consolidated supervisory authority over the complex international structures created by both firms. In addition, Wirecard and Greensill built extensive networks of influence that produced significant political favors and regulatory forbearance in Germany and the U.K. The collapse of Wirecard and Greensill embarrassed government agencies and inflicted massive losses on investors, creditors, and other stakeholders. The failures of Wirecard and Greensill provide clear warnings about the dangers of allowing fintechs to offer banking services while evading prudential regulatory requirements and supervisory standards that apply to traditional banks and their corporate owners. Regulators and policymakers should not allow fintechs’ claims of “innovation” to serve as a rationale for regulatory arbitrage and as camouflage for fraud. Both disasters show that high-tech firms engaged in banking and commercial activities are likely to create the same unacceptable hazards as previous banking-and-commercial conglomerates, including toxic conflicts of interest, reckless lending, dangerous concentrations of economic power and political influence, supervisory blind spots, and systemic threats to economic and financial stability

Mechanisms of Xenogeneic Baboon Platelet Aggregation and Phagocytosis by Porcine Liver Sinusoidal Endothelial Cells

Background: Baboons receiving xenogeneic livers from wild type and transgenic pigs survive less than 10 days. One of the major issues is the early development of profound thrombocytopenia that results in fatal hemorrhage. Histological examination of xenotransplanted livers has shown baboon platelet activation, phagocytosis and sequestration within the sinusoids. In order to study the mechanisms of platelet consumption in liver xenotransplantation, we have developed an in vitro system to examine the interaction between pig endothelial cells with baboon platelets and to thereby identify molecular mechanisms and therapies. Methods: Fresh pig hepatocytes, liver sinusoidal and aortic endothelial cells were isolated by collagenase digestion of livers and processing of aortae from GTKO and Gal+ MGH-miniature swine. These primary cell cultures were then tested for the differential ability to induce baboon or pig platelet aggregation. Phagocytosis was evaluated by direct observation of CFSE labeled-platelets, which are incubated with endothelial cells under confocal light microscopy. Aurintricarboxylic acid (GpIb antagonist blocking interactions with von Willebrand factor/vWF), eptifibatide (Gp IIb/IIIa antagonist), and anti-Mac-1 Ab (anti-αMβ2 integrin Ab) were tested for the ability to inhibit phagocytosis. Results: None of the pig cells induced aggregation or phagocytosis of porcine platelets. However, pig hepatocytes, liver sinusoidal and aortic endothelial cells (GTKO and Gal+) all induced moderate aggregation of baboon platelets. Importantly, pig liver sinusoidal endothelial cells efficiently phagocytosed baboon platelets, while pig aortic endothelial cells and hepatocytes had minimal effects on platelet numbers. Anti-MAC-1 Ab, aurintricarboxylic acid or eptifibatide, significantly decreased baboon platelet phagocytosis by pig liver endothelial cells (P<0.01). Conclusions: Although pig hepatocytes and aortic endothelial cells directly caused aggregation of baboon platelets, only pig liver endothelial cells efficiently phagocytosed baboon platelets. Blocking vWF and integrin adhesion pathways prevented both aggregation and phagocytosis

An Analysis of Restatements Due to Errors and Auditor Changes by Fortune 500 Companies

Events leading to the breakup of Arthur Anderson and Co. included the failure of Enron and other evidence of financial reporting irregularities. Many of these irregularities involved restatement of financial statements due to error. During the last several years, numerous articles in the accounting literature and accounting press have chronicled such restatements and the often associated change in auditor. This paper analyzes restatements due to error and auditor changes made by Fortune 500 companies during 2001 and 2002 in order to assess whether restatements due to error lowered or raised income and whether companies with income-decreasing errors showed a greater propensity for changing auditors. The data in this study were taken from 8-K reports filed by Fortune 500 Companies in 2001 and 2002 and from a search of the Securities and Exchange Commission\u27s EDGAR database using the word restate and its derivatives. We searched for and analyzed restatements that were due to error. The income statement effects of these restatements were classified as income-decreasing or as non income-decreasing. We identified and confirmed two hypotheses related lo restatements. First, restatemenls generally lowered rather than raised income. Second. companies reporting restatements that materially reduced income were more likely to change auditors than companies with non income-decreasing errors. More importantly. this study extended prior research by showing that the magnitude, not simply the direction, of a restatement was important in explaining when a change in auditor was likely lo occur