This course is about money, fraud, human nature, statutory interpretation, vagaries of the judicial process, and the federal securities laws. There will be a particular emphasis on developments related to the current economic crisis, including the operation of markets for credit derivatives and proposals for reform of the financial services industry. The course is divided into four modules.
The first module describes modern capital markets with a particular emphasis on the evolution of derivative instruments and the challenge these instruments pose to the regulatory system. No mathematical skill beyond addition, subtraction, and multiplication of whole numbers is necessary. Fractions are frowned upon. Long division is prohibited.
The second module addresses the domain of federal securities regulation. It will explore the expansive scope of the definition of the term "security" as well as the ability to transact offshore in a manner that legally avoids federal securities regulation.
The third module focuses on the SEC's mandatory disclosure system, with particular emphasis on the process of "going public" and the operation of the market for privately placed securities in the venture capital process.
The fourth module addresses fraud as it is prosecuted under Section 10(b) and Rule 10b-5 of the Exchange Act of 1934. Attention will focus on litigation related to the recent subprime meltdown, class action claims, SEC enforcement proceedings, and criminal prosecutions.
Capital Markets I will focus primarily on Modules one and two. Capital Markets II will focus primarily on Modules three and four.