Banking and Finance Law: Regulating Retail, Consumer and SME Markets
As the past decade has transformed understandings of finance and the economy, it has generated increasingly widespread recognition of the economic centrality of household finance. Responsibility for both the Global Financial Crisis and subsequent Great Recession can be attributed to failures of household credit markets. Consumer expenditure accounts for over 50% of GDP in most OECD economies, meaning that the financial markets and products powering this spending are of central policy importance. Key contemporary problems of economic stagnation, inequality, and political instability can all in some ways be linked to problems arising in consumer financial markets, which are increasingly important sites of legal and political activity. The economic significance of SME finance is similarly clear. Small and Medium Enterprises (SMEs) account for 99% of firms and approximately 70% of jobs in OECD countries, and questions of how these firms access finance raise perennial policy concerns. The political and regulatory disruption of Brexit also makes this is a key time for the study of banking and finance law as it relates to consumers and SMEs. Questions arise as to the future for consumers, SMEs, and financial institutions, as regulatory regimes and capital flows are changed by the UK’s departure from the EU.
The significance and expansive reach of the consumer and SME dimensions of financial law are not matched by coverage in typical law school curricula – this course aims to address this imbalance by presenting a unique offering. The course begins by discussing key principles and theoretical ideas of retail financial market regulation. It considers the nature and structure of consumer and SME financial markets, examining the institutions and sources that create the ground rules of markets, involving questions of how financial laws and regulations in these markets are made, applied, and enforced. The course applies and tests these ideas in examining discrete markets and areas of law, drawing on a combination of international norms and detailed examples from European, North American and English law. The course is structured uniquely around a thematic approach, discussing legal material through key questions of consumer/SME financial law and policy. Themes include:
- The place(s) of consumers and small enterprises in the Real Economy
- Aims and justifications of regulation in consumer and SME financial markets
- Consumers, SMEs and financial stability (including prudential regulation and its interaction with consumer/SME protection)
- Access to finance (basic banking; the cashless society; fintech)
- Complexity in financial products (including product design and the regulation of contract terms; information asymmetry and disclosure regulations; behavioural perspectives and ‘nudging’)
- Mis-selling scandals and legal responses (including mortgage lending crises and ‘responsible lending’; SME derivatives mis-selling and investor protection rules)
- Cross subsidisation, price discrimination, and fairness in financial services pricing (‘the poor pay more’; the ‘loyalty penalty’)
- The problem of high-cost credit and usury regulation (the Wonga saga and payday loan regulation; bank overdrafts; the role of price regulation in financial markets)
- Wall Street v Main Street (dispute resolution and enforcement; financial law-making
- Financial failure and default (entrepreneurship and bankruptcy law; over-indebtedness and consumer bankruptcy)
Lecturer: Dr Joseph Spooner
Module Code: LL450E
The objective of the module is to provide students with a detailed understanding of remedies in a commercial context. The reading addresses both case law and academic commentary. The module focuses on the principles that govern commercial remedies and the debates in the literature. It does not seek to improve the students' drafting skills. Here is an indicative list of the issues that will be considered on the module:
1. The aims of commercial remedies: What interests and other policies may be served by the law when remedying commercial disputes?
2. The function of contract damages: How do the courts assess damages for breaches of contract? Should the courts do more to protect the claimant’s interest in performance? What limits are placed on the recovery or measure of damages?
3. Punishment: Is punishment of a defaulting defendant ever a legitimate aim in commercial remedies? Should punitive damages be given a greater role in English commercial law?
4. Agreed remedies: To what extent are commercial parties free to fix the remedies available to them in the event of breach? Does freedom of contract extend to the parties’ secondary obligations?
5. Unjust enrichment: What is the law of unjust enrichment? What is its relationship to the law of contract? What can commercial parties recover under the law of unjust enrichment?
6. Comparative law: How do other jurisdictions deal with these questions? What might the common law learn from civil law systems?
Pre-requisite: Undergraduate contract and tort law.
Lecturer: Dr Andrew Summers; Professor Charlie Webb
Module Code: LL438E
Comparative Corporate Governance
This module will focus on topical issues in corporate governance, including: corporate governance codes as a regulatory technique; corporate governance reform, firm performance and financial development; the role of the board of directors in large public companies and groups of companies; the division of powers between the managers and shareholders; directors’ duties and enforcement of duties; executive remuneration; stakeholder representation, in particular employee representation, in corporate decision-making; shareholder activism and corporate short-termism; the market for corporate control as a corporate governance device.
Lecturer: Professor Carsten Gerner-Beuerle, Professor David Kershaw, Edmund Schuster
Module Code: LL418E
The module is a comprehensive study of the main features of competition law. While the focus is on EU competition law, reference will be made to the laws of other jurisdictions (e.g. the United States and the UK) when these offer relevant points for comparison. The first part of the module examines the history and aims of competition law. It considers the role of economic analysis and its limitations in the light of non-economic considerations. The second part is a review of the major substantive fields: restrictive practices; the regulation of monopolies and dominant positions; distribution and cooperation agreements and merger control. The third part addresses the public and private enforcement of competition law.
Lecturer: Professor Pablo Ibanez-Colomo
Module Code: LL425E
Regulation of the content and the form of the employment relation. The contract of employment, including express and implied terms and the scope of employment law. Regulation of minimum wage and working time. Protection against discrimination in the workplace. Discipline and protection from dismissal and termination of employment. The approach involves theoretical perspectives, economic analysis, comparative law of employment, and examination of relevant European law.
Lecturer: Dr Astrid Sanders
Module Code: LL441E
European Capital Markets Law
The module examines the EU's regulation of the capital markets. It considers the harmonized regulatory regime which applies to key capital market actors across the Member States and which supports the integrated market. The topics covered include: the rationale for integration and the role of law, the evolution of the integration project, and the impact of the financial crisis and subsequent reforms; the deregulation, liberalization, harmonization, and re-regulation mechanisms used to integrate and regulate the EU market and the role of the Court; market access and the passport for investment services; the Markets in Financial Instruments Directive 2014 (MiFID II) and the Markets in Financial Instruments Regulation 2014 (MiFIR) and regulation; the liberalization of order execution and the regulation of trading venues; the 'UCITS' mutual funds regime; retail investor protection and conduct regulation; the prospectus and disclosure regime; gatekeepers (credit rating agencies and investment analysts); and the institutional structure for law-making and for supervision, including the European System of Financial Supervision and the European Securities and Markets Authority. Module coverage may vary slightly from year to year.
Lecturer: Professor Niamh Moloney
Module Code: LL400E
Legal Aspects of Private Equity and Venture Capital
This course will equip students with a detailed understanding of the legal structures and issues arising in international private equity and venture capital. It is founded on deep academic analysis of pertinent theoretical and legal issues.It will have a pan-EUfocus, but with comparative global perspectives.
Session 1: Introduction to private equity and venture capital
This introductory session will include a critical discussion of the academic research suggesting that private equity outperforms other asset classes.
Session 2: Fund structures: the limited partnership and other international structures
This session looks at the structures adopted, and the reasons why, with particular emphasis on the legal, tax and regulatory characteristics of limited partnerships.
Session 3: Management vehicles and the UK LLP
This session will look at the objectives in structuring the management entity for the fund, with a particular emphasis on the legal and tax characteristics of LLPs, including the UK LLP Act and recent case law.
Session 4: Private equity fund (and manager) regulation
This session looks at UK and EU regulatory initiatives, and critically evaluates the provisions of the Alternative Investment Fund Managers Directive which affect private equity funds.
Session 5: Venture capital investments
Starting from a theoretical perspective, we will analyse the terms of a typical venture capital investment into a portfolio company by reference to example documents. We will also examine various aspects of contract and company law which have particular relevance to VC structures.
Session 6: The VC deal
In this session the students will discuss the key points arising from a venture capital investment case study.We will focus on key points which have a legal as well as a commercial aspect, and connect these to the theoretical discussions in Session5.
Session 7: The leveraged buyout: corporate governance issues
This session will examine the structure of a buyout and how it differs from a VC investment. We will focus on pertinent company law rules and academic corporate governance theory.
Session 8: Financing
This session will look at the leveraged finance model, advantages of leverage, the LMA Leveraged Loan Agreement, High Yield Bonds, the Inter-creditor Agreement and 'covenant-lite' and incurrance covenants.
Session 9: Distress
Discussions on the implications of distress for the PE firm, valuation, the new money decision, the role of the inter-creditor agreement and the PE firm as the loan-to-own investor.
In this session we will analyse a suite of leveraged loan deal documentation for a typical private equity buyout. Students will be provided with a fact pattern and asked to apply the theory that they have studied in sessions 8 and 9 to the deal documentation.
Lecturers: Dr Simon Witney; Ms Sarah Paterson
Module Code: LL4CQE
State and Market in the EU
Member States of the EU are not free to award subsidies to their national companies or to support them in a comparable way (by, inter alia, securing favourable supply conditions to the companies, granting loans at favourable rates or providing unlimited guarantees). In the wake of the recent financial crisis, for instance, bailout measures adopted across the EU had to be cleared by the European Commission in accordance with Articles 107 and 108 TFEU.
The first part of the module explores the economic rationale underpinning the control of State aid in the European Union (the reasons why similar regimes are not implemented at the national level in federal countries facing similar dilemmas, such as the United States, will also be explored). The second part examines (i) the notion of State aid within the meaning of Article 107(1) TFEU and (ii) the conditions under which measures falling under the scope of that provision may be deemed compatible with the internal market. The third part provides an overview of the application of the law in some sectors (including the financial and the communications sectors) or for some purposes (e.g. research and development, regional aid). Finally, the fourth part is devoted to the procedural aspects of the discipline.
Lecturer: Professor Pablo Ibanez-Colomo
Module Code: LL433E
Innovation, Technology and Patent Law
This module critically examines UK and European patent law from different perspectives including the economic case for incentivising innovation, industry and technological-specificity of legal doctrine, international economic and political frameworks, institutional features, and legal developments in the domestic laws of other countries as well as at regional and international levels. Case studies from comparable jurisdictions such as US, India or Latin America will be used where appropriate. The module aims to deliver a sound grounding in legal principles while exploring unprecedented challenges raised by emerging technologies through appropriate case studies.
- The economics of innovation and patenting/ Jurisprudential rationale for patents. Legislative overview – international and domestic.
- Priority, Novelty and Inventiveness
- Industrial Application, disclosure and Genomic Inventions
- The rational for subject matter exclusions (Methods of medical treatment, diagnostic methods, computer programs, business methods, mental acts, discoveries, genetically modified animals, human embryonic stem cells)
- Claim drafting, purposive construction and the doctrine of equivalents.
- Direct/indirect infringement – international concerns
- The research use exception and its application to post-genomics science
- The TRIPS Agreement and the global pharmaceutical industry
- The problem of patent enforcement
- Patent offices and the property parameters of patents
- Synthetic biology
- The patenting of Human gene therapy
Lecturer: Dr Siva Thambisetty
Module Code: LL435E
(formerly Insolvency Law: Principles, Rescue and Reconstruction Processes)
This module is concerned with the principles and policies underlying the rescue of financially distressed companies and businesses. The module considers formal legal procedures available for dealing with companies and businesses in financial distress as well as informal approaches to rescue. Topics include: Chapter 11 as a Rescue Procedure. Corporate Rescue Procedures in the UK: Informal and Formal Procedures. Recognition of Rescue Procedures: EC and International. The Theory and Philosophy of Rescue.
Lecturer: Sarah Paterson
Module Code: LL442E
Corporate Bankruptcy (formerly 'Insolvency Law: Company Liquidation and Stakeholder Interests')
This module is concerned with the principles and policies underlying the legal treatment of corporate bankruptcy. The impact of these procedures and approaches on third parties, for example corporate groups, secured and unsecured creditors, directors and employees, is also considered. Topics include: Setting aside transactions; The pari passu principle and preferential claims; Secured creditors and security devices; Quasi-security devices for the unsecured creditor; The problem of corporate groups; Company directors in troubled times; Employees in distress and EC and international recognition in corporate bankruptcy.
Lecturer: Sarah Paterson
Module Code: LL443E
International Commercial Contracts: General Principles
The module treats what can be called the general part of transnational contract law, i.e. the general principles of law which are of relevance in any kind of international contract, be it sale, construction, shipping, financing, or joint venture. These general principles relate to contractual formation and negotiations, interpretation, transversal general principles, changed circumstances and hardship, agency, third parties, assignment, self-help and set-off, direct performance and damages and penalties. At present, such contracts are governed either by uniform rules of international conventions or by the national laws applicable by virtue of conflict of law rules. The module puts the existing national and international solutions in a comparative perspective so as to work with the sources of such generally accepted principles. Where there are divergences between existing solutions, the module focuses on the elaboration of new efficient solutions that are internationally acceptable and have the potential of becoming general principles in the future. For these purposes, special attention is given to the UNIDROIT Principles on International Commercial Contracts and the European Principles of Contract Law. Other national laws, however, are drawn upon from time to time. Students are also encouraged, in both examination and classes, to reflect upon the similarities and differences between their own national laws and the UNIDROIT Principles.
Pre-requisite: Firm knowledge of contract law and/or international sales law from previous studies.
Lecturer: Dr Jan Kleinheisterkamp
Module Code: LL417E
International Financial Law and Practice I & II
As the recent debate on shadow banking shows, the traditional financial market sectors of commercial banking, investment banking, derivatives, capital markets and asset management are nowadays converging. However, their academic analysis is still largely sector-based. This module offers a cross-sectoral, functional analysis, permitting students to grasp the big picture of the entire financial market law. To this end, the module largely concentrates on the different activities of risk taking and risk shifting regardless of the type of financial institution involved.
The module is also a novelty as it integrates both spheres of rulemaking for the financial markets, notably financial law and some fundamentals of financial regulation. Experience shows that approaching the framework for financial law without at least considering the interdependencies with risk management and capital requirements leaves us with only a fragmented picture.
For non-practitioners, the market context of financial law appears sometimes confusing. Therefore, this module will first approach each subject from in a market perspective before coming to the legal framework. This short overview is essential with a view to understanding the permanent interaction between market behaviour and the legislators' and regulators' responses to it. The legal framework will be analysed taking into account international rules and developments as well as European legislation. Since the City of London is one of the globally most important financial markets, England will be used as anchor-jurisdiction in order to develop patterns of global significance that are addressed by legislators and regulators around the world, in particular also looking at the European Union and at international rulemaking.
The module also highlights certain anomalies in differing legal treatment of the respective sectors, and considers key trends. It is designed to be as topical as possible, and the content may change in the light of developments. While the precise topics covered will vary from year to year they typically will include the following:
- Logic and the players of the financial market. The creation and allocation of risk. The distinction between 'Law' and 'Regulation'.
- The reasoning and sources of financial law and regulation. The role of European financial law and regulation. The role of international law.
- Understanding the financial crisis.
- Banks and their nature. Assets and Liabilities. Deposit taking and bank loans. Money market instruments. Rank of creditors in bank insolvencies.
- Raising capital. Primary market and secondary market. Issuance of debt securities (bonds). Issuance of Eurobonds. Issuance of equity (shares).
- Security interests and financial collateral.
- Rehypothecation, repurchase agreements and securities lending. Relevant conflict-of-laws problems.
- Guarantee, indemnity, insurance.
- Derivatives. Types of derivatives. The rise of derivatives. Recharacterisation risk. Standard documentation (ISDA).
- Netting and set-off. Relation to insolvency law. Importance for derivatives, repos, securities lending. Conflict-of-laws analysis. Cross-jurisdictional problems.
- Fund structures (public and alternative).
- Structured finance, securitisation and asset-backed securities. The rationale behind it. Risks.
- Transfer of financial instruments. Stock exchanges. Trading and settlement of securities. Intermediated securities. Conflict of laws and cross-jurisdictional problems. Derivatives clearing.
- Syndicated loans.
- Regulatory arbitrage in respect of financial transactions.
International Financial Law and Practice II (LL411E) explores contemporary issues of the commercial law of international financial markets. These include
- the future of English law as reference law for international finance after Brexit
- financial markets and modern trends in conflict-of-laws
- the legal characteristics of the various types of networks used in financial markets (central, decentral, distributed)
- the disruption of law caused by ‘blockchain’ technology and FinTech
- the legal challenges flowing from the increasing use of ‘big data’ and artificial intelligence in financial services
- the future role of commercial law in managing risk
- the nature of so-called smart contracts and their role in standard documentation, risk management and due diligence
- legal issues associated with cryptocurrencies and crypto-money
As the moduleis conceived to be very topical, some of the modulecontent may change.
Lecturer: Dr Philipp Paech
Module Codes: LL410E; LL411E
Regulation: Strategies, Theories and Implementation
The module provides an introduction to key topics in the study of regulation from with a comparative and generic perspective drawn from public administration, socio-legal studies and institutional economics.
Topics include: What is regulation and Why do it? What is Good Regulation? Regulatory Strategies. Explaining Regulation. Enforcing Regulation. Risk Regulation. Regulatory Standard Setting. Regulatory Competition. Regulation and Cost Benefit Analysis.
Lecturer: Professor Robert Baldwin
Module Code: LL434E
Law of Corporate Finance
The module examines the private law rules governing how companies raise finance. The issues covered include e.g. capital structures, identifying and protecting shareholder rights, issuing shares, initial legal capital and alternatives, dividends, reduction of capital and share buy-backs, reform and moving to a solvency test and financial assistance. The module will focus on English Law and German Law and reference will be made to the relevant EU rules.
Lecturer: Dr Eva Micheler
Module Code: LL419E
Mergers, Acquisitions and Restructurings in Europe
In this module, we will explore the regulation of mergers, acquisitions and restructurings in Europe. We will focus on legal techniques for the combination and restructuring of business operations in Europe, with a particular focus on the legal issues arising in cross-border transactions in the EU.
There are a number of reasons for corporations wanting to restructure their operations or to make acquisitions. For instance, firms may want to acquire a strategically valuable firm or asset in order to improve the efficiency (and thus increase the value) of their business operations; they may want to implement a better governance structure, enabling them to manage their undertaking more effectively; or they may want to subject themselves to more favourable legal or tax rules – including choosing among different national corporate laws.
EU law offers a range of legal vehicles for achieving such aims, and it is these vehicles we will explore throughout the term. In particular, we will look at re-incorporations of EU companies based on the relevant Treaty provisions; takeovers of (listed) EU companies; domestic (“statutory”) mergers; de-mergers and spin-offs; cross-border mergers in the EU; and the European Company.
- The market for corporate control, corporate ownership structures and transaction structures for takeovers and restructurings in Europe
- European takeover regulation
- Domestic mergers
- Divisions & spin-offs
- Cross-border mergers
- Employee participation (board-level co-determination) and board structures, and their relevance for corporate transactions
- The European Company (SE)
- Brief introduction to taxation of corporate transactions and tax-related drivers and incentives for intra-group reorganisation and company migration
Lecturer: Mr Edmund Schuster
Module Code: LL432E
Regulation of Financial Markets I & II
This course (Part I and Part II) examines the regulatory structures governing financial markets and investment services. It covers the main principles of international, EU and UK financial regulation, with the aim of developing a critical understanding of the dynamics and conceptual framework of financial regulation. The course does not aim to provide a detailed comparative account of financial regulation across countries, but international comparisons may be made where these are useful. In this context, students are encouraged to draw on their knowledge of their own national systems of regulation in making comparisons, and to apply the analytical perspectives suggested to those systems. The focus will be on the regulation of national and international aspects of financial services and markets, rather than on private law and transactional aspects. No previous knowledge of financial market regulation or background in economics is required for those wishing to follow this course. Indeed, the course provides a good background for further study of both financial and economic law and economic analysis of law. The course might be regarded as complimentary to a number of other courses, including Law of Corporate Finance or International Financial Law and Practice I & II.
The first part of this course will address the following topics:
- Anatomy of the Financial Market and the Great Financial Crisis
- Building Blocks of the Regulatory World
- Rationales for its Regulation: Systemic Stability, Market Integrity, Principle-Agent Competition
- Key Elements of Financial Regulation: disclosure, resilience, risk modelling and regulation inside firm
- Global and EU Regulatory Structures
- Financial Stability – Policy Issues, Principles and Global Standard Setters
- Prudential Regulation of Banks – The Basel Accords
- The EU Banking Union
- Deposit Guarantees
- Bank Resolution and Insolvency
The second part focuses on financial stability, including macro and micro-prudential regulation, regulation of trading and market infrastructure, and on new and emerging issues in financial regulation. Topics include:
1. Unpicking the Great Financial Crisis
2. Mapping regulation for financial stability
3. States, Banks and Global Markets: the macroeconomic Background
4. The next Financial Crisis
5. Ethics in Finance
6. Market Integrity
7. The role of Consumers
8. Consumer Protection
9. Securities markets and Conduct of Business
10. Fast, global, decentralized– the Challenges of the Future
Lecturer: Dr Philipp Paech
Module Code: LL406E; LL407E
Takeover Regulation in the UK and the US
The module will look at the regulation of the bid process and at takeover defence regulation in the UK and the US. The module will look at: transaction structures; the function and effects of the market for corporate control; takeover process regulation; takeover defence regulation; deal protections; and regulating conflicts of interest in going private transactions.
Lecturer: Professor David Kershaw
Module Code: LL431E
UK Corporate Law
UK corporate law is an advanced corporate law module focusing only on UK law. The module covers in-depth the core areas of UK corporate law including:
The conception of the UK company;
separate legal personality and piercing the corporate veil;
corporate actions in contract, tort and criminal law;
the balance of power in the company between the board and the shareholder meeting;
UK board composition regulation;
Directors' duties and their enforcement;
minority shareholder protection; and
the role of company law in protecting creditors.
The module will rely on in-class case studies and problem questions to explore the applicable law and its development.
Lecturer: Professor David Kershaw
Module Code: LL439E
This module will provide a comprehensive overview of the phenomenon of tax avoidance and of the attempts by states to combat it: both unilaterally and multilaterally. Whilst using examples predominantly from the UK and USA the issues addressed by the module are general across many jurisdictions and so will be applicable to those with interests beyond the UK and USA.
Taxpayers have always sought to minimise their tax burden. However recent decades have witnessed a sharp rise in popular and governmental concern with tax shelters and other tax avoidance. Traditional strategies of tax avoidance have included postponement of taxes and tax arbitrage, in addition to attempting to exploit ‘loopholes’ through a formalist interpretation of legislation. In recent years the proliferation of complex financial instruments has increased the opportunities for such avoidance. Additionally, globalisation and the development of the digital economy have facilitated tax avoidance strategies of base erosion and profit shifting (BEPS). This rise in opportunities for tax avoidance has been accompanied by an increased public concern that individuals and companies pay their ‘fair share’ of taxation: which states have responded to both through unilateral and multilateral actions (including the OECD’s project on BEPS and the EU’s Anti Tax Avoidance Package).
Particular topics covered are likely to include (i) defining avoidance; (ii) strategies of tax avoidance; (iii) statutory interpretation and judicial approaches to tax avoidance especially with reference to the UK and USA; (iv) General Anti-Abuse and Anti-Avoidance Rules and Specific and Targeted Anti-Avoidance Rules; (v) reporting rules and other policies to deter avoidance; (vi) the OECD response to BEPS; (vii) BEPS and the EU; and (viii) corporate social responsibility, professional ethics and public attitudes with regard tax avoidance.
Lecturer: Dr Michael Blackwell
Module Code: LL4CPE
Taxation of Wealth
The module examines the taxation of wealth from a variety of academic perspectives, drawing on research from political theory, economics, sociology and law. Taxes on wealth are defined broadly to include taxes on transfers of wealth, returns on wealth, and holdings of wealth. The module equips students with an interdisciplinary framework for explaining and evaluating taxes on wealth, and applies these approaches to existing tax policies and options for reform. The focus is on the UK and US contexts although comparisons are also made with other jurisdictions.
Part I of the module introduces key debates from across the social sciences relevant to the taxation of wealth. Seminars 1-5 cover: (i) defining and measuring wealth; (ii) inequality and distributive justice; (iii) property rights; (iv) economic perspectives; and (v) social and political perspectives. Part II applies these debates to specific wealth tax policies. Seminars 6-10 cover: (i) taxes on transfers: inheritance/estate tax, lifetime receipts tax, comprehensive income tax; (ii) taxes on returns: capital gains tax, capital income tax and (iii) taxes on holdings: property tax, land-value tax, net wealth tax.
Lecturer: Dr Andrew Summers
Module Code: LL4COE