Capital Markets Regulation
Spring term, Block L
W 5:00 PM - 7:00 PM
Professors Hal S. Scott and Robert Glauber (Harvard Kennedy School)
2 classroom credits LAW-31970A
This course begins by examining the overall market structure of the capital market, e.g. retail versus institutional and public versus private. It then looks at key regulatory issues with respect to the equity and securitized debt components of the market. With respect to the equity market, we will begin by looking at the competitiveness of the public equity market with private and foreign market alternatives. We will then look at the following equity markets issues: (1) the regulatory process, with focus on the SEC; (2) the justification and impact of private enforcement through securities class actions; (3) the rise (and possible fall) of private equity as an alternative to public equity ; (4) corporate takeovers and the market for corporate control; and (5) disclosure and control of executive compensation. With respect to the securitized debt markets, we will look at what problems in these markets were revealed by the subprime crisis. We will then look at (1) how to achieve more transparency about the characteristics and value of the underlying assets in a pool of securities and of the pool as a whole; (2) possible changes in the role of the credit rating agencies; (3) key issues in borrower relief and consumer protection; and (4) capital adequacy for financial institutions with securitized debt exposure. We will conclude with an examination of possible reforms of the overall regulatory structure, including the role of the states as well as the various federal agencies. Our agenda of issues is subject to revision to take account of market and political developments in the next year.