Nationalized Treasure

by Patrick Schuette April 6 2009, 05:24
I. Introduction

On February 27, 2009, the United States government announced that it was taking measures that could result in it taking as much as a 36% equity stake in Citigroup, Inc.[1] This would make the federal government the largest shareholder in Citibank.[2] By converting $25 billion in preferred shares into common stock, the federal government hoped that the move would stabilize Citibank in a tumultuous market.[3] As a result of this move, a number of people have voiced a growing concern over the federal government taking further steps to nationalize other major financial institutions.[4] [More]

Weekend at Bernie's

by Patrick Schuette February 18 2009, 01:32
I. Introduction

The past few months have seen numerous financial frauds uncovered. Two of these frauds are particularly noteworthy. On December 11th, 2008, the largest of these financial frauds was unveiled when Bernard Madoff admitted to a $50 billion fraud through his firm, Madoff Securities.[1] On February 17th, the Securities and Exchange Commission (SEC) filed charges against Stanford International Bank relating to an allegedly fraudulent $8 billion certificate of deposit (CD) scheme.[2] Other alleged frauds have come to light, often in highly publicized and dramatic fashion.[3] These frauds suggest something is amiss in the markets. [More]

Tamed Tigers: Sovereign Wealth Funds as Passive Investors

by Patrick Schuette November 3 2008, 00:26
I. Introduction

The purpose of this article is to analyze the current role of sovereign wealth funds in a corporate governance scheme. Sovereign wealth funds, which have become increasingly important institutional investors in the United States, have found their activities in equities markets in the United States increasingly constrained due to stringent regulations. While these sovereign wealth funds raise important policy considerations for lawmakers, these regulations hinder sovereign wealth funds in their role as investors. Despite the power the sovereign wealth funds could hold in American companies, these funds have effectively become “tamed tigers.” Despite their enormous power, they simply cannot exercise it. Thus, this article will examine whether having sovereign wealth funds in a “tamed tiger” capacity should continue or whether regulations should encourage more activity from sovereign wealth funds. [More]

Salute Your Shorts

by Patrick Schuette October 2 2008, 00:29
I. A Short Introduction

With the recent collapse of numerous financial institutions, the practice of short-selling (“shorting”) has come under fire. Some authors have gone so far to claim that the actions of short-sellers (“shorters”) are among the core reasons for the current credit crisis.[1] In response to this outcry, the United States has imposed temporary bans on the shorting of certain stocks, particularly the stocks of firms in the banking and finance sector, citing the need to protect investors and markets.[2] Furthermore, New York Attorney General Andrew Cuomo has launched an investigation into shorters for allegedly spreading false rumors in the financial market.[3] These enforcement responses prompt the question; do shorters have a legitimate role to play in a fair and open market? [More]

Worst. Journal Article. Ever.

by Patrick Schuette March 14 2008, 08:31
I. It's All in Good Taste

Recently, Northern Island’s Court of Appeal overturned a jury’s decision to award £25,000 to a pizzeria in Belfast in a defamation suit.[1] In this particular case, Irish News restaurant critic Caroline Workman wrote a highly critical article of Goodfellas pizzeria, which resulted in the pizzeria filing a defamation suit against Irish News,[2] While a jury found in favor of Goodfellas, awarding the pizzeria £25,000, Northern Ireland’s Court of Appeal ordered a retrial after finding the instructions to the jury were confusing regarding the distinction between fact and comment.[3] [More]

La Grande Illusion

by Patrick Schuette February 8 2008, 15:21
I. La Règle du Jeu

Société Générale SA (“SocGen”) seemed poised to become one of the strongest and most well-respected financial institutions in Europe. In April 2007, they had acquired 75% of Banka Popullore in Albania.[1] Their stock, listed on the Euronext, reached an all-time high of $158.42 a share on May 4, 2007, shortly following the acquisition of Banka Popullore. Their performance heading into 2008 had been so strong that Risk Magazine named SocGen the Equity Derivatives House of the Year.[2] Risk Magazine noted that SocGen has handled the recent volatility in the market effectively through the use of innovation and risk management.[3]

Despite these accolades and accomplishments, SocGen has spiraled downhill since the start of the New Year. This article will examine how a rogue trader nearly brought SocGen to its knees, why lax banking controls allowed it to happen, and how it can be prevented in the future. [More]

The Format Wars

by Patrick Schuette November 28 2007, 15:45
I. The Phantom Menace for Consumers

High Definition Television (HDTV) was first demonstrated to the public in 1969 and made commercially available in the mid-1990s.[1] However, upon being made commercially available, HDTV created a problem for consumers who wished to record and watch movies. In 1998, more than 90% of households in the United States had a videocassette recorder (VCR).[2] At the time, most of those VCRs recorded in an analog format, rather than in a digital format.[3] Analog media formats have lower image and sound qualities than digital media formats.[4] While consumers would be able to watch videocassettes on their HDTVs, they would not be utilizing the high definition technology to its fullest. A digital media format needed to come into the marketplace that could cheaply and effectively record and play high definition programming. However, instead of one format establishing itself, two formats have fought to become the next established standard. This article will examine how these formats have developed and progressed, the legal problems that have arisen out of the conflict between these two formats, and what this conflict might mean for consumers. [More]

Analyzing the Beer Market

by Patrick Schuette November 1 2007, 01:23
I. Introduction

On Tuesday, October 9th, London-based SABMiller and Denver-based Molson Coors announced they would be combining their brewing operations in the United States, creating a brewer called MillerCoors.[1] This move is the latest in a growing consolidation trend among the brewers of the world’s beer. In 2002, South African Breweries purchased Miller Brewing from Philip Morris, forming SABMiller.[2] Molson Coors was formed in 2004 when Molson, a Canadian brewer, merged with Adolph Coors.[3] Earlier this year, Anheuser-Busch announced that it would be importing Czechvar Beer, brewed by the Czech state-run brewery Budejovicky Budvar NP[4] into the United States despite a century-long legal battle over the Budweiser name[5] Most recently, Scotch & Newcastle, the U.K.’s largest brewer, is receiving numerous takeover bids from other major brewers.[6] [More]

The 700 MHz Club: Verizon’s Challenge to the FCC’s Open Access Requirements

by Patrick Schuette October 4 2007, 01:00
I. Introduction

With the passing of the Deficit Reduction Act of 2005, Congress amended Section 309(j)(14) of the Communications Act of 1934, setting a February 17, 2009 deadline for the switchover from analog television to digital television.[1] After this deadline, all full-power television station licensees that hold a license to operate on a frequency between 698 and 806 megahertz (MHz) may no longer operate on that frequency.[2] On a television, these frequencies encompass channels 52 to 69.[3]

As a result of this freed up bandwidth going back to the government, Congress instructed the Federal Communications Commission (FCC) to auction off licenses to operate on these frequencies.[4] The purpose of these auctions is to encourage the development of new technology, to encourage competition, to recover a portion of the value of the spectrum for public use, and to encourage efficient and intensive use of the electromagnetic spectrum.[5] According to some estimates, the auction of these frequencies could raise in excess of $10 billion.[6] [More]

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