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Gramm-Leach-Bliley Act (1999)oOverturned separating of commercial and ibanksoRepublicans and Democrats both agreed; formed jobsInternational banks (Barclays, UBS, Deutsche) with commercial and investment branches could offer one stop shopping, taking business from other banksoCommercial banks significantly expanded ibanking businessoJP Morgan, Citigroup, and BOA created largest ibanking franchises among US commercial banksSecurities Exchange Act of 1934oSupervision of new security offerings, ongoing reporting requirements for offerings and conduct of exchangesoCompanies with more than $10M in assets and 500 owners must file annual and periodic reportsoAcquisitions of more than 5% ownership must be registeredoCreated SECoInsider trading prohibitedInvestment Company Act of 1940oRegulate asset managerso…. More in bookGlobal Research Settlement (2003)oIbanks required to comply with significant restrictions relating to interaction between the IB division and equity research departmentNo influence on research opinions or coverageNo payment of compensation or influence on promotionRestriction on communicationsoPractice of “spinning” hot IPOs is restrictedDodd-Frank Wall Street Reform and Consumer Protection Act (2010)o16 titles, with regulators to interpret meaning over timeExtremely controversialoTitle 1: financial stability oversight council and office of financial research(Treasury Department) to identify threats to financial stability, promote market discipline, and respond to financial riskoTitle 2: orderly liquidation authority granted to FDICoVolcker Rule maybe most controversialGlobal Financial Reform—must be reformed globally, can’t just fix one component (US)oStrengthen capital baseoReduce leverageoAccounting for systemic riskso***NEED TO LOOK AT SLIDESDODD-FRANK ACT
TUESDAY OCTOBER 8th NOTESFINANCINGSCapital Markets FinancingLong-term funding obtained through the issuance of a security ina regulated market or through a private placementSecurity can be debt , equity or a hybridUnderwritten by ibanks (take on risk when purchasing securities form issuer and then reselling those securities to investors) or distributed by banks as private placement on an agency or principal basisIn US securities offering registered with SEC through registration statement (includes prospectus) or sold as private placement pursuant to an exemption from registration requirementoProspectus has historical information, not future forecastsoExemption is Rule 144A exemption: requires private sell to qualified institutional buyer (QIB)