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Fintech Plans Announced to Digitize Portfolios in the Capital Markets

by | May 19, 2018

More than 1,200 dealmakers brought their ardor and business plans to sold-out Polycon18, a giant-sized version of television’s Shark Tank which convened at the Bahamas’ Bal Mar Grand Hyatt Hotel from February 28th to March 3rd, 2018. Attending investors were shown project offerings, as well as conference materials that cited U.S. Senate testimony by SEC chair, Jay Clayton, to the effect that initial coin offerings (ICOs) of securities tokens would indeed be considered securities:

“When investors are offered and sold securities – which to date ICOs have largely been – they are entitled to the benefits of state and federal securities laws and sellers and other market participants must follow these laws.”

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JPMorgan Chase Tests Blockchain Use for Securities Services

by | May 18, 2018

On May 16, 2018, JPMorgan Chase unveiled Dromaius, its prototype of a shared ledger for capital market services, at Coindesk’s Consensus 2018 conference. The prototype is designed to test the use of the Ethereum blockchain technology in supporting a coordinated posting by multiple entities to a single encrypted securities bookkeeping system. JPMC executive director Christine Moy said that, “We think the technology has the potential to be transformative.”

Ms. Moy, who leads J.P. Morgan’s Blockchain Center of Excellence, told the Wall Street Journal that the technology “should streamline operations, help with cost savings and overall make the experience of transacting or issuing a financial instrument like this more seamless and simplified.”

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Will Securities Lending Indemnification Be Regulated Into Oblivion?

by | Dec 20, 2014

Borrower default indemnification, sometimes referred to as a “securities replacement guarantee,” is fairly common in the securities lending industry. Under the typical arrangement, should a borrower of a security fail to return it at the end of the loan, the lending agent agrees to purchase a replacement security for the lender using the proceeds of the collateral posted by the borrower for the loan. The indemnity is applicable if the price of the replacement security exceeds the value of the collateral. In such a case, the lending agent agrees to make up the difference.

For many years, banks have provided borrower default indemnification as part of their securities lending services, which has given beneficial owners additional assurance as to the safety of their lending programs, and has allowed pension funds and others for whom such indemnity is legally required to participate in the securities lending market as well.

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The Truth About Securities Class Action Lawsuits is in the Numbers

by | Apr 27, 2013

Stanford law professor Michael Klausner, and his colleagues Jason Hegland and Matthew Goforth, have published an update to their 2011 studies reporting data on the timing of dismissals and settlements in securities class actions. In this latest update published in the April 2012 PLUS Journal, the authors address the factors that affect the timing of securities class action lawsuit dismissals and that affect the timing and size of securities suit settlements.

Klausner, Hegland, and Goforth’s analysis uses statistics derived from all securities class actions filed between 2006 and 2010, 82% of which have been resolved one way or another, and 18% are still open. The sample size consisted of 653 cases, of which 253 have settled, 206 were dismissed with prejudice (preventing their refiling), 74 were voluntarily dropped by the plaintiffs, and 119 are ongoing.

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