New York University Tandon School of Engineering

New York University Tandon School of Engineering Department of Financial Engineering Course Outline FRE-GY 6211 FINANCIAL REGULATION Fall 2016 Professor Raphaele Chappe Fridays 6:00pm – 8:41 pm; Jacobs Academic Bldg Rm 777

To contact professor: [email protected] or [email protected] Office hours: Mondays 4:00 – 6:00pm or by appointment

Course Pre-requisites

Course Description This course provides an overview of the legal and institutional framework for the financial sector (with a strong emphasis on the U.S., but some discussion of global and emerging markets), with the goal of developing a practical understanding for business decision-making. The course covers 1) banking regulation, 2) the regulation of securities markets and institutions devoted to the trading of securities, 3) the regulation of derivatives, 4) the regulatory framework for other market participants, such as hedge funds, and credit rating agencies, 5) international regulatory capital adequacy requirements, the Basel I, II & III framework, and the concept of VaR (Value at Risk) as it is applied in practice. The course also introduces a practical case-study to illustrate the impact of regulatory consideration on international planning and cross-border transactions. Course Objectives:

- Understand the role played by the SEC and the Federal Reserve in capital markets and in the financial sector.

- Understand the key statutes: Securities Act of 1933, Securities Exchange Act of 1934, Glass Steagall, Bank Holding Company Act, Sarbanes Oxley, and of course the major regulatory overhaul with Dodd-Frank

- Understand the regulatory framework for hedge funds and financial derivatives

- Understand the Basel I, Basel II and Basel III approaches to regulatory capital Readings Banking and Financial Institutions Law, William A. Lovett West; 7 edition (2009) ISBN- 13: 978-0314153739 Dodd-Frank (extracts) There are additional readings from time to time.

Course Requirements: Students are expected to attend class. The grading: Final Exam 100%

Weekly outline:

4/1 Some real world issues: International Banking, Cross-Border Regulatory Planning Issues

 All material in the Powerpoint 4/8 Introduction to Securities Law: What is a security? What is a broker- dealer? What is an exchange? Reading material on Blackboard:

 Securities Act of 1934 (extracts)

 Securities Exchange Act of 1934 (extracts)

 JOBS Act (extracts)

 Securities and Exchange Commission v. W. J. Howey Co

 Syndicated Loans as Securities

 SEC action against Goldman Sachs

 GS Settles SEC charges

 Rajat Gupta convicted on insider trading

 The rise and fall of Rajat Gupta

 Galleon network

 Insider’s guide to insider trading 4/15 Introduction to Banking Law + Broker-Dealer Law Reading material on Blackboard:  Securities Act of 1934 (extracts)

 Securities Exchange Act of 1934 (extracts)

 JOBS Act (extracts)

 Ex-SEC Official Blames Agency for Blow-Up of Broker- Dealers

 Agency’s ’04 Rule Let Banks Pile Up New Debt 4/22 Dodd Frank: Systemic Risk, Prudential Regulation

 Confusion still reigns on Volcker rule date

 FSOC reports

 Dodd Frank (Sec 619) 4/29 Dodd-Frank and The Regulation of Derivatives, Hedge Funds, Mutual Funds Reading material on Blackboard 5/6 Regulatory Capital: Basel I, II & III, Value at Risk Reading material on Blackboard 5/13 Final

Moses Center Statement of Disability

If you are student with a disability who is requesting accommodations, please contact New York University’s Moses Center for Students with Disabilities at 212- 998-4980 or [email protected]. You must be registered with CSD to receive accommodations. Information about the Moses Center can be found at www.nyu.edu/csd. The Moses Center is located at 726 Broadway on the 2nd floor.

Academic integrity Academic integrity is highly valued and academic dishonesty of any kind, cheating, forgery, plagiarism and collusion, is unacceptable and will not be tolerated. During exams, a student should neither give assistance to nor receive assistance from anyone and should not use any unauthorized notes or other aids. Any suspected cheating will be reported to the school, possibly resulting in course failure or school dismissal.