The Illinois Business Law Journal

Is China Ready to Establish the Stock Index Futures Market?

I. Introduction

  As a derivative financial product, Stock Index Futures (SIF) is distinguished because of its function in risk management when used duly. China is eager to introduce SIF to offer downside protection to investors, stabilize its stock market, and counteract the impact of offshore SIF based on its stock market. This article argues that this desire, however, may be hampered by the immaturity and design defects of the Chinese stock market, the high risk associated with the leverage effect of SIF, and China’s incompetence in the advanced financial market compared to sophisticated international investors. 

Zoning and Regulation of Detroit’s Adult Entertainment Businesses: Has it gone too far?

I.  Background

Detroit has been working hard to revive the city and bring residential growth to the downtown area. [1] Millions of dollars have gone into renovating historic buildings, creating new public transportation, reviving the riverfront and building residential lofts in the Central Business District area. [2] Detroit wants to prove that, “the growing population can support and sustain retail and grocery development,” for its current and future residents. [3] New casinos and stadiums have also enhanced the city’s cultural atmosphere while attracting a wave of young professionals. [4] Issues will arise, however, when the city tries to achieve this vision of a “better Detroit” by imposing ordinances and regulations on businesses that it deems problematic to their ideal. In particular, the city of Detroit has targeted the adult entertainment business as an industry they would like to see zoned out.

Sovereign Wealth Funds-The Newest Danger Facing the U.S. Economy

I.  Introduction

Amidst a global economic ‘credit crunch,’ world economies are desperately seeking dependable sources of investment into their financial institutions, in an effort to regain liquidity into their markets, enabling lending institutions to continue their day-to-day activities. One source of such income is derived from an emerging investment tool known as a sovereign wealth fund (also known as an SWF). This article will briefly explore the development of SWFs, explain the relevance they play in the U.S. and world economy today, raise national security issues that stem from SWFs, and address recent and developing legislation in response to the growing presence of SWFs in the U.S. economy.

Sovereign wealth funds are government investment funds composed of financial assets such as stocks, bonds, real estate, or other financial instruments that are financed by foreign currency reserves.[1] Some experts have referred to SWFs as oil or natural resource funds, because a majority were created with countries excess budgets from exports of oil and natural gas.[2] Many SWFs have developed because of the rising success of emerging economies, specifically in the Middle East and Asia.[3] In recent years, growing concerns have developed over the stake that these state-owned investment funds have in the private market of the U.S. These concerns are echoed by economists and government officials over the national security of the United States, which may be compromised because of the possibility these government owned investments might be securing a stake in vital economic institutions of the country for political rather than financial gain.[4]

Constitutional Property Rights over Oil Investments in Brazil

  I. Introduction

On November 8, 2007, the head of upstream regulator of Brazil Agencia Nacional do Petróleo (ANP) confirmed the discovery of a huge amount of ultra-deep oil field in Tupi [1], which increased 50% of Brazil's total oil reserves. [2] It is expected that in 2015, the exploitation of this oil field will allow Brazil to export up to one million of barrels per day [3] and will position Brazil as the eighth leading country with largest oil reserves in the world, between Nigeria and Venezuela. [4] As a result, it has become in an attractive place for U.S. oil investments in the upstream business.

This find might be an alternative to the new energy policies that President-elect Obama plans to implement, according to his New Energy for America Program, which includes the aspiration of eliminating current imports from Middle East and Venezuela before 2018. [5] Brazil might very well help to minimize the threat to US oil supply stability by becoming the next U.S. crude oil supplier.

One of the main factor investors evaluate when deciding to invest in a foreign country is its position toward the protection of property rights. Therefore, this article will provide an analysis of the constitutional provisions of Brazil, examining both property rights in general, and the treatment of property rights to petroleum.

Get On The City Bus: The Future of The American Suburb and Her Automobiles

Introduction

Jane Jacobs’ 1961 book, the Life and Death of Great American Cities revolutionized the way Americans viewed the streets that stretched beyond their front door.  In critiquing the programs of her era’s urban planners, Jacobs held up the sentimental and somewhat physically cramped city neighborhood as the pinnacle of communal living. [1]  Regardless of Jacobs’ warnings, urbanism rolled on, and in so doing, the suburb was born. Despite Americans’ preference towards the suburb in the later half of the twentieth century, our nation is currently poised to regret the very expansionist zest that drew them away from the urban core.  With the fluctuating price of gas and the limited public transportation alternatives, suburban Americans are forced to devote an ever-growing portion of their income and time to surviving their daily commutes. [2] Reducing the price of gas may be a legitimate means of combating the immediate crisis, but even if successful, would not decrease our nation’s dependence upon the automobile or curtail an expansionary suburban existence.   The issue confronting policymakers today is whether to realign current residential settlement patterns or to vastly improve public transportation within suburbs.  This article discusses some of the possible means available for accomplishing the latter.

Preventing Price-Gouging of Gasoline after Natural Disasters

Introduction

In 2007, in response to the public’s anger about the high cost of gasoline after the hurricane disasters, the House of Representatives drafted and passed the Federal Price Gouging Prevention Act (“FPGPA”), which reads in part:

“It shall be unlawful for any person to sell…during a period of an energy emergency, gasoline…at a price that
(A) is unconscionably excessive; and
(B) indicates the seller is taking unfair advantage of the circumstances related to an energy emergency to increase prices unreasonably.” [1]

To date, the Senate has not voted on the bill.  While the victims of recent hurricanes were understandably angered with rising gasoline prices in the days following the disasters, the FPGPA would ultimately do these consumers more harm than good in terms of economic recovery because the language of the bill sets an unclear standard for law enforcement, merchants and consumers, and anti price-gouging legislation has been shown to cost consumers more money long-term.  Rather, modification of federal and state legislation already in place would most effectively prevent the unfair manipulation of gasoline prices.

And the Walls Came Tumbling Down: Deregulation & the Current Financial Crisis

I. Introduction

While intellectuals, economists, bankers, and pundits try to explain the ins and outs of the economic downturn we are currently facing, many on "main street" are asking "what happened to make my 401k retirement savings account diminish so much in value since I looked at it in August?" The fact is that many hard working individuals have no idea what happened to cause the global economic downturn we are currently facing, and the explanations being put forth by most media outlets simply do not make sense to many people.

In trying to understand the situation, there are without question many factors that played a role. Trying to identify one overwhelming factor would be futile, however, this article will look specifically at the role deregulation played in the financial crisis.

Non-Compete Agreements: Friend or Foe?

I. Introduction

In today's economical climate, the excitement of finding a new job can be overwhelming. Additionally, In the rush of starting work, it is easy to skim the fine print of a contract without fully understanding its terms. Non-compete agreements in employment contracts can cause much unnecessary and hardship on an individual once that individual chooses to switch jobs. Additionally, while it may seem unintuitive that an individual cannot use skills learned at one job to advance his career at another job, many companies rely on non-compete clauses to limit just that. This article will discuss the non-compete agreements generally, the history of non-compete agreements, and the legal standards state courts use in examining non-compete agreements. It will then discuss how to enforce and contest non-compete agreementsare. Finally, it will conclude by giving advice for the employer or employee who is unsure about how to approach a non-compete agreement.

Chipping Away at the RIAA's "Making Available" Theory of Copyright Infringement

I.    Introduction

On September 8, 2003, the Recording Industry Association of America (RIAA) filed copyright infringement lawsuits against 261 individuals for sharing songs on peer-to-peer (P2P) networks.[1]  In the five years since, the RIAA has sued, settled, or threatened litigation against over 30,000 Americans for alleged violations of the Digital Millennium Copyright Act.[2]  These actions have attracted a great deal of public attention, largely due to the fact that the suits have hit very close to home for many Americans.  Unlike prior lawsuits, which targeted software programs such as Napster and Grokster, this new chapter in the file-sharing saga has focused on ordinary people.[3]  The targets of the RIAA’s legal claims run the spectrum of everyday people who are not typically the subjects of copyright actions, including children, parents, grandparents, single mothers, professors, and college students.[4]

The RIAA’s strategic offensive against music consumers has spurred a firestorm of debate concerning topics such as copyright law, technology, privacy, and legal procedure.  For the first few years of the RIAA’s legal efforts, the focus of legal and social observers centered on the RIAA’s tactics for identifying and filing suit against potential defendants.[5]  In the last year, however, as contested cases have made their way through district court litigation, the focus has shifted to the interpretation of black-letter copyright law.  The RIAA’s “making available” theory of infringement has garnered a great deal of attention, though its acceptance by district courts has been inconsistent.  To date, the few district courts to rule on the matter have each interpreted the Copyright Act differently in the context of file-sharing, indicating that there is likely to be ongoing uncertainty until appellate level courts offer clarification.  For the moment, though the trend is moving away from acceptance of the "making available" theory, courts appear more willing to allow the RIAA to prevail on the basis of actual dissemination.

Merger Talks in Detroit Auto Business

I. Introduction

Since September, General Motors ("GM") and Chrysler's majority owner, Cerberus Capital Management have been in talks over the possibility of acquiring Chrysler. [1] Both companies are facing a financial crisis as both have suffered huge losses during this economic recession. [2] Moody's Investor Service stressed that GM would run out of operating cash next year without new sources of capital. [3] GM sees it merger with Chrysler as its bailout providing the company with revenue, cash flow, and cash reserves to make it through the coming year. [4] Merger talks have dealt with GM acquisition of Chrysler's auto business and Cerberus merger with lender Chrysler Financial Services and GM's ownership of GMAC Financial Services. [5] However, the question remains: how beneficial will the GM-Chrysler merger be to these companies. In this article, the advantages and disadvantages of the merger will be discussed.

Tamed Tigers: Sovereign Wealth Funds as Passive Investors

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.

Wall Street to Fraud Street: Disgruntled Investors Want Compensation

I. Introduction

With the financial crisis showing no signs of recovery many are worried about employment, job security, investments, and the overall economy. With the collapse of Lehman Brothers Holdings, the buyout of Merrill Lynch along with several other Wall Street firms, and the government bailout of American International Group, many are beginning to reevaluate and question Wall Street and the executives that run the corporations.[1] While the Bush administration was proposing a $700 billion bailout plan, investors began to point fingers at the wealthy corporate executives that pocketed millions of dollars while the companies they worked for crumbled.[2] Although there are several factors that played a part in the Wall Street crisis, investors are lining up to sue the executives with the deep pockets.[3] Two major issue at the center of heated discussion are: fiduciary duty and executive compensation.[4][5] 

New Stadiums, Higher Prices, No Remedy

I. Introduction

It seems like every sports franchise is building a new stadium these days. In New York alone, four franchises (the Yankees, Mets, Giants, and Jets) will be moving to three new facilities within the next two years. [1]. By 2011, other area teams including the Rangers, Liberty, Knicks, Nets, Devils, Islanders, and Redbulls will all be playing in new or renovated stadiums. [2] The allure of a new stadium cannot be denied: more luxury seating, refined amenities, state of the art technology on and off the field, attracting free agent athletes and corporate sponsors, and last but not least, the bragging rights to say "my home town ball park is better than yours!" Sadly, with new stadiums come new costs to fans of their sports, not the least of which is increased ticket prices. Additionally, apart from increased ticket prices, there are additional costs that come with new stadiums.

Banking Acquisitions during the Financial Crisis

I. Introduction

When the housing crisis was at its lowest point, entire neighborhoods were experiencing the possibility of foreclosure as residents defaulted on their mortgage payments. Foreclosures and consumer defaults have not only damaged the housing market but also have affected financial institutions. [1] The financial industry was hit particularly hard, especially leading subprime lending banking institutions. Washington Mutual, Freddie Mac, Wachovia, Bear Stearns, Countrywide and Merrill Lynch have been or are in the process of being acquired by big banks, strong enough to make the acquisition. [2] In this article, I will discuss the most recent acquisitions, Washington Mutual and Wachovia Corp., and analyze the benefits of this acquisition to the banking industry as well as the costs to consumers.

Salute Your Shorts

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?