Category: Sam Nadler

Handling Controversy: NFL vs. NBA

4/22/2015

By Sam Nadler

Sam Nadler is a senior at Vanderbilt University studying history.

National Football League (NFL) commissioner Roger Goodell stood at a press conference on September 19th, 2014, in his first public comments addressing the Ray Rice fiasco enveloping the NFL. Rice was initially suspended for only two games after a video was released showing him dragging his fiancé out of an elevator, but when TMZ released a second video of Rice actually knocking his then-fiancée Janay Rice unconscious, backlash to the NFL’s decision grew. After this second video was released, Goodell changed the initial suspension to an indefinite suspension. Goodell, visibly uncomfortable, struggled through the press conference, and afterwards the public was clearly not satisfied with Goodell's answers.

Only months earlier, Adam Silver, Goodell's National Basketball Association (NBA) counterpart, also stood at a podium addressing a controversy in his league. Donald Sterling, the then-owner of the Los Angeles Clippers, was recorded by his girlfriend V. Stiviano making racist remarks during a phone call. Silver left no room for doubt when he suspended Sterling for life from all league association and announced the initiation of proceedings to force Sterling to sell his team. In contrast to Goodell, he was not on the defensive, trying to protect himself and his league, but instead on the offensive. Also unlike Goodell, Silver was praised after the press conference for his quick and decisive action.

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PFG's Downfall in Retrospect: Consequences and Lessons

4/1/2015

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By Sam Nadler

Sam Nadler is a senior at Vanderbilt University studying history.

This past July marked the two-year anniversary of the uncovering of a massive fraud at the commodities brokerage firm Peregrine Financial Group (PFG). PFG's CEO, Russell Wasendorf Sr., stole money from customer brokerage accounts over the course of almost two decades. Amazingly, Wasendorf managed to escape the detection of both the regulators charged with preventing such fraud, and his employees at PFG. Two and a half years later, it is instructive to look back on the institutional deficiencies that allowed Wasendorf to commit fraud, the judicial consequences that arose from the case, and the steps taken by regulators to prevent similar fraud schemes in the future.

In the wake of the fraud’s discovery, many were dismayed by how 'simple' it was for Wasendorf to embezzle funds and evade regulators. PFG represented itself as a legitimate commodities brokerage firm, matching buyers and sellers of contracts, which dealt with commodities like wheat and oil. However, in 2012, Wasendorf admitted to stealing over $200 million in investor funds for his own use beginning as early as 1993. Wasendorf doctored paper bank statements to make it look like PFG's accounts held far more than they actually did. In the note he left before his failed suicide attempt in July 2012, Wasendorf wrote, "Using a combination of Photoshop, Excel, scanners, and both laser and ink jet printers I was able to make very convincing forgeries of nearly every document that came from the bank." Wasendorf convinced the National Futures Association (NFA), the self-regulatory organization charged by the Commodities Futures Trading Commission (CFTC) to regulate commodities brokers, that a P.O. Box he had rented belonged to the U.S. Bancorp branch that handled PFG's account. He sent the doctored accounts to the NFA with the P.O. box as the return address. [1]

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Paul Singer Takes On Argentina

3/19/2015

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By Sam Nadler

Sam Nadler is a senior at Vanderbilt University studying history.

The U.S. Supreme Court met on June 12, 2014 to decide the fate of an 11-year long legal battle. On one side was the billionaire investor and head of Elliott Management, Paul Singer, and on the other the nation of Argentina. Argentina had appealed a lower court's decision, which forced Argentina to pay Singer $1.4 billion for bonds that he bought after the country defaulted in 2001. The Court decided not to hear the case, affirming the previous ruling against Argentina.

The significance of this decision cannot be fully understood without the context of the legal actions prior to Argentina’s appeal to the Supreme Court. The story began twenty years ago in New York, when Argentina agreed to the Fiscal Agency Agreement (FAA) with Banker's Trust for the purpose of issuing bonds eventually valued at $82 billion. Section 12(d) of the FAA stated that Argentina would default if, among other eventualities, “a moratorium on the payment of principal of, or interest on, the Public External Indebtedness of the Republic [were] declared by the Republic.” [1] Furthermore, and of specific interest to later legal developments, section 22 of the FAA stated that Argentina was to “expressly accept the jurisdiction [...of] any state or federal court in the City of New York [... for] any action arising out of or based on the Securities or this Agreement by the holder of any Security.” [2] Thus, Argentina fully acknowledged and accepted that any potential future litigation regarding the bonds could be filed in the United States.

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A Big Win For Wall Street Reform Advocates

10/21/2014

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By Sam Nadler

Sam Nadler is a senior at Vanderbilt University studying history.

The Commodity Futures Trading Commission (CFTC) scored a major courtroom victory on September 16th against some of the country's largest financial institutions, including some involved in the financial crisis. In a move with great ramifications for Wall Street and future financial regulations, Judge Paul Friedman, US District Court Judge for the District of Columbia, refused to vacate new cross-border swaps rules implemented by the CFTC.

Regulating swaps, which are contracts that make it easier for derivatives traders to incur risk, is the focal point of the new CFTC rules. Simply put, derivatives are financial instruments that derive their value from an underlying asset. They are contracts between two parties that specifying the rules under which payments are made between the parties. They come in many different asset classes including commodities, bonds, stocks, and currencies, and are used to speculate or hedge market risk. Most of the trading in these financial instruments is known as Over the Counter (OTC), which simply means that it occurs as the result of a privately agreed upon contract between two parties and not through an exchange.

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Can the CFTC Get a Piece of the Bitcoin Action?

4/7/2014

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By Sam Nadler

Sam Nadler is a junior at Vanderbilt University studying History.

On March 24, Tera Group Inc., a company based in Summit, NJ, announced the finalization of an agreement for the first platform for Bitcoin-linked swaps. This announcement comes on the heels of months of speculation about the regulation of Bitcoin by U.S. financial regulators. The pseudo-anonymous peer-to-peer digital currency has recently dominated news headlines. From volatile price swings to the bankruptcy of the leading exchange Mt. Gox, many have called for regulators to increase the transparency and stability of Bitcoin markets. Furthermore, Bitcoin's continual increase in popularity has hastened the efforts of Federal agencies to clarify legal questions surrounding regulatory jurisdiction over Bitcoin.

While Federal Reserve Chairwoman Janet Yellen has publically stated that the Federal Reserve does not have the power to regulate Bitcoin "in any way," the Commodities Futures Trading Commission has undertaken preliminary steps that may lead to Bitcoin regulation. [1] The Commodities Futures Trading Commission (CFTC), in charge of preventing manipulation of commodities markets, has made public internal discussions regarding the legality and feasibility of Bitcoin market regulation. While the CFTC has yet to enact policy or determine if they have the legal authority to do so, current developments are clarifying the legality of Bitcoin-related regulations and may pave the way to regulation in the near future.

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The Roundtable

Handling Controversy: NFL vs. NBA

PFG's Downfall in Retrospect: Consequences and Lessons

Paul Singer Takes On Argentina

A Big Win For Wall Street Reform Advocates

Can the CFTC Get a Piece of the Bitcoin Action?

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