Christoph Kumpan

Conflicts of Interest in Securitisation: Adjusting Incentives

While many factors have contributed to the current financial turmoil, its roots can be traced back to misaligned incentives on the micro-level which resulted in numerous potential conflicts of interest. Examining the situation of investors and the various participants responsible for creating and securitising subprime mortgages, the article focuses on these conflicts of interest and provides suggestions on how to address them. While certain issues require regulatory intervention, many conflicts of interest could be solved by adjusting the incentives for market participants to induce them to voluntarily act as desired. A regulation that adjusts incentives appears to be more appropriate and more effective in the long run than heavy-handed regulatory intervention. A regulation of the financial system which is too restrictive, while hailed in times of crisis, would stifle growth and innovation, and thus ultimately damage the very institution it is meant to protect.

Preventing Bank Insolvencies in the Financial Crisis: The German Financial Market Stabilisation Acts

The Financial Market Stabilisation Act of 2008 and the Supplementary Financial Market Stabilisation Act of 2009 allow the German state to gain unlimited control over banks of systemic importance. The emergency character of both acts is to be understood against the background of the turbulences of the financial crisis and the short time span available for bank rescue. Prior to the Acts, neither German insolvency law nor company law nor capital market law provided the means to safely restructure troubled banks. The content and evaluation of these state interventions in the banking sector under the pressure of the financial market crisis are relevant not only for Germany, but in a broader international context.The first mechanism to obtain unlimited control over banks of systemic importance, which has been applied in the takeover of Hypo Real Estate in 2009, relies on company and takeover law instruments such as capital increases and squeezeouts. These instruments have been modified by the two Financial Market Stabilisation Acts as regards state-initiated takeovers of systemically important banks. However, these modifications and additional measures, e. g., for combating shareholder strike suits, raise doubts on their compatibility with EC law and German constitutional law. Indeed, actions at the German Federal Constitutional Court are already pending.The second mechanism to obtain unlimited control involves expropriating the shareholders of systemically important banks. This comes with advantages such as transactional certainty and compliance with EC law. However, expropriation touches on the fundamental principles of the German economic order and especially on the constitutionally guaranteed right of ownership. The Rescue Takeover Act, which has been introduced by the Supplementary Financial Market Stabilisation Act, does not breach this constitutional guarantee. However, great care has to be taken in the application of the Act in the individual case.

Insidergeschäfte und Ad-hoc-Publizität bei M&A – Unternehmenskäufe und Übernahmeangebote und Marktmissbrauchsverordnung (MAR)

Der richtige Umgang mit Insiderinformationen spielt bei M&A-Transaktionen eine wichtige Rolle. Dementsprechend ist den Regelungen zu Insidergeschäften, zur Offenlegung von Insiderinformationen und zur Ad-hoc-Publizität in der M&A-Praxis besondere Aufmerksamkeit zu widmen. Hierzu hat die Marktmissbrauchsverordnung von 2014 eine Reihe von Neuerungen gebracht. Dies wird im vorliegenden Beitrag zum Anlass genommen zu untersuchen, welche insiderrechtlichen Anforderungen die neuen Insidervorschriften im Zusammenhang mit Übernahmen, Verschmelzungen, Unternehmenskäufen, Paketerwerben und generell M&A-Transaktionen stellen. Dies erfolgt mit Blick auf die einzelnen Transaktionsschritte und getrennt nach Übernahmen und sonstigen M&A-Transaktionen wie Unternehmenskäufen, Verschmelzungen etc.

Auditor Independence at the Crossroads – Regulation and Incentives

In November 2011, the European Commission published legislative drafts proposing radical reforms for statutory audits in Europe,1 fuelling heated political and academic debates2. This paper presents cornerstones for a new regulatory framework of auditing and thereby contributes to the ongoing debate on the role of auditors and their independence.