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{{g}}My port in your heavy storm.  
{{g}}My port in your heavy storm.  


A favourite {{tag|metaphor}} for U.S. Securities lawyers, who find [[safe harbor]]s in many unexpected places, to shelter them and their clients from the vicissitudes of:
A favourite [[metaphor]] for U.S. Securities lawyers, who find [[safe harbor]]s in many unexpected places, to shelter them and their clients from the vicissitudes of:
*The [[Bankruptcy Code]], when [[close out|closing out]] a derivative [[master agreement]]s against a U.S. corporations (and — perhaps not — [[ERISA]] plans);
*The [[Bankruptcy Code]], when [[close out|closing out]] a derivative [[master agreement]]s against a U.S. corporations (and — perhaps not — [[ERISA]] plans);
*The [[Investment Advisers Act of 1940]], for [[broker/dealer]]s wishing to bundle fees for [[research services]] into their [[commissions]] for [[equity brokerage]];
*The [[Investment Advisers Act of 1940]], for [[broker/dealer]]s wishing to bundle fees for [[research services]] into their [[commissions]] for [[equity brokerage]];

Latest revision as of 13:30, 14 August 2024

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My port in your heavy storm.

A favourite metaphor for U.S. Securities lawyers, who find safe harbors in many unexpected places, to shelter them and their clients from the vicissitudes of:

There are doubtless many more.

ERISA netting

Famously, ERISA plans tend to be set not to net, and for the unholiest of reasons, courtesy of the opinions committee of a leading U.S. law firm which prudence counsels it would be wiser not to name, but upon whom the whole market relies.

This firm cannot bring itself to rule out the risk that, when resolving an insolvent ERISA plan, a court would interpret ERISA as incorporating the US Bankruptcy Code as it stood in 1971 to the insolvency of the plan, rather than the Code as it stands at the time of insolvency. That’s a problem, because the “safe harbors” one relies upon for safely closing out swaps were only put into the Bankruptcy Code in the 1980s.[1] So, no netting against ERISA plans. Just in case.

Let me break that down:

Seriously. That’s it.

It is a frankly fantastical fear: Not only is it hard to know, at this remove, what the US Bankruptcy Code said in 1971, much less how it might have been interpreted in those days, but many of the institutions and concepts it relies on may since have been abolished or materially changed. Who knows? perhaps some old safe harbors from the 1960s might apply to swaps. But then again, since there weren’t any swaps before 1981, it’s not exactly likely. It would be an imaginative legislator indeed who catered in 1971 for something no-one had even had the presence of mind to think up for another decade.

Originalism?

There is a school of thought in US constitutional law — “originalism” — that when construing a legal text one should extract the original understanding at its time of adoption, disregarding all subsequent changes in law, moral consensus or technology. This is popular with conservatives, the four Yorkshiremen, people who think they don’t make things like they used to, but who are in denial about how crappy things used to be, and indeed how impossible it is to know, over the years, what those who framed a text had in mind in the first place anyway. It is a, ostensibly, a device from preventing judicial activism in favour of express legislative and constitutional amendment, but is in its own way just as wilful an exercise in juicial imagination. Perhaps we should call it judicial passivism, or even judicial passive-aggressivism. It is also to assume that legislation — especially consitutional legislation — is easily amended. But the U.S. constitution has long since transcended mere legislation and as become some kind of sacred article of faith for the American people. No-one is amending that. All that is left is creative interpretation of what it means to suit the current social climate.

See also

  1. Being WHEN SWAPS WERE INVENTED. See swap history.