Reflection on Fall & Winter Semesters
In writing this reflection on the fall & winter semesters of my LLM degree at Harvard Law School, I am now more than halfway towards completing my degree. The time has certainly flown by. Since walking into orientation in late August 2017 to meet brilliant classmates from over 70 different countries, I have had the fortune of being immersed in an incredibly stimulating intellectual environment, albeit one that has taught me a thing or two about the perils of New England weather and the ominously named meteorological phenomenon of “bombogenesis”!
STUDIES IN SUBSTANTIVE U.S. LAW
During the fall semester, I undertook two subjects which were in the nature of courses in substantive U.S. law. The first of these was a course in securities regulation taught by Prof. Allen Ferrell, which explored the regulation of public and private offerings under the Securities Act of 1933 and the Securities Exchange Act of 1934, as well as recurring issues in securities litigation and class actions in the U.S. I also undertook the course “Regulation of Financial Institutions”, which was taught by Prof. Howell Jackson, a leading U.S. authority on financial regulation, and Ms. Margaret Tahyar, a partner in the Financial Institutions Group at Davis Polk Wardwell in New York City. This course was a far-reaching and fascinating study of the regulatory landscape faced by U.S. financial institutions. Particular emphasis was given to the fragmented demarcation of regulatory perimeters as between the S.E.C. and other U.S. regulatory agencies, and the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act in facilitating a more coordinated response to sources of systemic risk. One of the standout aspects of this course was the opportunity to participate in student-led “case studies” examining topical real world issues of regulatory uncertainty or policy concern, such as how emerging fintech business models and novel financial products fit into existing regulatory perimeters. In my case, this involved an illuminating examination of whether the business models of peer-to-peer lenders in the U.S. should be viewed entailing a public offering of securities such as to require registration with the S.E.C.
One of my intentions in undertaking an LLM was to delve deeper into how financial regulation is influenced by both empirical evidence and by philosophical and political assumptions. In this regard, Harvard Law School has provided a great breath of opportunities to explore the intersection of law “and” various other disciplines. In the fall semester, I had the opportunity to undertake a course in law and economics taught by Prof. Steven Shavell, a leading scholar in the economic analysis of law. The law and economics movement has had significant influence in the U.S., and this course provided a fascinating external perspective on how the law and legal rules shape human behavior and may diverge from socially desirable outcomes. I have also particularly enjoyed exploring the emerging role of behavioral economics in financial regulation, particularly with respect to consumer protection and efforts to improve outcomes for retail investors participating in the financial markets. In this regard, I have found particularly interesting the role of behavioral economics evidence in the U.S. in shaping the emergence of the Consumer Financial Protection Bureau, and the implementation of “sticky” default choices and behavioural nudges in the context of employee retirement saving plans.
INDEPENDENT RESEARCH & WRITING
In addition to coursework, a central aspect of the LLM program at Harvard is a requirement that all students complete an independent research & writing project. A central focus of my project is the recurring tension in regulatory system design between the certainty and guidance of detailed and precise rules, and the flexibility and prophylactic benefits of broadly articulated standards. In particular, I am exploring this tension in the context of the incorporation of fiduciary obligations and “best interest” standards into regimes for the regulation of financial advice. This is an area of topical interest and practical significance, particularly so in the U.S. in light of controversial reforms by the Department of Labor under President Obama expanding the range of investment advice subject to fiduciary regulation under the Employee Retirement Income Security Act of 1974, and the emerging prospect that the S.E.C. will seek to harmonise regulatory obligations of registered investment advisers and broker-dealers in the U.S. under a fiduciary standard. The best interests standard imposed in Australia by the Future of Financial Advice reforms provides an important comparative focus of my writing, particularly given ASIC’s recent successes pursuing civil penalties for breach of the best interests standard.
REFLECTIONS GOING FORWARD
I can already say that my time at Harvard has been invaluable, not only in terms of new learning but also in terms of developing fresh perspectives on prior experiences and thinking. I am looking forward to spending the rest of my time at Harvard further exploring novel perspectives on regulatory design that I can bring home to Australia. I am, and will continue to be, immensely grateful to the Banking and Financial Services Law Association for making this experience possible.