Course: AD 678 Financial Regulation and Ethics (Section A5)

Semester: Fall 2024

Table of Contents

1. Course Overview

2. Instructor

3. Text & Materials

4. Learning Goals and Objectives

5. Course Expectations

6. Current Event Research Paper

7. Group Project

8. Exams

9. Course Grading

10. Class Schedule: Lecture Topics

11. Requirements, Policies and Standards

12. Academic Conduct Policy

1. Course Overview

.  AD678 is a comprehensive inancial regulation course.

· We focus on the key federal statutes that regulate securities and participants in the securities markets. These include

o   The Securities Act of 1933,

o   The Securities Exchange Act of 1934, o   Sarbanes-Oxley Act of 2002,

o   The Dodd-Frank Act of 2010,

o   The Foreign Corrupt Practices Act, and

。Several criminal statutes applicable to securities fraud and related offenses.

· We will read statutes and case law and use examples to understand the practical application of the law in real life.

.   Federal law governs the issuance of securities (“going public”), regulates companies whose    shares are being traded (known as “ issuers”), and makes rules for everyone working in the    securities industry, including investment bankers, brokers, dealers, and investment advisors.

· Issuers and investment irms (and their employees or directors) who violate federal securities laws and regulations face civil litigation from shareholders, enforcement actions by the

Securities and Exchange Commission, and criminal prosecution by the U.S. Department of Justice.

· After successfully completing the course requirements, students should be familiar with the   complex system laws, government agencies, self-regulatory organizations (“SROs”) and courts governing the securities industry to “protect investors, maintain fair, orderly, and eficient markets, and facilitate capital formation.”

http://www.sec.gov/about/whatwedo.shtml

· Students should also have a basic understanding of the separate system of federal laws and regulations governing the commercial banking and insurance sectors of the U.S. inancial     services industry.

A schedule of reading assignments and assigned problems is given in the course schedule.

Students are expected to prepare for the lectures as well as to do reading and research on their own. The objective of the lectures will be to guide and clarify student learning. Students are

expected to read the required chapters and other assigned readings and come to class prepared to participate in a group learning experience. Class attendance is mandatory.

· There are two exams in this course. The irst exam will cover the readings, lectures, and assigned case studies within the irst half of the course. The second exam will focus on the material from  the second half of the course. Reviewing notes of classroom lectures and discussions and

reading the key statutes regulating the securities industry, and the case law that interprets these statutes will be of paramount importance for preparing for the exams.

· In class we will discuss cases, identify issues, analyze and discuss questions, using current events and news stories as well as hypothetical examples to better understand the application of

securities regulations in the real world. Students need to come to class prepared to ask questions and offer their viewpoints on the assigned readings and case studies.

2. Instructor

. Course Instructor: Prof. Christopher Athaide · Contact Information: [email protected]

· Classroom: 100 Cummington Mall, SOC B57

· Office Location: 1010 Commonwealth Ave, Room 426

. Office Hours: Wednesday 12 noon – 2:00 pm and by appointment.

3. Text & Materials

1. Required Text, Course material, and Case studies:

。 Palmiter, Alan, Securities Regulation: Examples and Explanations, 8th ed. ISBN-13: 978-1454833925, ISBN-10: 1454833920

The SEC website https://www.sec.gov/ is a useful source of information. 2. Optional Readings:

The Wall Street Journal: http://www.wsj.com/

3. Blackboard Site: You will need a BU Id to logon. http://learn.bu.edu

4. Learning Goals and Objectives

· Understand the role of the Securities and Exchange Commission in regulating securities markets and their participants

.  Understand how federal securities laws and regulations protect investors in the issuance of securities through disclosures by issuers

· Understand how issuers are regulated by the federal government, including through anti-fraud provisions, disclosure requirements, corporate governance regulations, and anti-bribery laws

· Understand how securities laws and regulations apply to the accountants, lawyers, and bankers for securities issuers

.  Learn what constitutes insider trading

· Consider the line between what is legal and what is ethical in the securities industry

· Be introduced to the regulations that govern those who work in the securities industry,

including brokers, dealers, and investment advisors

.  Understand how federal law criminalizes bad behavior in the securities industry

· Be acquainted with the separate structure of federal laws and regulations governing the commercial banking and insurance sectors

5. Course Expectations

1. The course will be conducted through a sequence of weekly classroom lectures. A learning

partnership and the development of a class community are essential to a meaningful experience in this course. Students learn from students. As a member of the class learning community, each student is responsible for contributing to the educational experience of the entire class. The

class participation grade will reflect the quality and quantity of contributions to class discussions and teams as well as other voluntary activities inside and outside the classroom that enhance

the course experience for everyone. The best way to judge your performance in this area is to ask yourself after every class: “what value did I provide in class today”?

2. Learning in this class requires signiicant preparation before class and deep immersion in the

material. Skimming the materials will not sufice. The workload in and out of class will vary from week to week. Because much ofyour grade is based on class participation, you must prepare for class. Although every student is different, you should be spending at least two hours preparing for most of our class sessions. This estimate includes time to read the assigned materials, think, read them again, and take careful notes. You should also be asking me (or your classmates) questions and doing additional background research if you have questions or curiosities.

6. Current Event Research Paper

· One of the best things about studying securities regulation is that the topic is in the news daily. Every day a new company chooses to go public, another executive at a public company is

charged with violating anti-fraud provisions, or another public company is investigated for

attempting to bribe foreign government oficials. The current event research paper assignment asks that you choose one current event relevant to any of the topics we will study this semester, and write a research paper describing what happened, the relevant law, and the signiicance of the story for the industry, the company, the law, and/or you.

· How to choose your current event: The current event must have been in the news within the last six months. To ind a topic of interest, start reading the inancial and business news now. You might also visit the SEC’s website for press releases, or some of the many blogs on securities regulation, white-collar crime, or corruption. You can also follow the SEC on Twitter. Once you   ind a news story, you will research it more deeply, including the relevant law. Your story does   not have to be a case that has gone to court already. It can be an investigation, a proposed new rule or regulation, or any other story that implicates the legal issues we discuss in class.

· What to include in your paper:

o   a detailed description of the current event

o   a detailed discussion of the relevant law – explain the law from the very beginning as if your reader knows nothing about the topic; this is how you demonstrate your understanding of the law

o   an analysis of the current event – Why is it important to the industry? What companies will care about this news story? What will its impact be? Who will win? Why? You can answer any or all of these questions (or any other question). The goal is to demonstratea meaningful application of law to facts, and deep thinking about the issues presented by  the news story

Logistics:

o   7-8 pages, double spaced

o   Citation required anytime what you just wrote down did not originate in your brain

o   The paper should be prepared using the APA writing style. and guideline for references’

format. You must provide a bibliography, and all direct quotations and data sources must be properly cited.

o   The Department uses the APA style. to facilitate reading the paper and understanding

references without being as cumbersome as some other citation styles (such as Chicago or MLA).

。Students can download the student style. guide from the American Psychological

Association website or you can purchase the APA style. guide from the book store. There is even a help disk that can be purchased for about $ 40 (https://apastyle.apa.org/) that will  walk you through the process as you write the paper if you desire more “personal assistance”.

。 Papers are to be RESEARCH PAPERS. Remember that work that you use from other

authors MUST be referenced. Since it is assumed that you are not an authority on the topic that you are writing, it is expected that this paper is an overview of many different sources of information. Each of these must be attributed to the author using the APA format.

o   This is your paper and not the cut and paste of someone else's work. The internet has led to a false sense of what research is all about. Those new to research tend to think that it  means spending an afternoon suring the internet and then an afternoon cutting from material available.

。 Keep in mind that the Internet: (1) is not quality oriented as it has good materials and not so good materials and does not know the difference; (2) is NOT a sole source location. In particular, sources such as Wikipedia are the works of individual submitters which are not reviewed. Thus, while many entries provide excellent information, some are fundamentally flawed or just plain wrong.

。 Keep in mind that the Boston University Library as well as your local, state and the

national US Library of Congress have extensive online services. USE THEM.t plain wrong.

7. Group Project

· Historic Financial Scams

o   Much of the law regulating the inancial industry is reactive: Congress passes laws after   things go badly. Thus, to truly understand securities regulation and white-collar criminal laws, one must know the historical context in which the laws were passed. For better or   worse, inancial scams usually involve larger-than-life characters and creative schemes.

o   I hope you have fun learning about the “bad guys” of the inance world. In teams, you will  be asked to research one of the historic inancial scams that connect to our laws today. You will present your learning to the class. Each presentation should explain:

Who are the key players?

What was the inancial scam or scheme?

What laws were violated? Or, if you were assigned a old scam, what current laws would have been violated?

What was the regulatory response to the scam? Did it lead to any changes in the law?

o   The Scams (by Team #)

1. Charles Ponzi - The Original Ponzi Scheme

2. Enron

3. Eddie Antar – Crazy Eddie

4. WorldCom

5. ZZZZ Best Cleaners (1986)

6. Ivan Boesky

7. Samuel Israel III

8. Bernie Madoff

8. Exams

· You will have one midterm exam and one inal exam in this course.

· The date of the inal exam is set by the registrar's ofice. It is usually announced by the end of September.

The course material is dense, so we will divide it in half with each half being tested on separate exams.

,  The exams are NOT cumulative.

· In most cases, the exams will ask students to answer a series of questions by applying the law they have learned to a hypothetical fact scenario.

9. Course Grading

· You can expect to be challenged in this course, and excellent, research quality work will be rewarded with an ‘A’. Grades for this course will be curved.

· This is a Boston University course; that means something. One thing it means is that we

recognize and reward excellence. Excellence is uncommon, even rare. Your grade, then, will   reflect the standards of excellence set by Boston University, in which only truly distinguished work will receive the highest grade.

· Student participation is essential for a successful class. Contributing to the discussion in each class will give you an opportunity to be heard, and to experience a rewarding learning

environment. Each student is required to add value during class discussions. Use this opportunity, it’s yours.

Course grades will be determined as follows:

1.	Area Two one-page case write-ups	Weight 10%
2.	Two Exams	40%
3.	Current event research paper	20%
4.	Historic financial scam presentation	20%
5.	Class Participation	10%