• An analysis of the law and practice of securitisation

      Reis-Roy, Calvin (University of Wolverhampton, 2007-10)
      The introduction, and evolution of securitisation over the years, has made a phenomenal contribution to the area of corporate finance. Securitisation is specialised area which has evolved to deliver considerable advantages to banks and their corporate and government clients, a sub-subjected explored in this thesis. Securitisation is using the cashflow, creditworthiness and collateral of receivables to raise finance from the capital markets. To date, research on the subject of securitisation has produced a few textbooks and numerous articles written by academics and practitioners. The ambit of these writings addresses three questions, namely, what is securitisation; how does it work in practice; and how can securitisation be developed so that it can continue delivering advantages in the evolving world of corporate finance. Securitisation is very much a practical subject, and given that the author had very little, if any, practical exposure to the subject prior to developing this thesis, the author, admittedly, felt challenged to ascertain significant issues that could be developed to the extent that such development represents an original contribution to knowledge. Case law in the US had already explored the most significant issue regarding securitisation, namely, true sale. Armed with a solid theoretical base of knowledge that author looked for inspiration, and discovered it during the initial days when the Enron scandal hit the headlines. In short, the Enron scandal involved using the concept of securitisation to facilitate financial crime. The masterminds (if its appropriate to use such description) of the scandal, as this thesis will unfold later, cleverly used thousands of securitisation and hedging transactions to raise funds in order to give financial creditability to a giant corporation which on the surface appeared prosperous but, in reality, was breathing to a large extent on borrowed funds. This scandal, in which securitisation was used, inspired the author to develop the originality of the thesis by focusing on the issue of securitisation and financial crime. Given that financial crime is a huge area to explore, the author narrowed the focus to look at money laundering, and address the question: can the practice of securitisation facilitate money laundering? To approach this question and answer it at doctorate level required a solid understanding of what securitisation is and how it works in practice. Using textbooks, articles and conversations with practitioners, the thesis documents under Part 1, what securitisation is and how it works in practice before moving on to Part 2 to look at if and how securitisation can facilitate money laundering.
    • Securitisation and currency hedging under Islamic Shafi law, part 1

      Haynes, Andrew; Reis-Roy, Calvin (Sweet & Maxwell, 2018-02-28)
      This, the first part of a two-part article, examines key features of asset-backed securitisation and currency hedging under Islamic Shafi law. Reviews basic principles of Shafi law, and the Musharaka structures of its profit-sharing agreements, the use of Ijarah structures in securitisation, agency agreements using the Wakalah structure, purchase and sale transactions under the Salam structure, and asset financing through Murabahah structures.
    • Securitisation and currency hedging under Islamic Shafi law, part 2

      Haynes, Andrew; Reis-Roy, Calvin (Sweet & Maxwell, 2018-03-31)
      This, the second part of a two-part article on key features of asset-backed securitisation and currency hedging under Islamic Shafi law, examines the potential range of Sharia-compliant assets, the types of sukuk that may be used, the possible choice of law questions, the pricing models involved, credit enhancement arrangements and the challenges concerning secondary bond markets. Details the scope for currency hedging under Sharia law.
    • Shadow banking: The next financial crisis?

      Barnes, Matthew (Thomson Reuters - Sweet & Maxwell, 2021-03-31)
      Shadow banking plays an integral part in modern day banking and finance. However, shadow banking is not a modern concept, in fact, it has existed for many years when considering credit outside of banking institutions. Shadow banking was coined around the time of the global financial crisis 2007-2009, but the roots of such run far deeper than this time period. This paper will discuss credit outside of the traditional banking system, shadow banking and the global financial crisis focusing on securitisation, and prominently how shadow banking may be the catalyst for the next financial crisis with a focus on China where it appears rife.
    • The Legal Implications of Off Balance Sheet Financing: A Comparative Analysis of UK and US Positions

      Yeoh, Poh Seng (Peter) (University of Wolverhampton, 2007)
      Off balance sheet financing (OBF) is either not visible or only partially visible in financial reporting for a number of reasons. It has attracted controversy in the light of its employment in a number of major corporate scandals. Previous investigations dominated by short works and consultancy papers have focused mainly on the financial aspects of OBF. This academic cross-country research on the use of OBF in the UK and US capital markets was undertaken to extend the published analyses to include a legal perspective by studying its legal implications for directors, financial advisers, auditors and financial regulators. The study’s legal focus prompted relying primarily on the doctrinal approach, which was in turn completed by the use of a modified case study in order to help address the how and why issues of the research phenomenon. The study found that OBF instruments are double-edge financial instruments with good and bad consequences. When corporations used OBF for liquidity enhancement or to realise financial savings, they result in positive outcomes. In contrast, when used for aggressive window-dressing or in the manipulation of financial reporting for fraudulent ends, OBF mechanisms generated serious legal liabilities for directors, auditors, and financial advisers in terms of compensation suits or even criminal sanctions. Financial regulators were nonetheless found to be less likely to face legal consequences as a result of current judicial attitudes on the tort of public misfeasance. However, the extensive applications of OBF in conjunction with other forms of creative accounting have resulted in various regulatory responses. On a comparative note, litigation and enforcement actions were found to be relatively more extensive in the US because of the higher incidence of large corporate frauds and the work of regulatory champions especially in New York using deferred prosecution agreements.