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1 Law & Fin. Mkt. Rev. 1 (2007)

handle is hein.journals/lawfinancmr1 and id is 1 raw text is: Editorial

First Issues
This is our first issue, so a preliminary word about why we
are here seems appropriate. Every journal probably thinks it
is filling a gap in some way but we suffer from no delu-
sions as to the presence of competition in the banking/
financial law field. We just want to take a slightly different
approach. The name of our publication gives at least some of
the game away. We do not want to focus only on what some
call financial law (or even financial markets law). We
want to explore the relationship between law and the func-
tioning of the financial markets. This means that, for
example, in addition to legal developments affecting how
transactions are carried out, the laws on such things as extra-
dition and various aspects of financial crime also interest
us. Likewise, the implications of market practice and soft
law developments. Organisations are expected to observe
and comply with much more than just the law. Codes of
conduct and practice, various kinds of regulatory
pronouncement and promulgation, and the collective
wisdom of professional, trade and industry bodies have an
effect that can be indistinguishable from hard law. Such
things have a direct impact on the behaviour of market
participants and merit careful analysis and consideration.
Our approach results in an extensive agenda. We are not
limited to developments in English law, nor are we bound by
any preconceived requirements for any kind of geographical
balance. We want to look at law's role in serving an
expanding, international market. Addressing issues jurisdic-
tion by jurisdiction remains, of necessity, the norm, but for
how much longer? Whichever jurisdiction you may call
home, your appreciation of how your laws work can only
be improved if you have some idea of how they do it in
other places. And looking at issues across jurisdictions may
help us see the direction we should be taking to deal with
the more complex issues to which the law still does not
supply a satisfactory answer.
Changes in the law are inevitable and may be thrust upon
us for a variety of reasons. Market participants do not always
greet reform proposals with open arms. The markets' desire
for certainty in the law is well known and understood but
we also need to understand when and why reforms might
be necessary, whether in mature or transitional jurisdictions.
Market innovation in some areas tends to set such a cracking
pace that the law gets left behind - with predictable legal
risk consequences. If it works, don't fix it can be a
dangerous policy, especially in the absence of clear case law.
We value highly contributions to our journal from market
participants (and are delighted that Allen & Overy, Clifford
Chance and Lovells are supporting our update service, with
Herbert Smith adding a general regulatory update with effect
from the next issue). But we also value contributions from
academics who are expert in the various fields we cover (and
their contributions are peer-reviewed).' We plan to feature
interviews with leading lawyers and others in addition to
conventional articles. Lord Woolf's observations in this issue

provide a fascinating perspective on how a body like the
Financial Markets Law Committee helps to make the rela-
tionship between the law and the markets work properly. His
remarks on the rule of law also find echoes in our daily press.
Last month, two quality London papers expressed concerns
in lead editorials about the rule of law in both the UK and
Russia in the space of a single week. This is not an issue of
interest only to legal philosophers. (In both cases the politics
of the situation were such that relations with major trading
and security partners were perceived to be threatened.) As
this issue goes to press, the papers are reporting on a range of
issues that we confidently predict will be with us for some
time to come. In what circumstances, for example, should a
bank be held responsible when a corporate customer collapses
leaving many individuals out of pocket and facing a disap-
pointing Christmas because their savings have been swallowed
up in the insolvency process? Is this a case of breach of
existing duty, a shortcoming in the law, an attempt to find a
deep-pocket fall-guy or just plain hard luck? Will banks
ever be able to avoid being sucked into responsibility for the
misbehaviour of their customers? Regulatory issues, as ever,
ride high. Is principles-based regulation (including TCF,
or treat your customer fairly) the way of the future? Green
issues and corporate social responsibility have also climbed
the agenda. Are company directors facing an onslaught of
speculative litigation by stakeholders as the new UK
Companies Act provisions come into force? What exactly
does corporate social responsibility mean for a financial insti-
tution? Can the risks involved in such concepts be better
These are just a few of the themes that will continue to
feature. The ever-expanding impact of EU legal reforms will
remain a preoccupation. The bedding down of rescue
culture reforms in insolvency law (and related attacks on the
floating charge as a form of security) will also continue to
generate interest. And then there is the role of lawyers them-
selves. The Sarbanes-Oxley legislation in the United States
was preceded by various comments from public figures to
the effect that in the various well-known US corporate
scandals, lawyers had usually been involved in drawing up
documents and generally were present at the scene of the
crime. Such guilt by association analysis is sometimes
heard in the UK and elsewhere. Increasingly under scrutiny,
rightly or wrongly, lawyers involved in advising on various
kinds of financial transaction (whether in-house or in pri-
vate practice) are, it seems, expected to take a degree of
responsibility for the propriety of what is being done, to
look out for warning signs, blow whistles, and generally
be some kind of gatekeeper. The distinguished US aca-
demic lawyer, John Coffee, in his recently published book
Gatekeepers,2 defines the latter expression as connoting
some form of outside or independent watchdog or
monitor - someone who screens out flaws or defects or who
verifies compliance with standards or procedures .3 Coffee
bemoans the failure of gatekeepers such as lawyers, accoun-
tants and rating agencies to function effectively in the case of

Law and Financial Markets Review

January 2007


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