U.S. Banks Plan to Use Cellphones as a Substitute for ATM Cards

By Aamir Virani, J.D. Candidate 2019 | Posted on

Major banks like J.P. Morgan Chase, Bank of America, and Wells Fargo all have plans to roll out thousands of ATM machines this year that will be accessible using cellphone technology alone.

These new machines give customers the ability to obtain cash or make deposits without the use of a traditional ATM card. Customers who are logged into their mobile banking apps on their phones can use N.F.C. (Near Field Communication) chip readers on the new machines in order to gain access to their accounts. J.P. Morgan Chase has already introduced this technology in several hundred ATM machines in four test cities across the United States. Bank of America already provides this service to users who have compatible phones and certain wallet apps, but they plan to bring this cardless option to all of their machines by the end of 2017.

With the introduction of this new technology comes both security advantages and disadvantages. One distinct benefit of using mobile technology instead of ATM cards will be a reduction in “skimming”, which is the process by which a scammer steals card information in order to access an individual’s bank account. However, this new innovation still has its flaws. A Chase customer recently had $2900 stolen from her account when a thief obtained her login credentials, installed the Chase app on his phone, and used it to access her account at one of Chase’s new machines. Chase claimed it used this incident to strengthen its security measures.

In general, there is agreement that mobile ATM transactions are much faster than traditional card transactions. One bank even noted that its average transaction time dropped from 45 seconds to 10 seconds.

Many experts believe that ATM cards will remain a part of our financial ecosystem, but to what extent remains to be seen.

U.S. Banks Plan to Use Cellphones as a Substitute for ATM Cards (PDF)

Snap Aims for Valuation of More Than $20 Billion in IPO

By Lindsey Sugimoto, J.D. Candidate 2019 | Posted on

Snap Inc., the parent company of Snapchat, is positioned to be one of the biggest initial public offerings in the technology industry in years. The company will have the ticker symbol SNAP and is expected to begin trading early March. Snap has an expected potential value of about $22.2 billion, with its midpoint being close to $20.9 billion based on offerings in the range of $14 to $16 per share. Despite being lower than the $25 billion that Snap anticipated, it is significantly higher than the $16.5 billion that the company valued itself last year.

At a similar stage of the offering process, Snap will trail Facebook, as Facebook was valued at around $86 billion. Yet, Snap will greatly exceed Twitter’s valuation of $12 billion back in October 2013.

Snap will be beginning a two-week tour with three of Snap’s top executives to sell investors on one of the most promising and fruitful IPOs this year. The three executives include co-founder and chief executive Evan Spiegel, chief strategy officer Imran Khan, and chief financial officer Andrew Vollero. This tour officially began on Thursday, when Morgan Stanley hosted the executives to speak with its sales force. Goldman Sachs, another underwriter, installed the Snap’s Spectacles vending machine in its lobby.

Snap’s investors have questioned whether Snap has the ability to maintain its use growth rate, especially given Facebook’s recent additions in Instagram that mirror much of Snap’s features. While this may be so, Snap maintains that it averaged around 158 million users a day last year, and has focused its primary efforts in North America and Europe, as opposed to worldwide.

Additionally, investors are wary about Snap’s ability to maintain profits. Despite the company’s loss of $154 million last year, its revenue grew from $58.7 million in 2015 to $404.5 million last year. This boosted revenue stems from Snapchat’s decision to provide services for both users and advertisers. Starting off a platform for people to send disappearing messages, Snapchat has evolved to allow users to create “stories” and play with filters that have face-swaps or paid-for content.

Yet, one caution for investors is that they will have minimal influence in the company’s management, as the co-founders will be retaining about 89 percent of the voting shares. The shares in the offering will not include voting rights.

With so much speculation, Snap’s IPO is one to watch. Snap’s IPO may reflect the market’s appetite for other tech IPOs and may affect Snap’s reputation as one of today’s leading technology companies.

Snap Aims for Valuation of More Than $20 Billion in IPO (PDF)

Chinese Conglomerates Diversify by Buying U.S. Investment Firms

By Arjun Ghosh, J.D. Candidate 2019 | Posted on

As the number of consumers in China continues to grow, some Chinese conglomerates are raking in cash and looking for ways to diversify their businesses. What are they doing with this money? Recently, they have been looking to buy U.S. investment firms. Specifically, Chinese businesses are attracted to firms that practice more passive investment strategies, like investing in “funds of funds.”

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Pearson Considers Selling its Stake in Penguin Random House

By Hector Ramirez-Pardo, LL.M. Candidate 2017 | Posted on

On January 18, 2017, the British multinational Pearson PLC informed its intention to drop its 47% share in Penguin Random House – PRH. This announcement occurs only three years after the biggest merger of publishing companies, which currently is responsible for 25% of the worldwide sale of books.

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Rolls-Royce to Pay $817 Million to Resolve Bribery Investigation

By Yuxuan Wang, LL.M. Candidate 2017 | Posted on

Rolls-Royce, the United Kingdom-based manufacturer and distributor of power systems for the aerospace, defense, marine and energy sectors, agreed to pay the United States nearly $170 million as part of an $800 million global resolution of investigations by the United Kingdom Serious Fraud Office (SFO), United States Department of Justice (DOJ) and Brazilian Federal Prosecution Service (MPF) into a long-running scheme to bribe government officials in exchange for government contracts. Rolls-Royce apologized after it was found paying bribes, including a luxury car and millions of pounds worth of cash, to middlemen in order to secure orders in countries including Indonesia, Russia, and China.

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In a Sale Gone Awry, A Lesson for Other Deal Makers

By Jacqueline Alas, J.D. Candidate 2017 | Posted on

According to Reuters, GFI Group supported brokerage, trading, and clearing services, and traded technologies to global markets. In 2016, the GFI board sold GFI to CME—a global derivative market focused on trading, clearing, and regulation—even though at the end of the bidding war, CME offered a lower bid of $5.85 per share. Meanwhile, the competing buyer, BGC, a global brokerage company, offered $6.10 cash per share. This sale to CME was approved when the board overruled the decision of a committee of independent directors.

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Supreme Court Appointment Threatens Long-Standing Chevron Doctrine

By Alisha Mahalingam, J.D. Candidate 2018 | Posted on

Agency law is having a moment in the spotlight. With the nomination of Judge Neil M. Gorsuch to the Supreme Court, attention is being drawn to issues where his vote stands to make an impact. One such issue is Chevron deference, a long-standing agency law doctrine followed by the Supreme Court for over thirty years. Chevron deference has been cited in decisions affecting numerous agencies ranging from the EPA to the SEC.

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Tarullo Stepping Dow, Leaving Three Vacancies on the Fed’s Board

By Huan-Ting Wu, JSD Candidate | Posted on

Fed Governor Daniel K. Tarullo, 64, announced he would resign in April in a two-sentence letter on February 10, 2017 without too much explanation. His term does not end until 2022. Mr. Tarullo’s departure would bring the number of vacancies on the Board to three. Senate Republicans have preserved two vacancies by refusing to hold a vote on then-President Obama’s nominations –– the same tactic they used to hold a seat vacant on the Supreme Court.

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Hudson’s Bay Takeover Offer to Department Store Titan, Macy’s

By Ryoichi Kaneko, LL.M. Candidate 2017 | Posted on

On February 3, 2017, multiple news outlets reported that Hudson’s Bay Co. (HBC), the Canadian owner of Lord & Taylor and Saks Fifth Avenue, moved to takeover Macy’s Inc., the biggest U.S. department-store chain. According to the Wall Street Journal, the conversations between the two companies are still at a preliminary stage and the proposed deal is not assured.

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