Law and Economics of Capital Markets and Financial Intermediation

Course Information

Registration Information

Meeting Times

Day Time Location
TUE, THU 2:00 - 3:30 pm RRH 5.408


This course focuses on intermediaries in the capital markets -- those who trade, facilitate structure, or manage securities investments.  Modern capital markets are dynamic and innovative, as creative and highly paid bankers, investment managers, and their lawyers attempt to navigate an ever-changing economic and regulatory environment.  Students will gain an understanding of the institutional workings of the securities business and its legal regulation, with an eye toward recent developments and interesting economic problems. Topics include:

·         Pre-IPO trading, IPO underwriting, SPACs, and other IPO alternatives;

·         Investment companies, investment advisers, and broker dealers.

·         Efficient markets theory and implications for investment advising;

·         Structure and marketing of asset-backed securities, such as CDOs; 

·         Banking, shadow banking, and the demand for safe assets;

·         Banking competitors, such as crypto/stablecoins and money market mutual funds;

·         Market making, payment for order flow, and “gamification” of retail trading.

The course utilizes a case study approach, with examples drawn from (relatively) recent events, which include Facebook’s pre-IPO trading, Tether, the Bernie Madoff Ponzi scheme, Goldman’s ABACUS trade, the Lehman collapse, Robin Hood, and GameStop.


Evaluation is based on class discussion/participation and student group presentations.


This course is aimed at students who are planning to work as investment bankers, investment managers, broker/dealers, or legal advisors thereto, and the goal of this course is to equip students with an overview of the economic concerns that drive much capital markets activity and the consequent legal regulation that attempts to improve capital markets operation.  This course is intended to be an accessible survey for all business and law students; no prior knowledge of economics, securities markets, or law is assumed.

Textbooks ( * denotes required )

See Instructor/Syllabus For Course Materials


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