My educational path has taken me around the world, combining studies in economics, philosophy and law in Germany, a complete legal education in the United States, and graduate studies in the United Kingdom. Before entering the academy, I was able to gain practical experience in finance and law in Europe and the United States.
Academic training in three different disciplines in three different countries, combined with practical experience in law and finance, made comparative scholarship a natural fit for me. Accordingly, my scholarship focuses on the intersection of economics, finance and law with a particular emphasis on comparative and transnational finance and comparative corporate, securities, civil, and European law and Law and Economics. Because of the comparative and methodological character of comparative research, comparativists often have new and different perspectives on academic debates and real-world problems. As a comparativist, my scholarship is motivated in large part by the desire to make practically relevant contributions to relevant real-world problems from a comparative institutional perspective. I find that this approach enables scholarship that seeks truth independent of political or economic pressure. In my work on the extraterritorial application of securities law, hedge funds, and contingent capital, I strive to suggest socially optimal solutions to real-world problems and policy debates.
In the context of the extraterritorial application of securities laws, I show in several pieces that U.S. policy responses can have repercussions in other jurisdictions with suboptimal social welfare outcomes that merit changes in policy. My most recent article in this context, forthcoming in the Minnesota Law Review, shows that European countries are increasingly changing their rules to capitalize on recent changes in U.S. policy pertaining to the extraterritorial application of securities laws. I suggest that many of these issues can be addressed through a bilateral treaty and parties’ choice of law in securities transactions.
In the context of contingent capital securities, a hybrid financial instrument that has the potential to optimize social welfare and already has been used in Europe, I suggest in several articles that using contingent capital securities can improve regulatory regimes that are based on “stable rules,” i.e. rules that do not adjust to ever changing market and economic environments. In several new pieces and a book, I will develop the theory that a combination of approaches and experimentation with different legal regimes may result in “dynamic regulation” of the financial services industry. In addition, I will show that dynamic regulation has great potential to address the shortcomings of current financial market regulation.
In the context of hedge fund regulation, several articles suggest an indirect regulatory approach that balances economic and political demands with social welfare optimizing solutions. Several new pieces examine the policy implications of recent hedge fund registration and disclosure requirements in the United States. In the last two decades, the SEC repeatedly has attempted to register private funds, i.e. funds that otherwise were not regulated if they complied with certain requirements. The Dodd-Frank Act now authorizes the SEC to bring private funds under its regulatory supervision by requiring registration and enhanced disclosure for private equity and hedge fund managers. I examine if the new registration and disclosure rules have an effect on private funds and the private-fund industry. Because new rules pertaining to private funds also have been implemented in Europe, several follow-up pieces will compare the impact of these rules in the respective countries and the United States.
Given the policy and social welfare implication of my scholarship and the large practical application, the concepts and theories used can be transferred easily to the classroom. By explaining the real-world policy implications of my research, I hope to enable and support my students in becoming morally responsible, wise, skillful and critical leaders who are capable of discerning the importance of their decisions for the common good and social policy. My classes in international finance, securities regulation, business associations, and European law present many opportunities to accomplish that objective. Although the subject areas can be very technical, and it is important for students to appreciate the technical details, I always emphasize the methodological and theoretical foundations of the material. I strive to expose my students to the full spectrum of perspectives and discourse pertaining to the methodological and theoretical foundations of their respective subject matters. By introducing my students to my own scholarship and research, I underscore that the concepts students learn can affect our perception of the common good and have enormous practical and policy applications.
My work in the context of hedge funds, contingent capital and the extraterritorial application of securities law may be followed by several theoretical projects that explore the long-term, theoretical and methodological implications of policy initiatives, regulatory developments, and the empirical findings of my research. As my scholarship in these areas evolves, I hope to explore with my students some of the common denominators of Catholic social thought and institutional economics as well as the implications for theoretical foundations of corporate and securities law.
Wulf Kaal is associate professor at the School of Law.
From Exemplars, a publication of the Grants and Research Office.