This case should serve as a reminder to firms of the benefits of occasional independent reviews of the value of collateral used to secure margin loans. Independent valuations can serve an important compliance function in lending activities, just as they do in proprietary trading activities.

The fact that the leverage ratio is simple does not mean that it is clever. Simple solutions share one attribute with complex solutions: both can be completely wrong. As Vice Chair Hoenig concedes, it is not only market participants who believe the leverage ratio (as proposed) to be impractical; many of his fellow regulators believe that, too. At some point, the argument that because there was a financial crisis, Rule X is good stops being persuasive (although it never should have been). The…

The constant refrain of the regulators is that firms must reduce risk. It sounds good in theory (leaving aside the regulators' caveat that the major way to reduce risk seems to be to hold government securities), but if the banking regulators had their way, even private funds would be permitted only to take a limited amount of risk. Surely, someone must be allowed to take economic risks, but who will it be?

The fact that the government lost an insider trading case is likely to renew its legal focus on the Newman case (, 773 F.3d 438 (2d Cir. 2014)), in which the Department of Justice failed to demonstrate that traders who arguably had received inside information and traded on it were guilty of a crime. As in the present case, one element of the defense in Newman was the lack of any material benefit received by the tipper for the tip. However, the Newman defense had another significant prong –…