LawFin Research Seminar: Holger Spamann (Harvard Law School)
Speaker: Holger Spamann, Harvard Law School
Title: Indirect Investor Protection
This paper argues that many of the key mechanisms protecting modern investors, particularly retail investors, are indirect: they do not rely on the investors themselves, or their agents, or anybody else who is directly charged with looking after the investors’ interests. Rather, investors’ main protections arise as a byproduct of the self-interested behavior of sophisticated third parties that are in competition with one another, particularly hedge funds and plaintiff lawyers, as well as between the corporate issuers themselves. While existing law consciously supports some of these indirect mechanisms, others remain hidden from view and are at risk from contractual innovations and their own success. The analysis can shed new light on the perennial debate on corporate contractual freedom and the hot-button issue of the rise of large index funds.