Deadline Approaches: Biden’s Sweeping Executive Order on Regulation and Oversight of Digital Assets

PDF Available

By R. Arden Seavers*

Cryptocurrencies’ wild west era may be drawing to a close as governments are finally taking notice of digital assets’ many woes. On March 9, 2022, President Biden signed an Executive Order on “Ensuring Responsible Development of Digital Assets.”[1] The Executive Order tasked various agencies with submitting comprehensive reports to the president on the status of cryptocurrencies and digital assets within 180 days.[2] As that deadline quickly approaches against the backdrop of Bitcoin’s recent and still-smoldering crash,[3] the need for regulation and oversight seems to be illuminated.

While regulation and oversight of digital assets appear to have widespread support,[4] it is worth noting that the ethos of cryptocurrencies was and is to remain independent of established, national banking systems.[5] Investors have been forced to take the bitter with the sweet when investing in cryptocurrency—whatever benefit a person may receive from gaining assets that are untethered to any particular bank, boardroom, or state could be quickly dashed by the fickle market.[6] Or you could end up hilariously rich.[7] Regardless of cryptocurrency’s defiant origins, it has now become too big to thwart government oversight. The Biden Administration has set out to address the myriad of issues presented by the likes of Bitcoin, Ethereum, and Dogecoin, including consumer protection and the potential for a U.S. Central Bank Digital Currency.[8]

Consumer protection in the crypto market, or lack thereof, is one of the central issues the Executive Order calls attention to.[9] The development of digital assets and cryptocurrency has raced forward, relegating agencies and financial institutions to play the role of the tortoise and leaving consumers with virtually no protection.[10] Current laws and regulations pertaining to cryptocurrency are sparse and inconsistent. Several states have adopted crypto laws while federal agencies claw out of the analog age and reckon with the digital era.[11] While there are certain issues and public policy matters that must be left to the states, it would be unwise to count regulation of cryptocurrency among them. Digital assets are personas non grata and any regulatory scheme to establish consumer protections would better serve investors if established and administered at the federal level. The Executive Order’s directive that various federal agencies formulate a plan for implementing robust consumer protections could unify the nation’s approach to digital assets if carried out in an efficient manner that does not stifle the innovative and beneficial characteristics of cryptocurrency.

Exploration of a U.S. Central Bank Digital Currency (CBDC) requires federal agencies to consider the technological infrastructure necessary for a CBDC in order to further the administration’s goal of promoting and ensuring U.S. leadership in global finance and technology.[12] The U.S. dollar currently dominates the global financial market, but the growth of cryptocurrencies has prompted other major players in the financial sphere to adapt to new technologies.[13] Treasury officials have contemplated development of a U.S. stablecoin[14] and the Federal Reserve conducted a multi-year research initiative in conjunction with MIT to explore the development and implementation of a CBDC for the United States.[15] The Executive Order does not provide specifics on how a CBDC would actually be created or implemented, and doing so is easier said than done. Doing so would only be effective if the U.S could establish an efficient system for implementation while maintaining a leadership position in the global financial market.[16]

Biden’s Executive Order is merely a first step towards development of a comprehensive U.S. approach to digital assets. There is much work to be done to bring U.S. financial and consumer protection agencies into the crypto age. The reports issued after the 180-day deadline will be very telling of the U.S.’s trajectory within the crypto sphere. With the correct approach, the U.S. can make meaningful strides towards bringing cryptocurrency into the fold of the U.S. financial market, establishing a new American frontier in digital assets.

* J.D. Candidate, Class of 2023, Sandra Day O’Connor College of Law at Arizona State University.

[1] Exec. Order No. 14067, 87 Fed. Reg. 14,143 (Mar. 14, 2022).

[2] Id.

[3] David Yaffe-Bellany et al., Cryptocurrencies Melt Down in a ‘Perfect Storm’ of Fear and Panic, N.Y. Times (May 12, 2022), currencies-crash-bitcoin.html.

[4] Cheyenne Ligon, Biden’s Executive Order on Crypto Met With Relief From Key Industry Players, CoinDesk (Mar., 9, 2022),; Nikhilesh De, Biden’s Executive Order on Crypto Receives Bipartisan Praise, CoinDesk (Mar. 11, 2022),

[5] Ephrat Livni & Eric Lipton, Crypto Banking and Decentralized Finance, Explained, N.Y. Times (Sept. 5, 2021),; Daniel Cawrey, Bitcoin: A Means for Global Independence, CoinDesk (July 4, 2014),

[6] Yaffe-Bellany, supra note 3.

[7] Nellie Bowles, Everyone Is Getting Hilariously Rich and You’re Not, N.Y. Times (Jan. 13, 2018),

[8] Exec. Order No. 14067.

[9] Id.

[10] Madison Darbyshire, What Protections Do Consumers Have in Crypto Trading?, Financial Times (June 30, 2021),

[11] Scott D. Hughes, Cryptocurrency Regulation and Enforcement in the U.S., 45 Wash. St. U. L. Rev. 1 (2017); Sheelah Kolhatkar, The Challenges of Regulating Cryptocurrency, The New Yorker (Oct. 6, 2021), (stating that the SEC has at times provided guidance that some cryptocurrencies are not securities while simultaneously suing other another cryptocurrencies for making an unregistered initial coin offering).

[12] Exec. Order No. 14068. Press Release, Fact sheet: President Biden to Sign Executive Order on Ensuring Responsible Development of Digital Assets (Mar. 9, 2022),

[13] Michael Sung & Christopher A. Thomas, The Innovator’s Dilemma and U.S. Adoption of a Digital Dollar, Brookings (Mar. 24, 2022),

[14] Eric Lipton & Ephrat Livni, Regulators Racing Towards First Major Rules on Cryptocurrency, N.Y. Times (Sept. 23, 2021) /cryptocurrency-regulators-rules.html.

[15] Federal Reserve Bank of Boston & Massachusetts Institute for Technology Digital Currency Initiative, Project Hamilton Phase 1 A High Performance Payment Processing System Designed for Central Bank Digital Currencies (2022).

[16] Sung, supra note 13.

The Purdue Pharma Bankruptcy and Renewed Focus on Non-Debtor Releases in Chapter 11 Bankruptcies

PDF Available

By Alex Hartman*

Purdue Pharma, the maker of the opioid OxyContin, was a key player in the opioid epidemic that has cost the lives of tens of thousands of people.[1] A deluge of lawsuits pushed the company into Chapter 11 bankruptcy. A key component of Purdue’s reorganization plan is a non-debtor release that protects the Sackler family, who own and run the company, from civil liability in return for billions of dollars in contributions to the reorganization.[2] Non-debtor releases are a controversial topic in bankruptcy law and the broad protections in the Sackler’s release drew objections from dozens of states and municipalities. The Bankruptcy Court approved the reorganization plan over their objections only to have that ruling overturned by the District Court.[3] This set the stage for a showdown not just for this case but for non-debtor releases generally.

Non-debtor releases, as the name suggests, releases non-debtor parties in a bankruptcy from liability for certain claims. They are a tool used almost exclusively in mass-tort claim bankruptcies, usually for insurers who fund a trust to pay out claims to people injured by a company who filed for Chapter 11 protection. They can be a useful tool to prevent endless litigation and can drastically increase the funds available to pay out claims that otherwise wouldn’t receive a dime. They are also unusual because they, in a sense, extend bankruptcy protections to parties who never filed for bankruptcy. Additionally, the bankruptcy code does not explicitly allow for non-debtor releases outside of asbestos-related cases. Largely because of this lack of statutory support, a minority of the circuit courts of appeals, including the 9th Circuit, do not allow non-debtor releases at all.[4] However, the majority of the circuit courts do allow non-debtor releases by considering them as permissible under the reorganization plan confirmation sections of the code in 11 U.S.C. § 1123 and the equitable powers of the bankruptcy court in 11 U.S.C. § 105.[5]

 What makes the non-debtor release in the Purdue Pharma bankruptcy so controversial is who is protected and the extent of protection requested. Purdue is privately owned and largely run by the Sackler family and their proposed non-debtor release grants them virtually unlimited civil protection for any of their actions while running Purdue. There is copious evidence that the Sackler family aggressively marketed OxyContin as a safer and less addiction prone opioid product, which turned out to be false.[6] In return for the protection of the non-debtor release, the Sackler family originally agreed to contribute $4.3 billion to the reorganization plan to, among other things, pay claims and fund opioid abatement programs.[7] This contribution is the majority of all the funds available in the bankruptcy state to compensate the tens of thousands of claimants. However, the Sackler family received roughly $11 billion in profits from Purdue Pharma, predominately from the sale of OxyContin.[8]

In September of 2021, the Bankruptcy Court approved a plan for reorganization only to have that confirmation overruled by the District Court in December of 2021.[9] The District Court did not accept the lower court’s statutory basis for the non-debtor release, finding it violated other provisions of the bankruptcy code.[10] This set the stage for a fight in the Second Circuit Court of Appeals which could draw the attention of the Supreme Court. However, on March 10, 2022, the Bankruptcy Court approved a new plan, agreed to by many of the dissenting states. This new plan had the Sackler’s contribute an additional $1.7 billion to the plan, bringing their contributions up to around $6 billion. While this is certainly a win for the victims of opioid abuse there remain many unanswered legal questions around the use of non-debtor releases.[11]

Clarity around the legality of non-debtor releases may be coming. In response to public outcry over the Sackler release, legislation was introduced in both the House and Senate reforming non-debtor releases. The Nondebtor Release Prohibition Act of 2021, as the name implies, prohibits the use of non-debtor releases outside of asbestos cases.  Whether or not the bill becomes law remains to be seen.[12] The House Judiciary Committee already passed the bill while the Senate Judiciary Committee has yet to act. A complete prohibition might not be the best move. Debtors in mass-tort claim bankruptcies are unlikely to have the assets to pay even a fraction of the claims made against them and third parties with deeper pockets, like insurers or owners, may not fund a reorganization absent liability protection. This could result in virtually endless litigation against those third parties, which is great for lawyers but not so great for the victims of dangerous products.

* J.D. Candidate, Class of 2023, Sandra Day O’Connor College of Law at Arizona State University.

[1] See Barry Meier, Origins of an Epidemic: Purdue Pharma Knew its Opioids were Widely Abused, N.Y. Times (May 29, 2018),

[2] See Laura Strickler, Purdue Pharma Offers $10-$12 billion to settle opioid claims, NBC News (August 27, 2019),

[3] See In re Purdue Pharma, L.P., 635 B.R. 26, 34 (S.D.N.Y., 2021).

[4] See Elizabeth D. Lauzon, Validity of Non-Debtor Releases in Restructuring Plans, 18 A.L.R. Fed. 3d Art. 2 (Originally published in 2016).

[5] See In re Purdue Pharma, 635 B.R. at 43.

[6] See Barry Meier, Origins of an Epidemic: Purdue Pharma Knew its Opioids were Widely Abused, N.Y. Times (May 29, 2018), .

[7] See 11th Amended Joint Chapter 11 Plan of Reorganization of Purdue Pharma L.P. and its Affiliated Debtors at 1, August 31, 2021, ECF No. 3706, In re Purdue Pharma L.P., No. 19-23649 (RDD), 635 B.R. 26 (Bankr. S.D.N.Y. Sept. 17, 2021).

[8] See Samson Amore, John Oliver Creates Anti-Opioid Website Just to Mess with Purdue Pharma (Video), The Wrap (August 8, 2021), .

[9] See In re Purdue Pharma, L.P., 635 B.R. 26, 34 (S.D.N.Y., 2021).

[10] See id. at 47-70.

[11] See Meryl Kornfield, Opioid victims confront Purdue Pharma’s Sackler family: ‘It will never end for me,” Washington Post (March 10, 2022),

[12] See Nondebtor Release Prohibition Act of 2021, H.R.4777, 117th Congress (2021).

AN M&A Hiccup? Evaluating Senator Warren’s Proposed Merger Bill on M&A Deals and Private Equity

By Dylan Patel*

PDF Available

            It is no secret that M&A activity has attracted antitrust regulators given the high metabolism of corporate takeovers over the past century.[1] This past year marked a record year for M&A volume despite the continued economic concerns created by COVID-19.[2] In 2021, high domestic equity valuations coupled with low interest rates contributed to a staggering deal volume that is expected to carry over into this year.[3] Even though the financial landscape looks bright for mergers and acquisitions this year, regulatory scrutiny is increasing as changes to antitrust policy, including the FTC and DOJ’s temporary suspension of the Hart-Scott-Rodino waiting period and the FTC’s implementation of pre-consummation warning letters, will inevitably create longer timelines for deals.[4]

            Senator Elizabeth Warren and Representative Mondair Jones introduced legislation this month to block deals worth more than $5 billion or that lead to high market shares.[5] The proposed bill, the Prohibitive Anticompetitive Mergers Act, would essentially allow regulators to reverse mergers if they materially harm workers, consumers, and small businesses.[6] One of the key elements of the bill is the increased power for the FTC and DOJ to block mergers without a court order.

            While large M&A deals may benefit the corporate executives and large shareholders, Senator Warren’s proposed bill is highly prohibitive and disastrous for corporate dealmakers and the spirit of competition. First, one of the most detrimental effects is the diminution of innovation.[7] In areas like fintech, big data, and even healthcare, the pro-competitive merger justifications can benefit the consumer directly. Particularly, consumers “benefit from competition because, when producers face rivalry, they seek to attract customers through lower prices and higher quality.” [8] Moreover, Senator Warren’s proposal would vastly disrupt one of the most fundamental benefits of big mergers, which is the advanced pipeline of products and services that trickle down to consumers. Granted, deals initially financially benefit the largest shareholders in the industry, but these effects are trivial when considering the bigger picture.

            Secondly, the Prohibitive Anticompetitive Mergers Act, if passed, would create a catastrophic setback to the entire M&A industry because of inflation and rising interest rates. As previously, 2021 was a record year for deals, creating $5 trillion in total volume, partially thanks to low interest rates and stable inflation.[9] If this bill is passed at a time where inflation has been at one of its highest levels and as the Federal Reserve attempts to raise the Federal Funds rate this year to combat recessionary sentiment, deal volume will take huge hit. This is especially problematic for larger businesses that are attractive for acquisitions by massive public companies. Specifically, when it becomes economically difficult to operate financially under the market, most businesses will resort to the option for a sale at a premium.[10] Inflation has a direct correlation to the cost of financing.[11] On the other hand, when the Treasury rate or risk free rate is higher, the discount is greater because an acquirer “could safely park their money” in a risk-free investment with high interest instead of buying a business.[12] Furthermore, inflation, coupled with stronger antitrust regulatory power in the hands of the FTC and DOJ, will lead many businesses to exit within the next few years. Unfortunately, these sales will be hindered when deals reach $5 billion.

            Lastly, the proposed bill will also negatively limit private equity firms’ ability to continue to aggregate smaller businesses into one large company. The bill will prohibit these private equity “roll up” strategies that quickly consolidate industries.[13] Private equity roll up strategies involve firms buying smaller companies in an effort to create a larger company to dominate a niche market.[14] So far in 2021, there were “1,741 roll-up transactions in the U.S. with a total value of $164 billion, compared to 3,168 roll-ups worth a combined $323.4 billion in all of 2020.”[15] Generally, private equity firms have had a major goal of “flipping companies” to make them more profitable and in turn to resell them at a premium.[16] Senator Warren’s proposal would merely eliminate the incentive for PE firms to buy smaller private businesses.

            The Prohibitive Anticompetitive Mergers Act seems to create more anticompetitive consequences than expected on the surface. While the activities that the act aims to solve may be justified, the timing and extensive ramifications will be detrimental for the industry. Currently, with the unstable economy and uncertainty about the markets for the near future, the last thing that the M&A industry needs is greater regulatory scrutiny.

* J.D. Candidate, Class of 2023, Sandra Day O’Connor College of Law at Arizona State University.

[1] Marina Martynova & Luc Renneboog, A Century of Corporate Takeovers: What Have We Learned and Where Do We Stand? (Jan. 10, 2009), 32 J. BANK. FIN. 2148 (2008).

[2] 2022 M&A Outlook: Continued Strength After a Record Year, MORGAN STANLEY (Jan. 14, 2022),

[3] Id.

[4] US M&A Roars Into 2022 on the Momentum of a Record-Shattering Year, but Challenges Loom, According to a New Report by White & Case and Mergermarket, WHITE & CASE (Feb. 1, 2022),

[5] Joshua Fineman, Sen. Warren Introduces Bill to Block Mergers,SEEKING ALPHA (Mar. 16, 2022),

[6] Id.

[7] Roger L. Martin, M&A: The One Thing You Need to Get Right,HARV. BUS. REV., June 2016, at 42, 44.

[8] See Michael L. Katz & Howard A. Shelanski, Mergers and Innovation, 74 ANTITRUST L.J. 1, 39 (2007).

[9] MORGAN STANLEY, supra note 2.

[10] Martynova & Renneboog, supra note 1.

[11] How Inflation Will Affect M&A and Funding, ORION CAP. GRP., (last visited Apr. 3, 2022).

[12] Id.

[13] Press Release, Elizabeth Warren, Senate, Warren, Jones Introduce Bicameral Legislation to Ban Anticompetitive Mergers, Restore Competition, and Bring Down Prices for Consumers (Mar. 16, 2022),

[14] Arleen Jacobius, Firms Turn to Roll-ups to Find Instant Growth (July 12, 2021), Pensions & Investments,

         [15] Id.

[16] Id.

Russia Under Fire: How Russians Are Coping with U.S. Sanctions

PDF Available

By Ruzanna Mirzoyan*

Historically, warfare was the predominant method of solving conflicts between countries, but after World War I, the United States expanded its use of economic sanctions.[1] Sanctions are a nonviolent form of coercion that also push forward a specific policy or political agenda.[2] However, some have argued that “in reality, economic sanctions are by no mean’s peaceful and quite often deadlier and more destructive than military action.”[3] Currently, the United States uses financial and economic sanctions more than any other country.[4] Sanctions can vary, but common penalties are travel bans, embargoes, export controls, capital controls, trade sanctions, and asset freezes.[5]

In the United States, sanctions can originate in either the executive or legislative branch, but they typically start with the president issuing an executive order that declares a national emergency in response to an “unusual and extraordinary foreign threat.”[6] Recently, President Biden issued Executive Order 13661, sanctioning the Russian Federation for its invasion of Ukraine.[7]

The U.S. sanctions have cut off Russia’s largest bank, Sberbank, from the U.S. financial system, and entirely blocked Russia’s second-largest bank, VBT.[8] Additionally, U.S. sanctions have restricted Russian technology exports and prohibited any United States technologies produced by foreign countries, such as semiconductors, lasers, sensors, and maritime technologies.[9] More surprisingly, Switzerland, abandoned its ancient neutrality and imposed sanctions against Russia and Vladimir Putin by freezing any assets belonging to Putin, Prime Minister Mikhail Mishustin and Foreign Minister, Sergey Lavrov.[10] Switzerland is also closing its airspace to Russia and have an entry ban for individuals closely connected to Putin.[11]

Whether sanctions are effective depends on various factors such as the country’s size, assets, and natural resources. In Russia’s case, the current sanctions are slowly suffocating the country. In response, Russia announced a temporary ban on grain and sugar sales to ex-soviet countries, such as Armenia, to ensure its army and people have enough.[12] However, Armenia heavily relies on trade with Russia, and this ban will increase prices of essential goods for Armenian people.[13] Therefore, sanctions against Russia have artificially expanded and now affect small countries which are not responsible for Russia’s invasion. Furthermore, while not under a direct order from the United States government, there is social pressure for private companies to act.[14] Companies like Chanel, Hermés, Netflix, Instagram, Nike, Boeing, Apple, and  DLA Piper, have taken a stand against the war and exited Russia.[15]

Many Russian people strongly oppose the war in Ukraine and have even risked their freedom by publicly protesting.[16] But while many Russians have exhibited brave acts in condemning the government, they have little to no say on the sanctions imposed against Russia. The country has virtually reverted to its Soviet state when Western influence or goods were strictly prohibited. However, Russians have become reliant on working for American companies, purchasing goods from American retailers, and using American media platforms; without them Russians face a drastic lifestyle change that also creates immense financial constraints. Openly protesting the war or expressing support for Ukraine can face up to twenty years in prison, so people are protesting with their feet.[17] As many as 200,000 Russians have fled to nearby countries like Georgia, Armenia, and Turkey.[18] According to one Russian, many feel that “the only way we can protest is to leave the country, take our skills and money with us.”[19] With air travel becoming increasingly limited, people are traveling by car or train.[20]

While Russian people are finding new homes in cities like Tbilisi, Georgia, or Yerevan, Armenia, they struggle to feel accepted as locals are hesitant to accept them. Particularly for Georgia, it has been only fourteen years since Russia invaded Georgia, and some citizens fear another invasion. However, Armenia is seeing a potential opportunity to grow its IT businesses and is positioning itself as an attractive destination.[21] Software engineers and others alike are motivated to begin anew in Armenia, as locals speak Russian, the cost of living is low relative to Moscow, and Russians do not need a work permit.[22]

Furthermore, Russians are struggling financially, even if they previously lived comfortably as many cannot access their bank accounts and withdraw their money.[23] Those who rely on their relatives abroad for financial support also cannot receive any money because payment companies like Wise and Remotely suspended their service to Russia.[24] But tech entrepreneurs have found ways to connect the newcomers on a messaging app, Telegram.[25] There, Russians can discuss where to find housing, how to open bank accounts, and whether it is safe to speak Russian.[26]

While the United States hoped its sanctions would curtail Russia’s invasion of Ukraine, the sanctions have stimulated a massive exodus from the country. This may not be a violent style of warfare, but this exodus may nonetheless damage Russia’s government, people, and economy. However, the extent of that damage is yet to be seen, meanwhile there is hope for Russians to begin new lives.

* J.D. Candidate, Class of 2023, Sandra Day O’Connor College of Law at Arizona State University.

[1] Justin Stalls, Article: Economic Sanctions, 11 Miami Int’l & Comp. L.Rev. 115, 116 (2003).

[2] Id.

[3] Id.

[4] Jonathan Masters, What Are Economic Sanctions? Council on Foreign Relations(August 12, 2019),

[5] Brent Radcliffe, How Economic Sanctions Work, Investopedia (Feb. 24, 2022),

[6] Masters, supra note 4.

[7] Id.

[8] Fact Sheet: Joined by Allies and Partners, the United States Imposes Devastating Costs on Russa, The White House (Feb. 24, 2022),

[9] Id.

[10] Laura Hen, Switzerland Ditches Neutrality to Sanction Russia and Putin, CNN Business (Mar. 1, 2022),

[11] Id.

[12] Russia Temporarily Bans Grain Exports to Ex-Soviet Countries, Reuters (Mar. 14, 2022),

[13] Id.

[14] As Companies Leave Russia, Their Assets Could be Seized, ABC News (Mar. 12, 2022),

[15] Here Are Some of the Companies That Have Pledged to Stop Business in Russia, The New York Times (Mar. 21, 2022),

[16] In Russia, those who protest or publicly oppose the government are subject to imprisonment. Delaney Nolan, Russia-Ukraine: What do Young Russians Think About the War? ALJAZEERA (Mar. 18, 2022),

[17] Rayhan Demytrie, Russia Faces Brain Drain As Thousands Flee Abroad, BBC News (Mar. 13, 2022),  

[18] Id.

[19] Id.

[20] Id.

[21] Arshaluis Mdgesyan, Armenia Anticipates Influx of Russian Businesses, Capital, eurasianet (Mar. 10, 2022),

[22] Id.

[23] Demytrie, supra note 18.

[24] Hannah Lang, Payment Companies Wise, Remitly Suspend Money Transfer Businesses in Russia, Reuters (Feb. 28, 2022),

[25] Demytrie, supra note 18.

[26] Id.

Eros STX Subsidiary Files Bankruptcy

PDF Available

By Lilly Harris*  

FSO Jones, a subsidiary of global entertainment company Eros STX, recently filed for Chapter 11 bankruptcy on February 28, 2022.[1]  Notably, FSO Jones owns the rights to the Greenland sequel, Greenland: Migration, which is currently in the pre-production phase.[2]  Eros STX representatives stated, “[a]lthough pre-production of this sequel is going well, we determined that it was necessary for FSO Jones to seek bankruptcy relief to protect the value of that entity for all of our stakeholders while we continue to work toward closing our strategic alternatives for this company.”[3] 

Chapter 11 bankruptcy is a form of relief available under the Federal Bankruptcy Code for business enterprises.[4]  Chapter 11 bankruptcy is designed to enable a company to reorganize its assets and liabilities in order to continue operating in a profitable manner.[5]  Chapter 11 is an alternative to other types of bankruptcy which involve liquidation of company assets, though sometimes liquidation occurs. Contrary to popular belief, insolvency is not a prerequisite for a business to enter into Chapter 11 bankruptcy.[6]  Many companies file for Chapter 11 to take advantage of the protections provided for under the Bankruptcy Code, such as the automatic stay, the ability to accept or reject executory contracts, and the ability to sell assets free and clear of interest.

FSO Jones’ indication that they filed bankruptcy in order to protect the value of the company may be an allusion to the automatic stay.  Once the bankruptcy petition is filed, the automatic stay will protect the Chapter 11 debtor from the collection efforts of its creditors.[7]  Among other things, creditors may not sue, enforce a judgment or lien against, or obtain control over property of a Chapter 11 debtor.[8]  FSO Jones’ entrance into bankruptcy will protect them from creditors and lawsuits for as long as the bankruptcy lasts, which could span months or years.

FSO Jones may also have filed bankruptcy in order to escape contracts that they no longer wish to perform under.  The Bankruptcy Code provides that debtors may generally assume or reject executory contracts.[9]  An executory contract is a contract where “the obligations of both the bankrupt [debtor] and the other party to the contract are so far unperformed that the failure of either to complete performance could constitute a material breach excusing the performance of others.”[10]  In other words, a Chapter 11 debtor has a choice to either cancel or reaffirm any contractual obligation where neither party has substantially performed its end of the deal.  To place this into context, consider the Weinstein Company’s Chapter 11 bankruptcy proceedings.  In that production company’s bankruptcy, one issue was whether their contract with the producer of Silver Lining’s Playbook was executory.[11]  The Third Circuit found that the contract was not executory because the producer had no remaining material obligations.[12]  Unlike the Weinstein Company case, where Silver Linings Playbook had already been released for six years, Greenland: Migration is in the pre-production phase.[13]  Therefore, it is likely that numerous contracts connected to Greenland: Migration are executory, and FSO Jones will have the choice to either assume or reject them.

FSO Jones may also have filed bankruptcy in order to sell their assets free and clear of encumbrances.  The Bankruptcy Code permits debtors to sell assets free and clear of interest in the property under certain circumstances.[14]  This allows the Chapter 11 debtor to obtain competitive prices for the assets it chooses to sell because purchasers can buy the assets without their existing debts.  In the Weinstein Company bankruptcy, the production company sold its assets free and clear of interest to another production company, Spyglass.[15]  Thus, Spyglass was only responsible for obligations which occurred after the sale and did not need to cure pre-existing defaults.[16]  FSO Jones may take advantage of this same provision in order to sell some of their assets free and clear of interest for a profitable price.

Ultimately, Greenland super-fans need not worry about Greenland: Migration’s fate.  FSO Jones’s bankruptcy is not necessarily indicative of insolvency.  They may have truly filed for bankruptcy to take advantage of the numerous debtor-friendly provisions in the Bankruptcy Code, including the automatic stay, ability to reject executory contracts, and ability to sell assets free and clear of interest. 

* J.D. Candidate, Class of 2023, Sandra Day O’Connor College of Law at Arizona State University.

[1] Jeremy Hill, Eros STX Puts Gerald Butler Disaster Movie Rights in Bankruptcy (Mar. 1, 2022, 12:54 PM MST),

[2] Id.

[3] Id.

[4] Thomas J. Salerno, Jordan A. Kroop & Craig D. Hansen, The Executive Guide to Corporate Bankruptcy at 9 (2010).

[5] Id.

[6] Id. at 11.

[7] 11 U.S.C. § 362.

[8] 11 U.S.C. § 362(a).

[9] 11 U.S.C. § 365(a).

[10] Salerno et al., supra note 4, at 110.

[11] In re Weinstein Company Holdings, 997 F.3d 497 (3rd Cir. 2021).

[12] Id. at 501.

[13] Id. at 507; Hill, supra note 1.

[14] 11 U.S.C. § 363(f).

[15] Weinstein Company Holdings, supra note 11, at 502.

[16] Id. at 503.

The Antitrust Implication of the Proposed Frontier-Spirit Merger

PDF Available

By Kyler Mejia*  

In February 2022, Frontier Airlines (“Frontier”) and Spirit Airlines (“Spirit”) announced a merger valued at more than six and a half billion dollars.[1] The deal would integrate Spirit into Frontier, forming the fifth largest commercial airline carrier in the United States.[2] The merger comes as the Federal Trade Commission (the “FTC”), the federal agency charged with regulating antitrust matters, has ramped up scrutiny of mergers and acquisitions.[3] The FTC’s increased focus on antitrust is partly due to its current chairperson, Lina Khan. Khan, who was nominated under the Biden administration in 2021, is a staunch opponent of monopolies and has openly criticized our modern framework of antitrust law.[4]  Under her leadership, the FTC has notably increased its attention on antitrust matters.[5]

The nearly three-billion-dollar stock and cash deal might prompt the FTC to file suit blocking the transaction under federal antitrust law.[6] The Clayton Act prohibits mergers and acquisitions where “the effect of such acquisition may be substantially to lessen competition.”[7] This language has been construed broadly to include the future probable effects of the merger or acquisition.[8] The inquiry is context-specific, meaning the court will look to the “character and scope” of the transaction to determine its anticompetitive effect.[9]

            Frontier and Spirit have justified their merger as a measure to help the two companies better compete with their larger rivals, as well as save their customers an estimated one billion dollars on flight charges per year.[10] This is what is known as an efficiencies argument. An efficiencies argument justifies a merger or acquisition by claiming that the corporation will be in a better position to provide their good or service to consumers post-merger (i.e., without the merger/acquisition it would be arduous to compete at the same level the corporation will compete at when the merger/acquisition effectuates).[11]

The efficiencies argument has a complicated history and is not ubiquitously recognized.[12] Specifically, in the Third Circuit, which would have jurisdiction in a suit involving Frontier,[13] the court remains “skeptical” that the efficiencies argument even exists.[14] As such, if the FTC indeed files an antitrust claim to block the Frontier-Spirit merger, Frontier faces an uphill battle rebutting it by presenting its efficiencies argument in court.

            To successfully defend against an antitrust action, Frontier will need to demonstrate that the merger’s anticompetitive effect would be negligible. Frontier will likely emphasize that the merger forms only the fifth largest airline in the United States. Additionally, Frontier should highlight that the four larger airlines, in aggregate, cover nearly eighty percent of the market;[15] bolstering the argument that the proposed merger will not significantly alter the market dynamic or restrain competition. In short, to prevail against an antitrust claim, Frontier will need to shift its argument away from the efficiencies defense to instead stress the other factors that demonstrate competition will not be restrained by the proposed merger.

* J.D. Candidate, Class of 2022, Sandra Day O’Connor College of Law at Arizona State University.

[1] Alison Sider & Will Feuer, Frontier to Buy Spirit Airlines in Cash-and-Stock Deal, The Wall Street Journal (Feb. 7, 2022),

[2] Id.

[3] See generally David Benoit, Deals are Booming but Antitrust scrutiny has Deal Traders Worried, The Wall Street Journal (Feb. 12, 2022), (where the author discusses increased antitrust scrutiny in various American industries).

[4] See Shannon Bond, New FTC Chair Lina Khan Wants to Redefine Monopoly Power For The Age Of Big Tech, Nat’l Pub. Radio (Jul. 1, 2021), 7383/new-ftc-chair-lina-khan-wants-to-redefine-monopoly-power-for-the-age-of-big-tech.

[5] See generally supra note 3 (where the author discusses increased antitrust scrutiny in various American industries).

[6] Supra note 1.

[7] 15 U.S.C. § 18.

[8] Brown Shoe Co. v. United States, 82 S. Ct. 1502, 1522 (1962).

[9] Id. at 1529.

[10] Niraj Chokshi, Frontier and Spirit Airlines Plan to Merge, The New York Times (Feb. 7, 2022),

[11] Specifically, an efficiencies defense provides that reductions in production costs or gains in innovation from a merger will ultimately benefit consumers in the form of lower prices or higher quality goods and services. Isaac Weingram, The Status and Availability of the Efficiencies Defense in Antitrust Law, N.Y. Univ. L. Moot Ct. Bd. Proc. (Apr. 10, 2016),

[12] Id.

[13] Frontier is incorporated in Delaware which is within the Third Circuit’s jurisdiction.

[14] FTC. v. Penn State Hershey Medical Center, 838 F.3d 327, 348 (3rd Cir. 2016).

[15] Supra note 1.

The Federal Government’s New $5 Billion EV Charging Infrastructure Plan May Impact Tax Credits for Consumers

 PDF Available

By Stacey Hall*  

For decades, electric vehicles (EVs) have been floated as a revolutionary new way to curb greenhouse gas emissions and to decrease dependence on foreign oil supplies.[1] However, EVs have struggled to gain widespread adoption due to limitations in technology and cost.[2] But with technology improving and costs beginning to lower, electric vehicles (EVs) finally seem poised to take over America’s highways. In recognition of the potential of EVs to combat emissions, the Biden administration has made EV adoption a primary focus going into 2022.[3]

On February 10, the U.S. Departments of Transportation and Energy furthered these efforts by announcing a new infrastructure plan devoting $5 billion in federal funding to the roll-out of a nationwide network of EV charging stations.[4] The federal government will distribute the funds to the states and the District of Columbia over a five-year period, beginning with $615 million in disbursements for the fiscal year 2022.[5]

To receive the federal funds, each state must submit a plan for how it will use the money.[6] States have considerable leeway to develop their own plans, but all proposals must meet certain minimum standards set by the federal government to gain federal approval.[7] These standards govern, among other things, the frequency of charging stations along interstate highways and the number of charging ports at each station.[8]

While the roll-out of an expanded network of EV charging stations will no doubt transform the physical landscape of America, it may also affect the nation’s tax treatment of EVs. The federal government has provided tax credits to EV purchasers for over 10 years.[9] At the federal level, individual consumers currently receive a tax credit in the amount of up to $7,500 for each new vehicle purchased in the United States, depending on the vehicle’s manufacturer and battery capacity.[10] Many states and municipalities also offer their own tax credits to supplement the federal offerings.[11]

The current EV tax credit provisions begin to phase out once a manufacturer has sold 200,000 qualifying EVs in the United States.[12] When a manufacturer reaches this point, tax credits are reduced gradually over the course of the ensuing calendar year, first to 50 percent of the original credit amount and then to 25 percent, until they phase out completely by the end of the year.[13] Manufacturers like Tesla and General Motors have already reached the 200,000-vehicle limit, and more are soon to follow.[14]

It seems likely that, with the Biden administration’s new EV infrastructure plan, EV tax credit provisions, particularly those based on vehicle sales per manufacturer, will phase out sooner rather than later. One of consumers’ primary concerns regarding EVs is the range these vehicles can cover on a single charge.[15] As EV charging stations become as commonplace as gas stations for conventional vehicles, these concerns are likely to abate, thereby increasing demand for EVs. As more consumers purchase EVs, manufacturers will reach the tax credit phase-out limits more rapidly. Once these limits are reached, consumers who have not yet purchased an EV will no longer have the monetary incentive of a hefty tax credit to do so. This may therefore stifle the continued adoption of EVs under the current tax credit program.

The tax credits currently available to consumers have served as a powerful incentive to purchase EVs.[16] A change to the EV tax credit program may bolster adoption even further. In particular, it may be worthwhile for the federal government to increase the number of EVs a manufacturer may sell before the phase-out limits take effect. Last year, a bill known as the GREEN Act proposed increasing that cap to 600,000, thereby tripling the number of consumers per manufacturer who will qualify for the tax credit.[17] While that bill was shot down, increasing the phase-out limit by any extent will enable more consumers to qualify for the tax credit. When more consumers know they will qualify for a greater tax credit by purchasing an EV, they will channel more business to EV manufacturers, which will in turn encourage manufacturers to scale up production of EVs.

Of course, the sustainability of the tax credit program is limited, as the federal and state governments may not be willing or able to provide them forever.[18] But it is not necessary to extend the tax credit program forever. The Biden administration has set a goal for EV sales to reach 50 percent of vehicle sales in the U.S. by 2030.[19] While the 2030 time frame is ambitious, the 50 percent vehicle sales target may be a suitable cutoff point for the EV tax credit program.

The increased availability of EV chargers made possible through the new infrastructure plan will help to encourage EV adoption. However, adoption can be maximized by combining this plan with an extended EV tax credit program. Through these measures, the United States will come even closer to a more environmentally friendly future.

* J.D. Candidate, Class of 2023, Sandra Day O’Connor College of Law at Arizona State University.

[1] Brandon Hofmeister, Electric Vehicle Charging Infrastructure: Navigating Choices Regarding Regulation, Subsidy, and Competition in a Complex Regulatory Environment, 5 Geo. Wash. J. Energy & Env’t. L. 42, 42 (2014).

[2] Enrique Dans, The Five Factors Driving the Mass Adoption of Electric Vehicles, Forbes (Jan. 24, 2021),

[3] Fact Sheet: The Biden-Harris Electric Vehicle Charging Action Plan, White House (Dec. 13, 2021),

[4] President Biden, DOE and DOT Announce $5 Billion over Five Years for National EV Charging Network, Dep’t Energy (Feb. 10, 2022),

[5] Id.

[6] Id.

[7] David Shepardson, U.S. Unveils $5bn Plan to Fund EV Charging Network, Reuters (Feb. 10, 2022),

[8] Id.

[9] The Plug-In Electric Vehicle Tax Credit, Cong. Rsch. Serv. (May 14, 2019),

[10] Plug-In Electric Drive Vehicle Credit (IRC 30D), Internal Revenue Serv. (Jun. 27, 2021),

[11] Alan Jann et al., An Examination of the Impact That Electric Vehicle Incentives Have on Consumer Purchase Decisions Over Time, Univ. Cal. Inst. Transp. Studies (May 2019), at 1.

[12] Internal Revenue Serv., supra note 10.

[13] Id.

[14] Jim Gorzelany, These Are the Electric Cars and Plug-In Hybrids Still Eligible for Federal Tax Credits, Forbes (Jan. 25, 2022), electric-cars-and-plug-in-hybrids-that-are-still-eligible-for-a-federal-tax-credit/?sh=7f4f4be7782e.

[15] See Benjamin Preston, Consumer Reports Survey Shows Strong Interest in Electric Cars, Consumer Reps. (Dec. 18, 2020),

[16] Jann et al., supra note 11, at 18.

[17] GREEN Act, H.R. 848, 117th Cong. (2021).

[18] Id.

[19] White House, supra note 2.

The FTC and DOJ Announce Joint Effort to Enforce Stricter Merger Guidelines

PDF Available

By Michelle Shin*         

On January 18, 2022, the Federal Trade Commission (“FTC”) and the Department of Justice Antitrust Division (“DOJ”) announced their plans to jointly revise and strengthen federal merger guidelines to regulate the current rise in merger activity.[1] The agencies intend to heighten existing merger standards in response to data indicating that various industries are becoming more concentrated and less competitive.[2] The FTC and DOJ proposal to amend federal merger guidelines comes in the midst of an ongoing merger surge, in which merger filings have more than doubled between 2020 to 2021 –  resulting in over $5 trillion from merger deals in 2021 alone.[3] FTC Chair Lina Khan has expressed concern that the merger boom may further consolidate markets and weaken competition which poses long-term harm to consumers and businesses.[4] The recent FTC and DOJ announcement signals that regulators will be taking a more critical approach when evaluating proposed mergers, and businesses should anticipate antitrust enforcement policies that may slow deal activity.[5] With the agencies’ increased antitrust efforts and stricter merger protocols, businesses can expect to face the suspension of “early terminations” for most deals, meaning that even routine transactions with no competitive impact must wait the statutory minimum of at least 30 days before closing the deal.[6] The FTC has also implemented a recent policy that requires acquirors who settle merger enforcement actions to obtain prior approval from the FTC before closing merger deals in the same or related markets within a ten year period.[7] Additionally, businesses should be aware that the FTC plans to scrutinize merger activity in new areas of interest including labor markets, digital platforms, and employee non-compete agreements.[8]

            With this recent announcement, the M&A market faces uncertainty, and analysts strive to predict whether merger activity will cool as companies face greater regulation.[9] M&A trends throughout history suggest that companies are likely to make more defensive merger strategies to adapt to growing government pressure.[10] Companies intending to make merger deals are likely to increase and readjust their due diligence procedures in accordance with the FTC and DOJ’s stricter guidelines, and merger financing commitments may become more sensitive to potential “market disruption[s].”[11] Furthermore, the technology industry will likely be heavily impacted by the amended merger policies, as the FTC has previously announced its desire to create new guidelines that would make it more difficult for large tech companies to consolidate.[12] For example, federal regulators are closely examining transactions involving tech companies, and in some cases, even ordering companies to undo previously consummated transactions in accordance with the government’s renewed fervor to toughen antitrust enforcement.[13] Increased merger activity in the private equity, financial, and real estate industries may also indicate greater regulatory scrutiny for business mergers in those sectors as well.[14]

            The recent FTC and DOJ joint efforts to bolster merger guidelines will affect many businesses and the M&A market as a whole, and companies will heighten their due diligence efforts to comply with antitrust regulation. Certain industries such as the tech industry will be more directly impacted by the new merger policies, but all companies should stay updated on current and future merger protocols to be in full compliance with the law.

* J.D. Candidate, Class of 2023, Sandra Day O’Connor College of Law at Arizona State University.

[1] Fed. Trade Comm’n, Federal Trade Commission and Justice Department Seek to Strengthen Enforcement Against Illegal Mergers (2022),

[2] Id.

[3] Id; Skyler Hicks & Michael W. Scarborough, Looking Ahead to Tougher Merger Guidelines and Enforcement, Nat’l L. Rev. (Feb. 4, 2022),

[4] David McLaughlin, U.S. Antitrust Cops Eye Tougher Merger Rules as M&A Surges, Bloomberg (Jan. 18, 2022, 12:47 PM),

[5] Hicks & Scarborough, supra note 3; M&A in 2021 and Trends for 2022, Morrison Foerster (Jan. 20, 2022),

[6] Id.

[7] Victor Goldfeld et al., Mergers and Acquisitions: 2022, Harv. L. Sch. F. Corp. Governance (Jan. 27, 2022),

[8] Supra note 5.

[9] Logan Beirne, VIEWPOINTS: M&A Transactions Face Heightened Government Scrutiny, Law St. (Nov. 23, 2021),

[10] Trevear Thomas & Brian Kunisch, 2022 M&A Trends Survey: The Future of M&A, Deloitte (Jan. 2022),

[11] Dr. Markus Schackmann, Six Important Legal M&A Considerations During the Global Pandemic, Deloitte,

[12] Hicks & Scarborough, supra note 3.

[13] Goldfeld et al., supra note 7.

[14] Id.

The Policy Statement on Licensing Negotiations and Remedies: New Development of Antitrust Policy on Standards-Essential Patents?

PDF Available

By Yuqing Xu*

On December 6, 2021, the U.S. Department of Justice (DOJ) Antitrust Division, the United States Patent and Trademark Office (USPTO), and the National Institute of Standards and Technology (NIST) released a revised statement on remedies for the infringement of standards-essential patents (SEPs) that are subject to F/RAND commitments.[1] The revised statement seeks to indicate good-faith negotiation, promote technology innovation, further consumer choice, and enable industry.[2]

The draft statement comes in response to President Biden’s Executive Order on Promoting Competition in the American Economy.[3] The DOJ is requesting public comment on the draft policy statement on eleven questions with respect to licensing negotiation, F/RAND commitments, and remedies for SEPs.[4]

The draft statement encourages interested parties to revisit the 2019 joint policy statement “to avoid the potential for anticompetitive extension of market power beyond the scope of granted patents, and to protect standard-setting processes from abuse.”[5] The draft statement addresses the issue whether the holders of SEPs who agree to license essential technology on fair, reasonable, and non-discriminatory (FRAND) terms should be entitled to injunctive relief.[6] Especially, the draft statement cites Federal Circuit precedent of eBay[7] for injunction considerations, and suggests to “generally militate against an injunction.”[8]

Many have expressed concerns about returning to the 2013 joint policy statement.[9] In the 2013 joint policy statement, the DOJ indicated that “the remedy of an injunction or exclusion order may be inconsistent with the public interest” and  emphasized the negative effect of patent “hold up”, which enables SEPs holders to exclude competitors from the market.[10] The 2019 statement withdrew it because the earlier approach “would be detrimental to a carefully balanced patent system”, and explicitly stated that all remedies, including injunctive relief should be entitled to SEPs subject to FRAND commitments.[11] In the draft statement, the injunctive relief is still available. It encourages the court and other neutral decision makers to adopt a balanced, fact-based analysis of remedy determinations; and consider all relevant facts, including the F/RAND commitment and conduct of the parties for remedy determination in SEP cases.[12] However, the DOJ limits the remedies for SEPs holders, and expresses that “[w]here a potential licensee is willing to license … SEPs subject to a voluntary F/RAND commitment, seeking injunctive relief in lieu of good-faith negotiation is inconsistent with the goals of the F/RAND commitment.”[13] And injunctive relief for a SEP subject to F/RAND commitment has rarely been granted.[14]

As a development of the previous statements, the draft statement offers a framework for SEP holders and potential licensees to engage in good-faith negotiation. The statement encourages the SEP holders to provide information as to how the SEPS are being infringed, and encourages the potential licensees to access the information provided and respond within a commercially reasonable amount of time in a manner that advances the negotiation or results in a license.[15]

The draft statement is not finalized and is seeking public comments on questions about the negotiations and remedies for cases involving SEPs. The DOJ is also seeking public thoughts about the injunctive relief. For example, the DOJ asks whether the public has experienced the possibility of injunctive relief being a significant factor in negotiations over SEPs subject to voluntary F/RAND commitment.[16] The DOJ is also concerned about the impact on the small business owners and small inventors by asking for comments on the effect on them by licensing.[17]

The draft statement points out the negative efforts on small and medium-size entities by patent hold-up, which raises antitrust concerns.[18] The draft statement has no force or effect of law, but it indicates the DOJ are applying antitrust principles to cases involving SEPs, and the antitrust enforcers are more active in SEP disputes.[19] 

* J.D. Candidate, Class of 2022, Sandra Day O’Connor College of Law at Arizona State University.

[1] Press Release, Dep’t of Justice Office of Public Affairs, Public Comments Welcome on Draft Policy Statement on Licensing Negotiation and Remedies for Standards-Essential Patents Subject to F/RAND Commitments (Dec. 16, 2021),

[2] Id.

[3] Id.

[4] See id.

[5] Exec. Order. No. 14,036, 86 Fed. Reg. 36,987 (July 9, 2021).

[6] Federal Agencies Issue New Draft Policy Statement Regarding Standard Essential Patent Licensing and Remedies, DOJ Seeks Public Comments, Ropes & Gray (Dec. 7, 2021),

[7] eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).

[8] Dep’t of J. Office of Public Affairs, supra note 1, at 9.

[9] See Dennis Crouch, Policy Statement on Licensing Negotiations and Remedies, PatentlyO (Dec. 13, 2022),; see also RPX Corporation, United States: Biden Administration Releases Draft of SEP Policy Revamp, Mondaq (Jan. 10, 2022),

[10] Press Release, Dep’t of J. Office, Policy Statement on Remedies for Standards-Essential Patent Subject to Voluntary F/RAND Commitments (Jan. 8, 2013),

[11] Press Release, Dep’t of J. Office, Policy Statement on Remedies for Standards-Essential Patent Subject to Voluntary F/RAND Commitments (Dec. 19, 2019),

[12] Dep’t of J. Office of Public Affairs, supra note 1, at 10.

[13] Id., at 4.

[14] Id. at 9.

[15] Id. at 5.

[16] Id.

[17] The public comments are open until February 4, 2022 at the following link:   

[18] Dep’t of J. Office of Public Affairs, supra note 1.

[19] Id. at n.17; see also David Golden, Startups Take Note: Feds Propose Limits on Standard-Essential Patent Market Power by Disfavoring Injunctions and Enforcing Non-Discriminatory Commitments, ConstantineCannon (Jan.4, 2022),

As Libor Nears its End, Deutsche Bank Traders Convictions are Overturned

PDF Available

By Emily McGill*

            On January 27, 2022, the U.S. Court of Appeals for the Second Circuit in New York overturned the convictions of Matthew Connolly and Gavin Black, two former Deutsche bank traders.[1] Connolly and Black had been convicted in 2018 for wire fraud and conspiracy related to the London interbank offered rate (“Libor”) scandal of 2012.[2] Prosecutors were arguing that Connolly and Black were pressuring their peers to alter interest rates and submit false data to benefit their own positions.[3]

            Having been the world’s most important number, an interest rate benchmark underpinning $800 trillion in financial instruments, Libor was responsible for many transactions varying from complex derivates to simple mortgages.[4] Being integrated in a majority of global financial products, the rate would signal the health of a bank, hint when banks were in trouble, and create the basis for payments for trillions of dollars in debt ranging from corporations to home mortgages.[5] Due to Libor’s critical role in the financial marketplace, member banks would report their numbers to the British Bankers Association and the European Banking Federation each morning.[6] These institutions required that each bank use their subjective judgment in determining their submitted rates, and strictly prohibited derivatives traders to consider their own financial positions when exercising this judgment.[7]

In 2008, Libor grabbed the headlines and soon became regarded as the world’s biggest headache and the subject of late-night punchlines.[8] International banks such as Barclays, Deutsche Bank, Rabobank, UBS, and the Royal Bank of Scotland[9] were caught colluding to manipulate the rate so their traders could make a profit on derivatives pegged to the base rate.[10] Relying only on self-reported estimates, Libor was easy to manipulate, making it possible for a bank to submit artificially high or low rates.[11] While these manipulations go back as early as 2003, they were spotlighted between 2005 and 2007 when Barclay’s first manipulated Libor.[12] During this period, “swaps traders often asked the Barclays employees who submit the rates to provide figures that would benefit the traders, instead of submitting the rates the bank would actually pay to borrow money.”[13] Additionally, it was reported that “certain traders at Barclays coordinated with other banks to alter their rates as well.”[14]

            A direct result of the scandal coming to light was the immediate erosion of the public’s trust of the marketplace.[15] Despite still being a viable source until it will be phased out at the end of the year, Libor will be replaced by the Secured Overnight Financing Rate (“SOFR”), produced by the Federal Reserve Bank of New York.[16] The data provided by SOFR will be based on transaction data as opposed to estimates.[17]

            Prior to being overturned, Connolly had been sentenced to six months of home confinement with an order to pay a $100,000 fine.[18] Similarly, Black was sentenced to nine months of home confinement with a $300,000 fine.[19] According to the Second Circuit, there was a lack of evidence that the two traders had caused Deutsche Bank to make false Libor submissions.[20] Specifically, the government had failed to produce any evidence that any of the Libor submissions by Deutsche Bank were influenced by the traders and were rates that Deutsche Bank was not allowed to request, receive, or accept.[21] By failing to meet this evidentiary burden, the Court was unable to determine any false or misleading conduct that would warrant a conviction of wire fraud or conspiracy.[22] While the Department of Justice has yet to speak on the matter, counsel for the traders stated, respectively, that they are “elated Matt Connolly has been fully exonerated in this contrived case”[23] and are “deeply appreciative” of the outcome.[24]

Since 2012, federal prosecutors have been locked in a decade long battle to hold Wall Street accountable for its manipulation.[25] The recent decision from the Second Circuit dealt another blow to this effort, as prosecutors have previously come to terms with more than a dozen other traders have had their convictions overturned or been acquitted in both the U.S. and UK. [26] Regardless of the government’s failed attempts to hold the traders involved accountable, there will be no recovery for the reputation and use of Libor. While searching for a successor to Libor as the new benchmark, lawyers have already begun to prepare for its awaited demise in 2023 by writing fallback language into contracts.[27] As both the legal and financial world moves on from the fall of Libor, it seems that the entire ordeal may just be forgotten.

* J.D. Candidate, Class of 2022, Sandra Day O’Connor College of Law at Arizona State University.

[1] Jonathan Stempel, U.S. Appeals Court Throws Out Deutsche Bank Traders’ Libor-Rigging Convictions, Reuters (Jan. 27, 2022, 12:50 PM),

[2] Id.

[3] Chris Dolmetsch, Ex-Deutsche Bank Traders’ Libor Convictions Tossed on Appeal, Bloomberg (Jan. 27, 2022, at 8:13 AM),

[4] Michael R. Koblenz, Kenneth M. Labbate, & Carrie C. Turner, Libor: Everything You Ever Wanted to Know but Were Afraid to Ask, 6 J. Bus. Entrepreneurship & L. 281, 284 (2013).

[5] Id.

[6] Id. at 285.

[7] Id.

[8] Lanah Nguyen & Jeanna Smialek, Libor, Long the Most Important Number in Finance, Dies at 52, New York Times (Jan. 13, 2022), libor-finance.html.

[9] Miranda Marquit & Benjamin Curry, What is Libor and Why Is It Being Abandoned?, Forbes (Dec. 21, 2021, 11:20 AM),,player%20in%20this%20complicated%20scam.

[10] James McBride, Understanding the Libor Scandal, Council on Foreign Relations (Oct. 12, 2016, 8:00 AM),

[11] Nguyen & Smialek, supra note 8.

[12] Id.

[13] Behind the Libor Scandal, New York Times (July 10, 2012),

[14] McBride, supra note 10.

[15] Id.

[16] Nguyen & Smialek, supra note 8.

[17] Id.

[18] Stempel, supra note 1.

[19] Id.

[20] U.S. v. Connolly, No. 19-03806, 2022 BL 28693, at *55 (2d Cir. Jan. 27, 2022).

[21] Id. at *54.

[22] Id. at *54-55.

[23] Stempel, supra note 1.

[24] Id.

[25] Matthew Goldstein, Two Former Deutsche Bank Traders Win Their Appeal in a Libor Manipulation Case, New York Times (Jan. 27, 2022), /business/libor-manipulation- deutsche-bank-traders.html.

[26] Id.

[27] Alec Foote Mitchell, LIBOR: The World’s Most Important Headache, 105 Minn. L. Rev. 1485, 1486 (Feb. 2021).