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Professor Davidoff’s Paper Reaches SSRN’S Corporate, Securities & Finance Law Journals Top 10 List

October 10, 2007

DETROIT (Oct. 10, 2007) – Wayne State University Law School’s Professor Steven M. Davidoff’s paper entitled “Black Market Capital,” was recently listed on the Social Science Research Network’s (SSRN) Top 10 downloaded list in several categories, indicating it has been widely read and circulated by the academic and law communities. The paper was also recently quoted extensively and favorably in an Oct. 1, 2007, Financial Times article titled “SEC risks seeming perverse about risk.”

In his paper, Prof. Davidoff notes that retail investors may not be able to invest in hedge funds - or private equity funds for that matter - but they can invest in the funds' managers.  Prof. Davidoff suggests that the spate of flotations of alternative asset managers - albeit slowed by the credit market turmoil - is partly the result of the rules against public issues by alternative funds.  Prevented from buying the funds directly, public investors look for something that replicates their benefits. The financial industry quickly meets that demand.  But it does so with less suitable vehicles such as asset managers, special purpose acquisitions companies and the growing array of exchange-traded funds and indexes that attempt to track private equity or hedge fund performance.  These vehicles, which Prof. Davidoff dubs “Black Market” Investments, tend to be more risky on an individual basis than the hedge fund and private equity funds they substitute for. So public investors who buy them bear more risk and together inject more risk into the US capital markets than if they were allowed to invest in the funds.  Prof. Davidoff argues that the SEC should resolve these problems by amending the securities laws to permit public investors to invest directly in private equity and hedge funds.

The paper, located at 1 or  2, was in the top 10 downloaded in a number of categories including: “Administrative Law,” “Corporate Law: Corporate & Financial Law: Interdisciplinary Approaches,” “Corporate Law: Corporate & Takeover Law,” “Corporate Law (Topic),” “Corporate Law: Law & Finance,”  “Corporate Law: Securities Law” and “Young Scholars Law.“

The SSRN is an online network for academic papers.  In advance of paper publications, articles are often posted on SSRN for review by regulators, judges, academics, practitioners and others who are interested.  Articles that reach the Top 10 for a subject means the article was one of the most frequently downloaded during the 60 days after it was posted.

Prof. Davidoff, who joined the Wayne State Law faculty in 2006, teaches courses in corporations and securities regulation. His research focus is on corporate governance, regulation of hedge funds, mergers & acquisitions and securities regulation.  His prior scholarship can be accessed on the SSRN at http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=576465 and his blog, M&A Law Prof Blog, can be accessed at http://lawprofessors.typepad.com/mergers/.

Before joining the Wayne Law faculty, Prof. Davidoff practiced as an attorney for approximately a decade with Shearman & Sterling in their New York and London offices and with Freshfields Bruckhaus Deringer in their London office. He graduated from the Columbia University School of Law, where he was a Harlan Fiske Stone Scholar, and received a B.A. from the University of Pennsylvania. He has a master’s degree in finance from the London Business School. 

Wayne State University Law School has served Michigan and beyond since its inception as Detroit City Law School in 1927. Located in Detroit’s re-energized historic cultural center, the Law School remains committed to student success and features modern lecture and court facilities, multi-media classrooms, a 250-seat auditorium, and the Arthur Neef Law Library, which houses one of the nation's 30 largest legal collections. Taught by an internationally recognized faculty, Wayne State Law School students experience a high-quality legal education via a growing array of hands-on curricular offerings, five live-client clinics, and access to well over 100 internships with local and non-profit entities each year. Its 11,000 living alumni, who work in every state of the nation and more than a dozen foreign countries, include leading members of the local, national and international legal communities. For more information, visit www.law.wayne.edu.

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