Internal Control and the Federal Police

Scenes from Portland are frightening. This weekend I began to wonder just who these federal agents were because the feds were never meant to ever have a police force. The prohibition of a federal police was fundamental to the founding fathers (and mothers) view of the new version of federalism created by the US Constitution. We all are learning more as the media uncovers more. The “fourth estate” may be redeeming itself, imho, as journalists begin to unearth who these agents are in order to help us grapple with the legal legitimacy of the federal interference. Also, recent federal court decisions concerning the police and federal agents in Oregon create a one step back, two steps forward scenario. If the federal government has the legal right to enlist federal agents, then court decisions and new laws are permitted to check that power.         

 

THE COURTS

While a federal judge recently refused to grant the State of Oregon a restraining order against the deployment of federal agents in Portland, the ACLU has been successful obtaining a restraining order against the use of force by police and federal agents against the press and legal observers. In all the situations cited by the ACLU, the press and legal observers were 30-40 feet away from protestors, wearing press badges as well as vests clearly identifying them as NOT protestors. The order stops federal agents from dispersing, arresting, threatening to arrest, or targeting force against journalists or legal observers at the Portland protests for 14 days. A restraining order stops temporarily an activity, until a full hearing or review of the matter is possible. Seattle erupted in sympathetic protests this weekend and a federal in Seattle judge ruled that a recent ordinance approved by the Seattle City Council that bars police from using tear gas, pepper spray and other crowd control devices COULD go into effect on Sunday hopefully reducing harm to any and everyone. Black Lives Matter organizers in Chicago, joined journalists and civil rights attorneys to file a preemptive suit in federal court against the Trump Administration to prevent federal agents from being utilized Portland-style in Chi-town.   

 

FEDERAL POLICE?

The  Secretary of Homeland Security justifies the use of federal agents in Portland under 40 U.S. Code § 1315, which is most commonly used to enlist help for the Federal Protective Service, to protect federal property. The Department of Justice also has power under federal criminal law to protect government property.  U.S. Marshals, Federal Protective Service, U.S. Customs and Border Protection and Homeland Security Investigations (ICE) have alternated officers through Portland. The U.S. Marshals Service appears to be the lead agency. Department of Justice Office of Inspector General is reviewing federal agent activity in Portland. The administrative agencies that house these agents are under the direction of the President or an appointed leader. Some of these agencies are under the direction of interim presidential appointees because they never completed the congressional review of those appointments which is the norm. Perhaps that plays a part in the ease with which the federal agents appeared at protests. Perhaps a more qualified appointee would have refused the request to use federal agents. Some have argued that the agents are poorly trained because they were never meant to police civilians or civil unrest. What if all of this is perfectly legal?

 

THE Constitution

“The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected. The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State. The operations of the federal government will be most extensive and important in times of war and danger; those of the State governments, in times of peace and security.” (James Madison, Federalist Paper #45)

If the above was TL;DR,  et me break it down. The Federalist Papers are newspaper articles written by James Madison, John Jay, and Alexander Hamilton, published in New York newspapers during the debates over the drafting of the Constitution. The helps us understand what the framers were debating and how THEY understood the powers they incorporated into the Constitution. The above says, federal power is greatest during time of war. Otherwise, federal power is limited and small and must defer to the states. For the state’s main concern should be the lives and property of the people and “internal order.” It does seem that while the letter of the law may allow the presence of federal agents the spirit of the law does not. And perhaps the letter of the law also does not. A court will need to declare that or a new law must be passed to ameliorate the situation.      

 

Author Michael Lewis, in his 2018 book The Fifth Risk: Undoing Democracy, describes the danger to America of poor appointments to important agencies. The current administration has not appointed competent leaders for critical agencies. Agency directors who are incompetent (lack of experience) create all types of insecurity over legitimacy. Poor leadership decisions have caused great harm in the past – Waco.

The civil unrest of today is extraordinary. We were legally unprepared. It is time to catch up.   

Civil Rights Report Card for Facebook

Laura Murphy was the first African American and first women to head the Washington D.C. Office of the American Civil Liberties Union (ACLU). Laura recently worked with lawyers from the Washington Civil Rights law firm Relman Colfax to conduct a civil rights audit of Facebook. The audit was not just limited to racial justice but also included possible instances of discrimination in education, employment, as well as protected classes including sex, sexual orientation, gender identity, disability, national origin, religion, and age.

The audit was called for by civil rights organizations, advocates, and a few members of Congress. Facebook agreed to it and chose the auditors themselves.  Facebook was being taken to account for perceived failures during the 2016 Presidential elections and other failures to balance the safeguarding of free speech with hate, discrimination, and inequality.

The auditors began by interviewing over 100 civil rights organizations and members of Congress. The first preliminary audit report was release in 2018 with a second update in 2019. The focus of the audit was the Facebook app and no other Facebook products.

The audit found that civil rights organizations were most concerned about the failure of Facebook concerning race-based hate, voter suppression, advertising targeting and practices, and civil rights implications of privacy practices. Even with some noted positive changes at Facebook currently, the report found Facebook’s dealings regarding civil rights reactive and piecemeal. The report found it ironic that Facebook had no qualms about stopping anti-vaccination proponents and misinformation surrounding COVID-19 but was reluctant to take on board firm rules limiting misinformation regarding voting and voter suppression.

                Facebook Community Standards are what guides its decisions regarding posts. Here is the May 2020 Community Standards Enforcement Report.  The report only covers activity until March. Instagram was included in this report noting a concerning rise in Hateful Speech, Adult Nudity, Violence and Cyberbullying. Drug-related content surged during the months from January to March 2020. Despite improving tools and technology, Facebook estimates there are over 130 million fake profiles active on the platform. Also increasing is the number of governments seeking public data, which is concerning.

The ACLU audit’s primary concern is that Facebook do better during November’s 2020 Presidential election. The #StopHateforProfit and #HitPauseonHate campaigns’ ask advertisers to pause their ads on Facebook until it changes how the platform meets certain standards – establish a civil rights infrastructure, regular independent audits of identity-based hate and misinformation, find  remove groups focused on white supremacy, climate denialism, and antisemitism, to name only a few. 970 groups, advocates, and corporations such as The North Face, Verizon and Microsoft have joined the boycott. Facebook has met with the campaign organizers but no specific answers regarding the recommendations were clearly articulated.

Mark Zuckerberg owns a special class of shares that grant him 57% of the voting rights at board of directors meetings of the company = powerful. Moreover, hate speech is protected by the First Amendment. Neither, Zuckerberg’s power (and ignorance) nor hate speech’s protections can be viewed in isolation from our society and our own responsibilities. Assuredly, Facebook can do better and so can the rest of us.

At the end of the day more civil discourse and dialogue at all levels of each of our communities would go a long way toward improving things. My community is the California Community College system with its own struggle with Free Speech. I hope civil discourse is healthy enough to face #CancelCulture. There is a place for the social and societal pressure to act better that we are seeing  yielding positive change. However, we still need to be capable of standing in the same space with someone who does not believe the same things as us but we listen, learn, and rebut them if they are wrong.

  

Parenting during COVID

 

California is peaking when it comes to COVID. I am currently located in Southern California.   

My family lives a bike ride away. As California has relaxed restrictions, COVID case have gone up. My family of a 27 year old working disabled son and an 81 year old mother does not want to get together in person. They want to FaceTime and Facebook (FB) video message.

My son wants to FB video message and leave it on while we do other things. Sometimes we connect and he watches a movie while I play Animal Crossing New Horizons. Sometimes I do work while he watches something after work. I listen to it and continue to work.

This new COVID behavior is very interesting to me. Previously, he would never connect like this. He was busy working and being social. These days he works at a company that makes hand sanitizer. He is amazingly social on Zoom in a way that I envy.

My Zoom calls are all about work. Sometimes they are "Happy Hours" but usually not. 

We, as a family, have met up on Google Meet. But Zoom and FaceTime are our go to. What fascinates me is the sitting on zoom or messenger while the other person does something else. This is new and fascinating. 

During these sessions we are relating and not relating. We are watching each other. Responding when things require it but mostly keeping each other company.

There are multiple realties related to COVID. At home with too many people. At home alone. And maybe at home with intermittent people coming and going.

My son is truly connecting with me in ways we have not before. I am feeling less alone. Maybe he is too. It took me awhile to get used to this. Previous to COVID, I would have disconnected if he was watching something while video calling me.

Now I stay connected to him and I feel relief. I feel less alone. I feel more motivated to connect to others by video as well. Very strange and exceedingly relevant. I hope to evolve while the virus does. I hope to stay current and responding to changes as they appear to me and as my circle reveals them to me.       

Death and Inheritance

This summer I am teaching Wills, Trusts, and Estates to/with my amazing paralegal students. I have 60 students in my class this summer which is taught online due to COVID 19 . We are seeing a surge of students in classes this summer. We believe it is related to COVID19. I have never, ever had 60 students in a summer class before. The norm is 45. This class is 8 weeks long and very compressed. IN light of Black Live Matter and the diversity of my students, I am infusing more equity in my course this summer.

“Infusing Equity” is all about understanding that the people who wrote the textbook I am using for the class are most likely of white descent. Last names Hower, Walter, Wright for the textbook but that does not reflect my students who want to and will work for a local law firm.

In an effort to make the class more accessible for them, I make sure my examples when I lecture are not only about white privilege. White persons in Orange County, California inherit. Men inherit wealth and land. While the RIGHT to inherit or own land has become more equal the ability has not. Women and persons of color just have so much less wealth and own less land.

My journey this summer continues and I will update. In other news, the American Bar Association no longer has FW de Klerk as its keynote speaker for its annual conference.  Important voices are needed as the globe moves forward. I have no opinion about this event. I ask are voices with experience necessary? I want success so I only seek that success. How can we move forward successfully? Who leads that success movement?       

   

An Introduction to Civil Discourse

Several years ago, an organized group came to my college campus quad, to exercise their First Amendment right to say horrendous and hateful things with bullhorns about the Prophet Muhammad, Muslims, women, gays persons, and people of Jewish descent. After teaching a Business Law class that morning, I crossed campus to see what the gathering and noise was about. The group was large and loud. Students stood in a large group encircling the visiting speakers.

Several of the students from my class who were Muslim stood listening to the hateful rhetoric. I attempted to get them to somehow signal their disagreement with the speaker. Did they know a chant or song - even in Arabic - that we could all say at the same time? I asked them to sit with me with my back to the speakers to show our disagreement. Most stood with their mouth agape struggling with the fact that no one was stopping the hateful speech. American students struggled as well.

Campus police had already detained one student for spitting on the speakers. Forced to leave to teach my next class, I felt useless and confused. Campuses around the country were struggling with student protests against conservative voices on campus. The speakers were (allegedly) a Christian group and they videoed the entire time they spent on our campus.

At IVC, we began to call the day the organized group came, our First Amendment event. We held open forums and discussed hate speech. As faculty we discussed how to help student better face disagreeable dialogue with an equally protected response. Most of the discussion seemed to end once someone said the speakers had a protected right to speak. I began to lecture at open forums and in the classroom and explain that the First Amendment protects the response to that hateful speech as well.

Dean Erwin Chemerinsky, then Dean of University of California, at Irvine law school, and other experts came to our community college campus to teach us about the first amendment. I listened and learned. I was asked to speak on Free Speech at the Fall 2017 California/Nevada regional meeting of Phi Theta Kappa  – the honors society – helping students understand protected speech. I was astonished in speaking to students that they knew very little of the rights afforded them under the US Constitution’s First Amendment. 

I began to understand part of the puzzle – students did not know how to respond to ideas and words that were deeply hurtful and offensive. I also appreciated that by not participating they were muted and silenced.    

America is polarized. #BlackLivesMatter has been brewing for so long. Most Americans no longer know how to engage in discourse. Peaceful or unpeaceful protests are not a cause for concern. What is concerning is the failure to listen by both sides. LISTENING is a crucial part of civil dialogue. Failure to listen to opposing views is peaking on all sides of America’s polarization. Protests & counter protests, are symptoms of a complicated and layered problematic USA. Listening leads to understanding. There is no quick and easy solution and that makes America uncomfortable.

For my own part, I am applying for a National Endowment of the Humanities grant. The grant will fund the development of an Introduction to Civil Discourse course and related forums and activities on campus to help us all learn how to dialogue effectively. Effective dialogue and discourse will mean listening and understanding concepts that are offensive and responding with evidence-based arguments. Looking forward to digging deep on civil discourse.  

When the statues come down

The unnecessary killing of George Floyd led to historic unrest. All over the world protestors in support of #BlackLivesMatter are defacing walls and statues with the words “I can’t breathe.” The protests are resulting in statues being removed one way or another.

In the city of Bristol, England a bronze statue of Edward Colston – former slave trader – was torn down and thrown into the harbor. <= Check out the BBC interview with Bristol’s Mayor Marvin Rees! In multiple cities in Belgium, statues of King Leopold II were set on fire or defaced. Belgian’s colonial history in Africa under Leopold was brutal and dark. In Antwerp, a defaced statue of Leopold was taken down by the city and delivered to a museum for restoration and storage. An act to be repeated by cities in the US.    

A few days ago, in the US city of Philadelphia, a statue of a former Police Commissioner and Mayor Frank Rizzo was removed by the city. The removal was already planned due to the renovation of the plaza where the statue sat. The statue was defaced during #BLM protests and removal was expedited. In the following days, a mural of Frank Rizzo at an Italian market in South Philly was painted over. 

My family has been in Pennsylvania for centuries. I lived outside Philadelphia, in East Norriton Township, as a child when Frank Rizzo was mayor (1972-1980). Race was very important then but not in a healthy way. I grew up in white privilege. There was great division between black and white people at the time exacerbated by Rizzo’s support of police brutality which was particularly anti-black. My parents pulled me out of public school (free) and sput me in a Catholic one for a few years due to violent racial problems between students at school.           

In the US state of Virginia, The Mayor of the city of Richmond, also decided to voluntarily remove the statue of General Robert E. Lee, a Confederate (Southern) General from the US Civil War. Beginning July 1^st of this year legislation gives Virginia cities the discretion to remove Confederate statues. That law was passed in April 2020 and ended a former prohibition in Virginia of the removal of Confederate war memorials. 

Governor Northam of Virginia announced that the statue of Robert E. Lee in Richmond would come down immediately and put in storage. Shortly after that announcement, a judge temporarily blocked the removal of the statue for 10-days in response to a speedily filed claim of irreparable harm should it come down. The statue sits on a portion of land in the city of Richmond that was deeded to the state. The effect of the language of the deed on removal of the statue will be resolved in the courts review. It must be pointed out that threats of removal of this same statue sparked the Unite the Right march in Charlottesville, VA in 2017.

I lived in Richmond, VA while at school at the University of Richmond. I was there in 1984 when the Richmond Spiders Men’s basketball team made it to the NCAA tournament. Charles Barkley played for Auburn in that game. One of my many part-time jobs in college was as a bartender and waitress for the Country Club of Virginia. Race was also very important and equally unhealthy but, in a manner, exceedingly different from Philadelphia.

In the 70s, Philadelphia saw protests and journalists speaking out about race inequality and police corruption. Richmond in the 80s was a walk back in time. It was sleepy and asleep. There was no hope for equality given the deep, ingrained institutional bias against black people. The same Virginia Governor Northam who wants to pull down Robert E. Lee, admitted then denied being photographed in blackface in a Medical School yearbook photo from the 1980s.

White privilege is real. Unwinding it in America will take a great deal of dialogue and education. We cannot forget intersectionality. For every Person of Color who is disabled, a woman, or trans or any marginalized identity – they are experiencing layers of bias and overlapping discrimination. 

Both the City of Philadelphia (City of Brotherly Love) and the State of Virginia (Virginia is for Lovers) have played crucial roles at important points in American history – Founding Fathers (and Mothers), American Revolution, Civil War. I do not see them as leaders right now but they might be bell-weathers for concrete change.  

#AmericanSpring

“I wish I could say that racism and prejudice were only distant memories. We must dissent from the indifference. We must dissent from the apathy. We must dissent from the fear, the hatred and the mistrust…We must dissent because America can do better, because America has no choice but to do better." - Thurgood Marshall 

U.S Embassies in Africa, in an unprecedented fashion, have condemned the death of George Floyd at the hands of the Minneapolis police.  Additionally, the head of the African Union Commission, Moussa Faki Mahamat, rejected the “continuing discriminatory practices against Black citizens of the United States of America." America has a problem with systemic racism. The world is watching. COVID19 may have made this moment of nationwide civil unrest possible. Difficult to know if it will last or if lasting change will be the result.

The State of Minnesota Department of Human Rights has opened an investigation into the Minneapolis Police Department. This type of probe can reveal ways to correct the police departments history of racial discrimination. But we have been here before. After the killing of Michael Brown in Ferguson, Missouri in 2014, the US Department of Justice opened Federal Civil Rights investigations. Some things changed and things remained the same. Police wear body cameras but the Floyd killing went viral based on a bystander video, not a police body cams.  What provides some hope is the speed with which the police officer involved was charged with a crime. That is new. And it seems that COIVD19 may have prepared some of the US to have this dialogue on the streets and online.

COVID19 in the US saw the rise of the effective and powerful state Governor. That was new.

In the wake of a failed US Federal Government response to the Pandemic, California’s Governor  Gavin Newsom and New York Governor Andrew Cuomo rose in power and profile on the national stage as leaders in combatting the virus. We listened and watched online no matter what state we lived in. I live in California and Newson is a particular hero in most parts of the state.   

There are many layers to racism and inequality in the US. America had already begun some discussion of the inequitable impact of COVID19 - closures, infection rates, access to affordable healthcare had been the national and state dialogue. All of the dialogue was virtual. Months stuck at home with no healthy outlet for frustration on many levels.

There is some evidence of outsiders aggravating the protests. What is different from the Ferguson protests is the use of helpful words such as systemic racism, white privilege, and bias. This new language that white America must face, digest, and embrace is a healthy step forward. Privilege is unearned and unasked for. The challenge is to generate the momentum to move to the next step in our understanding in order to allow a broader discussion of police abuse of power and bias toward those of African descent. Also, the US must face its limitations and approach its role on the international stage with a great deal more humility.        

#LARain 2018

It is 2018 and the rain is amazing. The house feels like a boat floating.

This blog is changing course.  While my focus is Africa,  I want to include new fields of interest: Cannabis, teaching undergraduate & graduate law, and guest posts with my students. My students want to talk about the most amazing things - free speech on campus, millennials learning, millennials working. Africa working and other things.

Canna & Africa, Cannatech, learning and capital markets are all interconnected & integrated. So much interesting writing to take place. Did not feel like starting a new blog; do not really care who follows me; so jazzed about writing new things so here it is.

Cannabis and how it relates to business law is the most important thing occurring in California law today.  Given the Sessions Memo it might be the coolest things occurring in US law today. California is set to make billions on Cannabis. Cannabis business need to know how to run a legit business.

I will talk about this on this blog.



        

Mexico City, LSA 2017

South Africa, Ghana, Nigeria, California !!!

Africa at Law and Society

This past week the Law And Society Association (LSA) met for its annual meeting in Mexico City, Mexico.
There was a robust African presence.


In 2016, LSA provided an opportunity for members to seek grant funded travel for academics in remote locations to attend the international conference in Mexico. The only requirement was the establishment of an International Research Consortium (IRC) with a specific goal. IRC 24 Africa Financial Regulation was created and we received funding for 4 Africa based academics to travel to Mexico. Only Prof. Tsheop Mongalo, Monash South Africa was able to attend. The others fell foul of arcane University reimbursement policies and Visa restrictions.        

Great event, great discussions and reinvigorated my focus on financial regulation in Africa.

Please check out my latest publication:  23 J.L. Bus. & Eth. 101, Winter, 2017

EMERGING AFRICAN CAPITAL MARKETS AND GLOBAL FINANCIAL STANDARD-SETTING: PERMITTING ALL VOICES TO BE HEARD 

US SEC and proposed changes to crowdfunding rule for offer and sale of securities

Raising capital through crowdfunding is evolving and the securities rules have not kept up with business practice. Here are some links to informative discussions on the proposed changes to the US Securities and Exchange Rule 147 and the limitations of those changes. The changes would allow the offer and sale of securities through crowdfunding on the internet through an exemption and not a safe harbor. The new changes propose to facilitate intrastate and regional securities offerings.

See the links below.

Crowdfunding discussion 

SEC press release

ZIm farmers judgment forces the sale of a home in SA

I previously wrote about a Southern African Development Community (SADC) Tribunal ruling that resulted in a judgment in the South African Constitutional Court. That judgment resulted last month in the sale of a home in Cape Town that was attached for settlement of monies owed.

While described as a symbolic victory, the judgment still has the power to cause other sales to satisfy it. The lawsuit to enforce the decision of the SADC tribunal demonstrated that civil law  functions in Southern Africa, with some help.

Interestingly, a case will be heard in a South African court early next year regarding the complicity of the South African Government in the suspension of the SADC Tribunal in 2011.  I blogged about the suspension here.  The SADC Tribunal is the forum previously given jurisdiction by member states of SADC over human rights violations by those states. 

The missing voice of Africa

After the Asian financial crisis, the voice of emerging economies grew at the global level. Paul Martin, the first chair of the new G20 considered it imperative to the reform of the international financial architecture. Why was the voice of Africa not amplified after the most recent crisis?

I do not know the answer but my guess is perpetuation of parternaistic notions.
Here is a draft version of my most recent essay on the matter.

“…inclusiveness lies at the heart of legitimacy and effectiveness”[1]

Incumbent players in the global capital markets construct barriers to financial development in Africa through the imposition of best standards and policy, created without significant enough input from Africa, in an effort to harmonize securities regulation suiting primarily developed markets, not developing or emerging markets predominantly found in Africa.[2] Capital markets, diverse and distinct by nature, are capable of providing a ladder out of poverty through, for example, capital access for water and road system projects, IT development, and permitting people to collectively share in prosperity.  Africa has experienced steady growth[3] and now participates to a greater extent than ever to the global domestic product – developing world consumers are buying U.S products. [4] We are a global economy. This necessitates that dominant players in the global economic arena shed paternalistic views of Africa and incorporate in the policy dialogue at the global level emerging and developing African economies. Such inclusion is paramount for effective global financial governance. [5]

Extreme poverty is reduced worldwide but still very present in sub-Saharan Africa despite steady and continued growth in the region.[6]  The markets in sub-Saharan Africa are unique because of poverty but also because they are African.[7] Nations, and therefore national exchanges, of Africa share the continent, nevertheless they are distinguished by geography, demographics, history, geology, and level of development. That unique context has not previously been integrated in the legal and economic literature debating how to achieve growth in these capital markets.^[8]  This essay argues that the distinctness of Africa mandates that African capital markets have a more meaningful presence and voice in policy and standard setting for global legal matters such as global securities regulation. African capital markets, unencumbered by unrealistic notions of legal conformity and better situated to contribute, will then evolve in a healthy, inclusive global environment reflecting honest global membership rather than an outdated, paternalistic, neo-colonial model of global participation.  

Financial integration in the global economy is defined by the International Monetary Fund (IMF), a global international organization, as a country’s linkages to international capital markets.[9] As integrated economies experience the after-effects of one another’s financial predicaments, the impetus to establish global standards escalate for industries such as international accounting, corporate governance, and securities regulation in the interest of crisis prevention.[10] Emerging and developed markets strive for inclusion in the global economic community to share in the prosperity and possibility. A functioning and stable capital markets can create opportunity domestically and also attract outside investment. Inclusion comes with the expectation of having achieved a stated international standard. This is not uncommon Industries with global members regularly establish best practices and standards.[11]

International financial standards, specifically, are complex and commonly created by a small-community of experts.[12] Moreover, politics plays a role in international standards when they involve public and private entities.[13] For the most part, across the globe, domestic capital markets contain that public and private partnership. [14] Furthermore, there are associated costs for complying with international standards which will vary depending on levels of economic development.[15] The developing economy may bear a greater burden when asked to comply with a standards due to weak financial infrastructure, job skills deficits in the workforce and political instability. These characteristics described above were exactly what led to an increased voice, albeit ever so slightly, of emerging economies in the setting of policy for the global economy. The Group of 20 was created, expanded from the Group of 7[16], signaling a shift to a more inclusive, diverse group in dialogue concerning global economic governance.[17] This shift was in recognition that emerging economies needed to contribute to rule-making at the global level.[18] It was recognized that the powerful few had for too long established economic policy for the world with catastrophic economic results.[19]  The recognition that global policy must be made by inclusive institutions was given lip service after the Global Financial crisis but no changes were implemented.[20] This lack of inclusiveness is evident in organizations that set policy for regulation of the capital markets. International securities regulation standards are set by the International Organization of Securities Commissions (IOSCO). It has historical been controlled by developed economies and is now slowly adding emerging market members. It is too little, too late and more must be done. Furthermore, this essay suggests that it is this very lack of representation at the rule-making table that prevents African capital markets from reaching their potential.             

IOSCO was established in the 1970’s with the purpose to set global standards for world securities exchanges, [21] over 90 percent of the world stock exchanges are members.[22] The IOSCO has a board and committees which set policy. Only in 2013, did the IOSCO allow, for the first time, an African member on the Growth and Emerging Markets Committee.[23] The Chair of the Africa/Middle East Regional Committee is the Director General of the Securities and Exchange Commission of Nigeria.[24] The governing board of IOSCO was previously reserved for the largest capital market countries but in 2014 two seats were made available for emerging markets,[25] and  the stated goals of the organization are to press forward the Financial Stability Board[26] and G20 agendas, which have little or no African representation. That same governing board has 34 members with 53 percent representation from the largest capital markets based on market capitalization.[27] The growth and emerging markets committee currently has a member from South Africa. Membership in IOSCO is a key part of a developing and emerging capital markets entry into the global economic marketplace historically. However, its membership still reflects the same hegemony that was rejected 15 years ago only now Asia is sitting at the table.[28] The reassessment regarding institutional inclusion that occurred at the global level after the financial crises’ of the late 1990’s did not take place after the recent financial crisis. And yet, economies are integrated like never before and are vulnerable to systemic risks leading some economists to argue that full financial integration should not be the goal as it does not appear to lead to greater stability by spreading the risk.[29]  Regardless, we are integrated. Dialogue about how fully that should take place and resulting policy remains dominated by developed economics and does not include Africa in a meaningful way.

Currently, Africa is underrepresented in the global economic policy making forums. African economies are a growing contributor to global domestic product and still suffer recessions and financial set-backs resulting from foreign economic activity.  African economies host stock exchanges,^[30] bond markets,^[31] as well as commodity and derivative markets^[32].Many are currently regulated with governance structures that were imposed through standard-setting^[33] and those regulations have very little bearing on transactions on the exchange trading floor or how disputes are resolved.^[34]  This essay argues that until there is significant representation of African emerging markets in global economic dialogue, with organizations like the IOSCO, growth in those economies will remain elusive and donor dependent.

---

[1] The Honorable Paul Martin, Minister of Finance of Canada, first chair of the newly formed G20. Germain, Randall (2001) ‘Global Financial Governance and the Problem of Inclusion’, Global Governance, 7: 412, 411–26

[2] Africa is used for convenience to refer to the over 25 equity, commodity and bond markets on the continent. 

[3] http://www.un.org/sustainabledevelopment/poverty/ ; see also Regional Economic Outlook Sub-Saharan Africa April 2015

[4] Wall street journal “US Stock Market can’t sidestep emerging markets trouble this time around: Recent troubles in developing economies could pack more punch for US investors. 10/14/15.

[5] Germain, Randall (2001) ‘Global Financial Governance and the Problem of Inclusion’,

Global Governance, 7: 411–26. (Arguing that technical issues such as transparency, moral hazard and prudential regulation alone would not be enough to reform the global financial architecture after the Asian financial crisis. It was the inclusion of emerging market economies for the very first time in the Financial Stability Forum and the G-20 that would increase the legitimacy of the global financial architecture and that without this political component the technical reform would not be effective.)  

[6] World Economic report, International Monetary Fund. 2015. World Economic Outlook:

Adjusting to Lower Commodity Prices. Washington (October), 16.

[7] The author has visited and interviewed brokers and CEOS of stock exchanges including the Zimbabwe Stock Exchange, Malawi Stock Exchange, Uganda Securities Exchange, Dar es salaam exchange (now the TSE) and the Lusaka Stock Exchange.    

[8] June McLaughlin, “Towards a Contextualized Appraisal of Securities Regulation,” in The Political Economy of Development and Underdevelopment in Africa, edited by Toyin Falola and Jessica Achberger (New York: Routledge 2013):  121. 

[9]  E. Prasad, et al.,  “Effects of Financial Globalization on Developing Countries; Some Empirical Evidence,” IMF Occasional Paper No. 220, p. 1 (Washington DC: IMF, 2003)

[10] Layna Mosley,  Attempting global standards: national governments, international finance, and the IMF's data regime,  Review of International Political Economy 10:2 May 2003: 331, 332

[11] See, International Association of Oil and Gas Producers http://www.iogp.org/international-standards, Global Healthcare Data Standards http://www.ghxeurope.com/global-standards,  

[12] Mosley, supra note 6 at 335. (Discussing the political economy of international financial standards and the interplay of government and private actors in their effectiveness and acceptance). This is certainly true with international securities regulation.

[13] Id.

[14] Many world stock exchanges are demutualized and trade as private entities on an stock exhange. They are regulated at the federal or national level; some self-regulate. Broker dealers and brokers are also regulated in the U.S. by the Securities and Exchange Commission but also by the Financial Industry Regulatory Authority which regulates its members; brokers and broker dealers.   

[15] Id at 336-37. (Describing the effectiveness of standards

[16] G7 consisted of finance ministers and central bank governors from Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

[17] See, Mark Beeson and Stephen Bell, The G-20 and International Economic Governance: Hegemony, Collectivism, or Both?, Global Governance 15 (2009) 67-86. The only African economy included in the G20 was South Africa primarily due to the insistence of the Honorable Paul Martin, first chair of the new G20.  See, G20 Governance for a Globalized World, .John J. Kirton, Ashgate, (2013).

[18] Germain, supra note 4 at 418.

[19] Martin Khor, Globalization and the South: Some critical issues, United Nations Conference on Trade and Development (UNCTAD), Discussion paper, April 2000, (describing the rise of Bretton Woods institutions such as the International Monetary Fund (IMF) and multinational corporations setting a global agenda focused on commerce and the diminishment of United Nations focus on principals of partnership and fulfilment of human needs). 

[20] McLaughlin, supra note, at 107. (African nations not members of the G20 submitted a paper giving an African perspective. No new memberships were extended.)

[21] See generally, Rhys Bollen, The International Financial System and Future Global Regulation, 23 J. Int’L Banking L. 458 (2008).

[22] June McLaughlin, “Taking Responsibility—Securities Regulation Reform and the Global Financial Crisis: The United States, United Kingdom, and East Africa,” Transnational Law and & Cotemporary Problems, Vol.19, (2008):128.

[23] http://www.iosco.org/annual_reports/2013/AMERCReport1.html A South African was voted Vice-Chair of the Growth and Emerging Markets Committee (GEM) after the African Middle Eastern Regional Committee pressed for more representation on the IOSCO Board. From 2010-2012 the Chair of that committee was from Turkey, 2008-2009 Chile, 2007 Jordan, 2006 India, 2004-2005 Turkey.

[24] Director Gerneral Arunma Oteh. http://www.iosco.org/annual_reports/2013/AMERCReport1.html

[25] IOSCO Annual Report of the Growth and Emerging Markets Committee. https://www.iosco.org/annual_reports/2014/GEMCChairReport1.html.

[26] http://www.financialstabilityboard.org/ [incomplete documentation]

[27] https://www.iosco.org/annual_reports/2014/generalInformation1.html

[28] Handbook of Safeguarding Global Financial Stability: Political, Social, Cultural and Economic Theories and Models. Editor-in-Chief, Gerard Caprio, Chapter 46 “D.W. Arner, “Organizations of International Cooperation in Standard-setting and Regualtion”, (contrary to the author’s statement IOSCO does not have wide spread membership)

[29] Joseph E. Stiglitz Capital Flows, Contagion, and Regulatory Responses †

Risk and Global Economic Architecture: Why Full Financial

Integration May Be Undesirable American Economic Review: Papers & Proceedings 100 (May 2010): 388–392

http://www.aeaweb.org/articles.php?doi=10.1257/aer.100.2.388

[30] http://www.african-exchanges.org/members/ There are twenty-three stock exchange members of the African Stock Exchange Association

[31] 24 local currency bond markets in sub-Saharan Africa, See IMF Working Paper, Bond Markets in Africa, Yibin Mu, Peter Phelps, Janet Stotsky. , https://www.imf.org/external/pubs/ft/wp/2013/wp1312.pdf

[32] 17 commodity and derivative exchanges collectively http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Guidebook_on_African_Commodity_and_Derivatives_Exchanges.pdf

[33] McLaughlin, “Taking Responsibility,” p. 120

[34] I have visited the Zimbabwe Stock Exchange, the Malawi Stock Exchange, the Uganda Securities Exchange, the Dar es salaam exchange (now the TSE) and the Lusaka Stock Exchange.