November 09, 2015
Tulane Law Professor Onnig Dombalagian teaches about capital markets and has a direct role in making sure they work properly.
Worried that the volatility of the stock market signals the possibility of another national financial crisis?
Trying to prevent crises through regulation isn’t necessarily a viable approach, says Tulane Law Professor Onnig Dombalagian, who not only teaches about markets but has a direct role in ensuring they work properly.
“I approach the question of whether we can regulate crises out of existence with an extreme degree of humility,” he said, referring to the crash of 2008. “We’re talking about the animal spirits of the markets.”
But he analogized it to earthquakes, which can’t be prevented but can be prepared for: “We can certainly take steps to anticipate crises and to mitigate their severity with some common sense regulatory reforms.”
In his scholarship, Dombalagian argues for better market structures and more transparency so that investors have a better understanding of what they’re getting into, and problems are detected early on rather than after there have been huge failures and billions of dollars lost.
And he’s been prolific during 2015, with a book and four law review articles that explore approaches to addressing complex issues affecting securities markets, investment banking and public companies.
His new book Chasing the Tape: Information Law and Policy in Capital Markets, published by MIT Press, examines how to promote efficiency and transparency in a regulatory framework that lags far behind technology and globalization.
“Principles for Publicness,” published in the Florida Law Review, explores the duties public companies owe investors, markets and society, and it proposes reframing the rules governing public offerings to increase accountability while not discouraging companies from seeking public investors.
His article “Substance and Semblance in Investor Protection,” in the Journal of Corporation Law, discusses whether the Securities Investor Protection Corporation is the best vehicle for compensating investors harmed by large-scale securities fraud, such as the Bernie Madoff and Allen Stanford Ponzi schemes.
He also has articles forthcoming in the Wake Forest Law Review and the SMU Law Review. And an article calling for more collaboration between U.S. banking and market regulators was published recently in Oxford University Press’ Capital Markets Law Journal.
Dombalagian, who holds the George Denègre Endowed Professorship in Law, joined the Tulane Law faculty in 2003 after working as an attorney fellow at the Securities and Exchange Commission and in private practice at Cleary Gottlieb Steen & Hamilton.
He has first-hand experience in enforcing fair and well-operating financial markets: He’s nearing the end of a three-year term on the National Adjudicatory Council of the Financial Industry Regulatory Authority, the largest independent regulator of securities firms doing business in the United States.
The 14-member council, which includes seven industry members and seven non-industry members, reviews appeals of FINRA rulings disciplining broker-dealers. The council’s decisions can be appealed to the SEC, then in federal court.
While having an industry body, such as FINRA, adopt and enforce regulations raises some skepticism, Dombalagian said the arrangement helps resolve practical and technical problems without the political complications inherent when Congress or the SEC gets involved.
“The goal is for FINRA to try to adopt standards that make business sense for members and make investors confident in the brokerage industry,” he said.
While it’s a difficult balance, securities regulation can be made more efficient without sacrificing investor protections, he said. “A lot of the old ways of regulating need to be reconceived.”
In addition to teaching business associations, securities regulation and corporate finance, Dombalagian co-founded the transactional track of Tulane’s annual Intersession boot camp. The week-long immersion in skills training gives students an up-close look into being a law firm associate working with senior partners on a business deal.
Having faculty and practitioners work together on skills-building exercises, he said, enables Tulane to “give students some real insight into how what they’re learning in the classroom works in practice.”