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Hedge Fund
Scholarly Compositions - Featured Authors
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Dr. David M. Schizer
Dean
Lucy G. Moses Professor of Law
Columbia Law School
Academic Home Page
Brief Biography:
David M. Schizer, a
nationally-recognized tax and corporate governance scholar, was
appointed as the 14th Dean of Columbia Law School on July 1, 2004.
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At 35, Schizer is the youngest
Dean of the country’s top law schools. His parents are also
lawyers, and his mother, Hazel Gerber Schizer, was a 1959
graduate of Columbia Law.
After receiving a B.A. and an
M.A. in history from Yale in 1990, and a J.D. from Yale in
1993, where he served as executive editor of the Yale Law
Journal, Professor Schizer clerked for Judge Alex
Kozinski, U.S. Court of Appeals for the Ninth Circuit, from
1993–94, and then for Supreme Court Justice Ruth Bader
Ginsburg ’59 from 1994–95.
He went
on to specialize in tax law at Davis Polk & Wardwell until
1998, when he joined the Columbia faculty. His work as a
practicing attorney and as an academic has focused on the
taxation of sophisticated commercial transactions, including
complex derivative securities. Professor Schizer’s articles
aim to help the government curtail wasteful tax planning,
and also explore
SEQ CHAPTER \h \r
1the
influence of tax on corporate governance and capital
markets.
He has pursued these themes in
various articles, including
"Balance in the Taxation of Financial Instruments: An Agenda
for Reform," Columbia Law Review; "Scrubbing the Wash
Sale Rules," Taxes; "Market Bubbles and Wasteful
Avoidance: Tax and Regulatory Constraints on Short Sales,"
Tax Law Review (with Michael Powers and Martin Shubik);
"Understanding Venture Capital Structure: A Tax Explanation
for Convertible Preferred Securities," Harvard
Law Review
(with Prof.
Ronald Gilson; 2003); "Frictions and Tax-Motivated Hedging:
An Empirical Exploration of Publicly-Traded Exchangeable
Securities," (with Prof. William Gentry) National Tax
Journal; "Frictions as a Constraint on Tax Planning,"
Columbia Law Review (2001); "Tax Constraints on Indexed
Options," University of Pennsylvania Law Review
(2001); "Sticks and Snakes: Derivatives and Curtailing
Aggressive Tax Planning," Southern
California
Law Review (2000);
"Executives and Hedging: The Fragile Legal Foundation of
Incentive Compatibility," Columbia Law Review (2000);
and "Realization as Subsidy," New York University Law
Review (1998).
At Columbia, Professor Schizer
has taught federal income taxation, the taxation of
financial instruments, corporate tax, and deals. He chaired
Columbia’s clerkship committee from 2000-2002, and has just
joined the school’s appointments committee as co-chair for
entry-level candidates. He also serves on the executive
committee of the N.Y. State Bar Association’s Tax Section,
and is a member of the Tax Club and the Tax Forum.
He is
married to Meredith Wolf Schizer, and has two children.
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Market Bubbles & Wasteful
Avoidance:
Tax & Regulatory Constraints on Short Sales
(Working Paper)
by Michael R. Powers, David M. Schizer, and Martin Shubik
Cowles Foundation For Research In Economics
Yale University
April, 2003
Abstract
Although short sales make an important contribution to financial
markets, this transaction faces legal constraints that do not
govern long positions. In evaluating these constraints, other
commentators, who are virtually all economists, have not focused
rigorously enough on the precise contours of current law. Some
short sale constraints are mischaracterized, while others are
omitted entirely. Likewise, the existing literature neglects
many strategies in which well advised investors circumvent these
constraints; this avoidance may reduce the impact of short sale
constraints on market prices, but may contribute to social waste
in other ways. To fill these gaps in the literature, this paper
offers a careful look at current law and draws three
conclusions. First, short sales play a valuable role in the
financial markets; while there may be plausible reasons to
regulate short sales – most notably, concerns about market
manipulation and panics – current law is very poorly tailored to
these goals. Second, investor self-help can ease some of the
harm from this poor tailoring, but at a cost. Third, relatively
straightforward reforms can eliminate the need for self-help
while accommodating legitimate regulatory goals. In making these
points, we focus primarily on a burden that other commentators
have neglected: profits from short sales generally are
ineligible for the reduced tax rate on long-term capital gains,
even if the short sale is in place for more than one year.
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