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Henry T. C. Hu

  • Allan Shivers Chair in the Law of Banking and Finance

Education

  • JD Yale
  • MA Yale
  • BS Yale

Professor Henry T. C. Hu holds the Allan Shivers Chair in the Law of Banking and Finance at the University of Texas Law School. Appointed by U.S. Securities and Exchange Commission Chairman Mary L. Schapiro, he was the inaugural Director of the SEC's Division of Risk, Strategy, and Financial Innovation (2009-2011) (now called the Division of Economic and Risk Analysis). The first new Division in 37 years, it was created to provide sophisticated interdisciplinary analysis across the entire spectrum of SEC activities, including policymaking, rulemaking, enforcement, and examinations. See, e.g., (1) Kara Scannell, At SEC, Scholar Who Saw It Coming, Wall Street Journal, Jan. 25, 2010, at page C1; and (2) CNBC's "Squawk Box" - Feb. 23, 2011 (as the "guest host"): Fmr. SEC 'Risk Czar' Speaks Out, http://www.cnbc.com/id/15840232?video=1811142035&play=1. Interested in the law and economics of capital markets, financial innovation, and governance, he has written on asset allocation; corporate and financial institution compensation, disclosure, governance, objectives, and risk management; debt, equity, and hybrid "decoupling" through credit default swaps, equity derivatives, securitization, and other means; director fiduciary duties; individual investors and retirement security; model risk; regulation of banks, derivatives, hedge funds, and mutual funds; systemic risk; and Warren Buffett. The writings have appeared in law reviews (e.g., Columbia Law Review, University of Pennsylvania Law Review, and Yale Law Journal), finance and specialist journals (e.g., Annual Review of Financial Economics, European Financial Management, and Risk), and newspapers (e.g., Financial Times, New York Times, and Wall Street Journal).

In research, his June 2012 article (Too Complex to Depict? -- pertinent links at "Recent Publications" below) offers a fundamental rethinking of the SEC’s disclosure system--in place since the 1930s--and of the nature of “information” in an age characterized by unprecedented innovations in finance and in computer-related technologies. The article also analyzes whether certain “too big to fail” banks may be "too complex to depict." A series of articles (2006-2009) offered the first systematic analysis of debt and equity “decoupling,” and coined terms that have come into worldwide use among finance and legal academics, bankers, hedge funds, institutional investors, judges, and regulators, such as “empty creditor” and “empty voter.” This decoupling research was featured in a lead front-page story in the Wall Street Journal and stories in the Economist, the Financial Times, and the New York Times. In recognition of a 1995 article on derivatives and corporate hedging, an exchange-traded index derivative introduced in 1996 was assigned the ticker symbol of “HUI”. Today, the “HUI” (NYSE Arca Gold BUGS Index) lives on not as a derivative but as one of the world’s two most widely-followed indexes for gold mining stocks. A 1993 Yale Law Journal article (Misunderstood Derivatives) receiving renewed attention in the wake of the global financial crisis showed how cognitive bias, compensation, financial "science," and other factors can lead major banks to take undue risks and make other mistakes as to complex derivatives.

Professor Hu teaches corporate law, modern finance and governance, and securities regulation. He has also taught them at Harvard Law School, where he was the Bruce W. Nichols Visiting Professor of Law for the 1997-98 academic year. He has been chair of the Association of American Law Schools' Business Associations Section and a member of the Legal Advisory Board of the NASD (now FINRA), the NASD and NASDAQ Market Regulation Committees, and the Board of Trustees of the Center for American and International Law. He is on the Editorial Board of the Oxford University Press's Capital Markets Law Journal. He has testified before Congress, including on behalf of the SEC as to landmark derivatives legislation. In 2010, the National Association of Corporate Directors named him as one of the 100 most influential people in corporate governance ("Directorship 100"), based on a survey of 15,000 directors and executives. He holds a B.S. (Molecular Biophysics & Biochemistry), M.A. (Economics), and J.D., all from Yale. Sample Writings: Henry T. C. Hu, Misunderstood Derivatives: The Causes of Informational Failure and the Promise of Regulatory Incrementalism, 102 Yale Law Journal 1457-1513 (1993); Henry T. C. Hu and Jay Lawrence Westbrook, Abolition of the Corporate Duty to Creditors, 107 Columbia Law Review 1321-1403 (2007); Henry T. C. Hu and Bernard Black, Equity and Debt Decoupling and Empty Voting II: Importance and Extensions, 156 University of Pennsylvania Law Review 625-739 (2008); Darrell Duffie and Henry T. C. Hu, Competing for a Share of Global Derivatives Markets: Trends and Policy Choices for the United States, draft at http://ssrn.com/abstract=1140869 (2008); Henry T. C. Hu and Bernard Black, Debt, Equity, and Hybrid Decoupling: Governance and Systemic Risk Implications, 14 European Financial Management 663-709 (2008); Henry T. C. Hu, 'Empty Creditors' and the Crisis--How Goldman's $7 billion was 'not material', Wall Street Journal, Apr. 10, 2009, at A13; Henry T. C. Hu and Terrance Odean, Paying for Old Age, New York Times, Feb. 26, 2011, at A19; Henry T. C. Hu, Too Complex to Depict? Innovation, "Pure Information," and the SEC Disclosure Paradigm, 90 Texas Law Review 1601-1715 (2012); Henry T. C. Hu, Efficient Markets and the Law: A Predictable Past and an Uncertain Future, 4 Annual Review of Financial Economics 179-214 (2012).

Recent Publications

  • Systemic Risk and Financial Innovation: Towards a “Unified” Approach, in Quantifying Systemic Risk at 11 (Joseph G. Haubrich & Andrew W. Lo eds., 2013).
  • Efficient Markets and the Law: A Predictable Past and an Uncertain Future, 4 Annual Review of Financial Economics 179 (2012).
  • Too Complex to Depict? Innovation, “Pure Information,” and the SEC Disclosure Paradigm [Symposium: Reshaping Capital Markets and Institutions: Twenty Years On], 90 Texas Law Review 1601 (2012). Available at <http://ssrn.com/abstract=2083708 > [discussed in Gillian Tett, The banks that are too complex to exist, Financial Times, June 8, 2012, at 20, web version available at <http://www.ft.com/cms/s/0/65281562-b0c1-11e1-a2a6-00144feabdc0.html>].

Full list of publications…

Contact Information

Henry T. C. Hu

hhu@law.utexas.edu

Work (512) 232-1373

Fax (512) 471-6988

Office: TNH 4.102
The University of Texas at Austin
727 E Dean Keeton Street
Austin, TX 78705

Faculty Assistant

Scott T. Vdoviak svdoviak@law.utexas.edu
(512) 232-1388

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