Markets as Regulators: A Survey

Gadinis, Stavros; Jackson, Howell E.

doi:10.2139/ssrn.960168

Cited by 15 publications

(5 citation statements)

References 9 publications

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“…Thirdly, exchange enforcement is vulnerable to the budgetary whims that sometimes befall commercial organisations (Reiffen and Robe, 2011). Fourthly, some claim that the relatively limited enforcement powers available to exchanges mean that the outcome of any enforcement actions they bring is unlikely to influence regulatory reform (Gadinis and Jackson, 2007). Finally, it has also been argued that an expulsion only serves as a deterrent if membership in a “club” is perceived to be highly valuable (Macey and Novogrod, 2011).…”

Section: Literature Reviewmentioning

confidence: 99%

How effective are the enforcement activities of derivatives exchanges in the digital age? A survey of enforcement notices through the lens of humans

Culley

2024

JFRC

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Purpose The purpose of this paper is to scrutinise the effectiveness of four derivative exchanges’ enforcement efforts since 2007. These exchanges include the Commodity Exchange Inc. and ICE Futures US from the United States and ICE Futures Europe and the London Metal Exchange from the UK. Design/methodology/approach The paper examines 799 enforcement notices published by four exchanges through a behavioural science lens: HUMANS conceived by Hunt (2023) in Humanizing Rules: Bringing Behavioural Science to Ethics and Compliance. Findings The paper finds the effectiveness of the exchanges’ enforcement efforts to be a mixed picture as financial markets transition from the digital to artificial intelligence era. Humans remain a key cog in the wheel of market participants’ trading operations, albeit their roles have changed. Despite this, some elements of exchanges’ enforcement regimes have not kept pace with the move from floor to remote trading. However, in other respects, their efforts are or should be, effective, at least in behavioural terms. Research limitations/implications The paper’s findings are arguably limited to exchanges based in Anglophone jurisdictions. The information published by the exchanges is variable, making “like-for-like” comparisons difficult in some areas. Practical implications The paper makes several recommendations that, if adopted, could help exchanges to increase the potency of their enforcement programmes. Originality/value A key aim of the paper is to shift the lens through which the debate concerning the efficacy of exchange-level oversight is conducted. Hitherto, a legal lens has been used, whereas this paper uses a behavioural lens.

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Section: Literature Reviewmentioning

confidence: 99%

How effective are the enforcement activities of derivatives exchanges in the digital age? A survey of enforcement notices through the lens of humans

Culley

2024

JFRC

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“…Government regulators thereby can focus on their agenda. 125 Standards are established through a largely consensual process. SROs are a counterpart for negotiations with government agencies seeking to introduce regulatory initiatives.…”

Section: Advantages and Disadvantages Of The Sro Modelmentioning

confidence: 99%

Who Can Regulate Fraudulent Charitable Solicitation?

Fishman

2016

taxreview

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The scenario is common: a charity, typically with a name including an emotional word like “cancer,” “children,” “veterans,” “police,” or “firefighters,” signs a contract with a professional fundraiser to organize and run a campaign to solicit charitable contributions. The charity may be legitimate or a sham. The directors of the charity may be allied or coconspirators with the fundraiser, or as likely, well-meaning but naïve individuals. The fundraiser raises millions of dollars through telemarketing, Internet, or direct mail solicitation. The charity receives but a small percentage of the amount. In some cases, at the close of the campaign, the organization owes the solicitor more than the amount raised for the charity.1Thereafter, the state attorney general investigates the charity and finds fraud in the solicitation or an improper use of the funds raised. As part of the settlement, the professional solicitor agrees to be barred from operating in that particular state. Thereafter, the fundraiser moves to a neighboring jurisdiction, opens business (perhaps under a different name), and commences the same cycle of fraudulent fundraising using another charity.2 Deception in solicitation and misuse of monies raised for charitable purposes is not only a fraud on the donor; it also can be a diversion of tax dollars from state or federal treasuries.This article examines several approaches for regulating unscrupulous professional fundraisers and preventing carpetbagging, moving from jurisdiction to jurisdiction, committing fraud, or willfully violating regulatory requirements. It examines limitations in the existing regulatory framework to prevent charity fraud and offers possible solutions to the problem. As a first solution, the Internal Revenue Service should revitalize and extend the “private benefit doctrine” as a tool of enforcement. Second, Congress and the Service should amend § 4958 to address excess benefit transactions to more clearly include unscrupulous solicitors.A third possible resolution to the problem outlined would be the expansion of the Federal Trade Commission’s enforcement authority to cover charitable solicitation generally. Currently, the FTC has authority over telemarketing by for-profit fundraisers.3 The legislation proposed would enable the creation of a self-regulatory organization under Federal Trade Commission aegis that fundraisers would be required to join. This new organization would enforce norms and rules for professional fundraisers, have the authority to discipline and, if necessary, to bar dishonest fundraisers from the fundraising industry.A final recommendation is the creation of an online, readily accessible database containing records of violations of professional fundraising companies and the individuals who own and work for them, the contracts between professional solicitors and the charities they work for, the results of fundraising campaigns listing the percentage of dollars raised that goes to the charity, and the texts of settlement agreements between state charity officials and fundraisers and the charities involved. An important issue not addressed in detail is the fiduciary responsibility of charity boards to carefully select the firms that manage their solicitation campaigns.

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“…For example, comparing both sides of the Atlantic, the Securities and Exchange Commission (SEC) in the US has taken a more active role in policing the market than the Financial Services Authority (FSA) in the UK. Gadinis and Jackson (2007) have tried to categorize different jurisdictions into three distinct models. The Continental model (France, Germany and Japan), which is described as the government-led model, preserves significant authority for central government control over securities markets regulation, although with a relatively limited enforcement apparatus.…”

Section: American Style Of Public Enforcementmentioning

confidence: 99%

Law and Finance: What Matters? Hong Kong as a Test Case

Yeung¹,

Huang²

2012

Asian Journal of Law and Economics

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This paper, using Hong Kong as a test case, challenges one conventional theory and confirms another one in law and finance study: (i) legal families in relation to stock market development; (ii) transplant effect of foreign laws. Economists, most notably La Porta and colleagues, allege that common law systems can offer superior investor protection and thereby facilitate the rise of financial markets. Undeniably, the legal system of Hong Kong, which was inherited from England, belongs to the common law family and is widely considered as one of Hong Kong's advantages. Nonetheless, the high concentration of family ownership among Hong Kong companies implies that its system is not entirely Anglo-Saxon. Moreover, legal scholars, most notably Pistor and colleagues, claim that the import of laws from a developed system (legal transplantation) will have little impact unless there is such a demand in the first place. Interestingly, for Hong Kong, the transformation of a small fishing village in the mid-nineteenth century to a financial serviceoriented economy nowadays is an illustration of the existence of demand in corporate and financial laws. By absorbing the nutrients from English legal traditions, American style of intense public enforcement and the flexibility of Chinese family businesses, Hong Kong has successfully established itself as one of the most crucial financial centers in the world.

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Markets as Regulators: A Survey

Cited by 15 publications

References 9 publications

How effective are the enforcement activities of derivatives exchanges in the digital age? A survey of enforcement notices through the lens of humans

How effective are the enforcement activities of derivatives exchanges in the digital age? A survey of enforcement notices through the lens of humans

Who Can Regulate Fraudulent Charitable Solicitation?

Law and Finance: What Matters? Hong Kong as a Test Case

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