The sleeping watch dog: aka the Securities and Exchange Commission
Purpose - The purpose of this paper is to expose inefficient regulatory policies and organizational weaknesses at the Securities and Exchange Commission (SEC) that have contributed to a series of regulatory oversights that have produced some of the largest fraud schemes perpetrated on investors. Design/methodology/approach - Sources of information consisted of scholarly articles and articles retrieved from the web. Findings - Findings suggest that although weaknesses that have been exposed at the SEC may not account for any one securities fraud oversight, cumulatively, the weaknesses create negative synergy that increases the probability that a regulatory oversight will occur. Originality/value - This paper serves as a useful guide to alert and educate securities regulators and enforcement, regardless of the country they may operate in, to examine their own regulatory policies and organizational structures for weakness that may be similar to the SEC.
Self-regulation and compliance enforcement practices by the Investment Dealers Association in Canada
Purpose - This paper examines the enforcement practices of the Investment Dealers Association of Canada (IDA) and argues that self-regulation simply does not work in the financial sector, as the sanctions available are not applied with sufficient severity, nor are the responsibilities for enforcement adequately divided between self-regulation, provincial securities commissions, and the police Design/methodology/approach - The core compliance data for the study came from the IDA’s tribunal cases that were heard between 1984 and June of 2008. The theoretical approach involves the invocation of classic articles by the likes of Stigler, Posner and Becker, the essence of whose conclusions is that institutions will act in their own best interests and cannot be expected to act in the public interest. Findings - The findings show that over the period 1984-2008 the severity of the sanctions increased consistently over the period. When penalty ceilings were increased, penalties increased. When in the latter phase of the period, public members (i.e., non-members of the industry) chaired the tribunals, penalties also increased. Research limitations/implications - Researchers can use the data to write an article which asks "Why did the IDA tribunal penalties increase so consistently with time?" Future research could canvass various possible explanations, including the one presented in this paper, in order to focus sustained attention on the issue of self-regulation. Originality/value - The article is the first to systematically examine the enforcement performance of the IDA.
Insiders' profits, costs of trading, and market efficiency
This study investigates the anomalous findings of the previous insider trading studies that any investor can earn abnormal profits by reading the Ofi&/ Summan/. Availability of abnormal profits to insiders, availability of abnormal profits to outsiders who imitate insiders. determinants of insiders’ predictive ability, and effect of insider trading on costs of trading for other investors are examined by using approximately 60,000 insider sale and purchase transactions from 1975 to 1981. Implications for market efficiency and evaluation of abnormal profits to active trading strategies are discussed.