GLOBAL ENFORCEMENT IN THE FINANCIAL INDUSTRY
The research project “Global Enforcement in the Financial Industry” aims at empirically studying public enforcement against financial firms and their managers. Financial market participants have been an increasingly prominent target of regulatory and criminal enforcement across jurisdictions. This trend has been amplified since the Global Financial Crisis, when sanctions and other regulatory measures became an essential tool to restore public trust in the financial system, and legal, compliance and regulatory risk a top priority for financial firms.
The project has three main components :
- Quantitative and qualitative analysis of the regulatory enforcement by the Swiss Financial Markets Supervisory Authority (FINMA) and the subsequent courts’ practice.
- Quantitative mapping and analysis of regulatory enforcement across time and jurisdictions (US, UK, CH, FR, DE, NL, SG, HK).
- Comprehensive qualitative case studies of “high-profile” international enforcement cases against financial firms (including actions from regulators, criminal and civil prosecutors and anti-trust authorities and civil class-actions claimants).
The main objective of the research project “Global Enforcement in the Financial Industry” is to address a series of research gaps identified in the existent literature and to contribute to the development of enforcement as a topic for empirical research. Moreover, the project offers a bridge across disciplines, contributing to and stimulating interactions between the fields of empirical legal studies, law and economics and public policy.
This project (February 2019 – July 2022) benefits from the financial support of the Swiss National Science Foundation and the Centre of Banking and Financial Law, University of Geneva.
Present and former members of the project team include :
- Urs Zulauf, Project co-director (firstname.lastname@example.org)
- Roy Gava, Project co-director (email@example.com)
- William Gerosa, Research assistant
- Felix Hotz, Research assistant
- Melanie Müller, Research assistant
- Marc Renel, Research assistant
- Michael Umbricht, Research assistant
Urs Zulauf/Roy Gava | FINMA’s Enforcement in Court
An empirical and legal assessment of the court rulings regarding the Swiss Financial Markets Supervisory Authority’s financial regulation enforcement
This article presents an empirical and qualitative analysis of the judicial review of the Swiss Financial Markets Supervisory Authority’s (FINMA) enforcement of financial market laws by the Federal Administrative Court and the Federal Supreme Court. It is part of a broader research project on global enforcement against financial institutions and their managers and employees. Based on an overview of FINMA’s enforcement, the appeal rate against FINMA decisions and the success rate of such complaints is discussed. In addition, the article analyses key areas in which the courts have supported or set limits to FINMA practices. Statements on the right to a fair trial and the scope of FINMA’s discretion are the object of a special analysis. In an overall assessment, the authors come to the conclusion that, despite FINMA’s relatively high success rate in court, there is an effective judicial control over its enforcement.
Swiss Review of Business and Financial Market Law (SZW), 2/2019, pp. 2-16.
Roy Gava | Challenging the regulators : Enforcement and appeals in financial regulation
This article investigates the conditions under which regulatees challenge regulatory sanctions in court. Targets of enforcement have the right to make independent regulatory agencies (IRAs) accountable in court, but IRAs would prefer not to have their enforcement actions challenged. This article argues that, when deciding whether to contest regulators through appeals, regulatees consider the price of harming the regulatory relationship. Regulatory litigation is expected to be shaped by the type of enforcement measures at stake, the type of entity (i.e., firm or individual), and the kind of relation between firms and authorities (i.e., primary regulators). The empirical analysis relies on more than 3,700 cases from 18 financial regulators covering 13 European countries between 2004 and 2020. Results suggest that enforcement actions that impose costlier sanctions and target individuals are at higher risk of appeal ; in contrast, firms sanctioned by their national primary regulators show less appetite for appeals.
Regulation & Governance, 2021, https://doi.org/10.1111/rego.12405
PAPERS IN PREPARATION
- Roy Gava | Enforcement of financial regulation and media coverage
- Roy Gava | The Political Economy of Enforcement Risk
- Roy Gava, Urs Zulauf | Global Enforcement in the Financial Industry : The enforcers’ tools and their use
- Urs Zulauf | 1MDB : Showcase for integrated cross-agency enforcement in the Financial Industry
- Urs Zulauf | Enforcement frontrunning regulation : the case of cross-border client tax enforcement in the Financial Industry
PROJECT AND PAPER PRESENTATIONS
- Urs Zulauf, Roy Gava | Swiss Financial Markets Supervisory Authority | Bern, November 2021.
- Roy Gava | European Consortium for Political Research General Conference | Virtual, September 2021.
- Roy Gava | ComplianceNet Annual Conference | Virtual, June, 2021.
- Roy Gava | ECPR Regulation and Governance Standing Group Conference | Virtual, June 2021.
- Roy Gava | Law and Society Annual Meeting | Virtual, May 2021.
- Roy Gava | Law and Society Annual Meeting | Virtual, May 2020.
- Roy Gava | Swiss Political Science Association Annual Meeting | Lucerne, February 2020.
- Roy Gava | Max-Planck-Institut für Gesellschaftsforschung (MPIfG) | Cologne, November 2019.
- Roy Gava | European Consortium for Political Research General Conference | Wroclaw, September 2019.
- Urs Zulauf | Jahrestagung Universitärer Forschungsschwerpunkt Finanzmarktregulierung | Zurich, June 2019.
- Roy Gava | Law and Society Annual Meeting | Washington D.C., June 2019.
- Urs Zulauf, Roy Gava | Journée de droit bancaire et financier | Geneva, November 2018.
- Urs Zulauf, Roy Gava | Tagung Compliance im Finanzdienstleistungsbereich | Zurich, November 2018.
We are currently collecting different data on enforcement in the financial industry. Datasets will be published here when they are publicly released.