Compliance rot in the financial services industry

Canary Wharf | Photo: David Liff

About this talk

This talk is based on the author’s recent book “Law, Bubbles, and Financial Regulation“. The book analyzes how and why financial law-breaking appears to increase in frequency and severity during asset price bubbles.

Such a phenomenon is described as ‘compliance rot’ and is highly topical issue as the financial services industry is coming under much reputational scrutiny.

The talk will draw from highlights in the book, discussing historical episodes of fraud and law-breaking during alleged bubble periods in legal history as well as empirical data from more recent episodes.

The talk focuses on how “compliance rot” may occur under various theories, including rational actor/deterrence, behavioural economic, and social norms frameworks.

About the speaker

Erik F. Gerding is Associate Professor of Law at the University of Colorado Law School.

His research interests include securities, banking law, the regulation of financial markets, products, and institutions, and corporate governance.

He previously practised at the New York and Washington, D.C. offices of Cleary Gottlieb Steen & Hamilton LLP. His recent book, Law, Bubbles and Financial Regulation was published by Routledge in late 2013.