The Challenge of Enforcement in Securities Markets: Mission Impossible?
IMF Working Papers, August 1, 2009
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Bibliographic details
- Authors: Ana Carvajal, Jennifer A. Elliott
- Published: August 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451873153.001
Overview and purpose
- Authors: Ana Carvajal, Jennifer A. Elliott
- Date: August 1, 2009
- Paper series: Working Paper No. 2009/168, Volume: 2009, Issue: 168
- Pages: 37
- DOI: https://doi.org/10.5089/9781451873153.001
- Stock No: WPIEA2009168
- ISBN: 9781451873153
- ISSN: 1018-5941
- Subject: Financial regulation and supervision; Financial services; Legal support in revenue administration; Securities; Securities regulation
- Keywords: court order; enforcement capacity; insider trading; regulators surveillance systems; securities regulator; U.K. FSA; WP
Key findings and arguments
- Weaknesses in the enforcement of regulation have been targeted by the G-20 as a priority concern for reform.
- Enforcement efforts in securities markets have proven difficult and uneven.
- The Bernard Madoff Ponzi scheme in the United States, which went undetected by U.S. authorities for more than two decades, highlights:
- the importance of effective enforcement of securities regulation, and
- the challenges securities regulators worldwide face in implementing credible enforcement programs.
- Noncompliance with securities law can have serious system-wide impact, not just individual losses.
- The credibility of the system as a whole rests on the existence of effective discipline — the probability of real consequences for failure to obey the law.
Analytical approach
- The paper explores:
- the elements of enforcement,
- why enforcement is so challenging,
- why enforcement is important, and
- whether the effects of enforcement can be measured.
- Methodology: analysis of data gathered in the World Bank/IMF Financial Sector Assessment Program (FSAP) to examine how enforcement is being carried out around the world.
Conclusions and implications
- The paper draws conclusions regarding how countries are meeting the challenge of effective enforcement based on the FSAP data analysis.
- Effective enforcement is necessary to maintain system credibility by ensuring a real probability of consequences for legal violations.
IMF Working Paper — The Challenge of Enforcement in Securities Markets: Mission Impossible? By Ana Carvajal and Jennifer A. Elliott, August 1, 2009. Working Paper No. 2009/168.