Public Agencies and Investor Compensation: Examples from the SEC and CFTC

Verity Winship

University of Illinois College of Law

January 29, 2009

Administrative Law Review, Vol. 61, No. 1, 2009

Investor compensation by financial regulators hits the headlines when an agency has been the white knight, recovering and distributing funds to injured investors. Rarely do the papers laud financial regulators when they provide the judges in the financial market equivalent of small claims court. The SEC’s and CFTC’s approaches to compensation track these two alternatives. The SEC’s Fair Fund power allows it to distribute money-penalty amounts to injured investors. In contrast, the CFTC’s longstanding “Reparations Program” resolves disputes between private parties (individual shareholders and financial professionals) in a role akin to that of an arbitrator or judge. This essay suggests revisiting the unglamorous business of resolving disputes between customers and brokers and recasting it as a potentially valuable source of industry information to the agencies tasked with enforcing securities and commodities laws. It also provides concrete case studies of public agencies’ involvement in the often private domain of compensatory remedies.

中文版在: http://ssrn.com/abstract=2159249

Number of Pages in PDF File: 24

Keywords: SEC, Securities and Exchange Commission, CFTC, Commodity Futures Trading Commission, Reparations Program, financial regulation, compensation, investor compensation, remedies, Fair Fund, WorldCom, financial institutions, whistleblower, arbitration, securities arbitration, Treasury, public agencies

JEL Classification: G28, K20, K22, K23

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Date posted: March 30, 2012  

Suggested Citation

Winship, Verity, Public Agencies and Investor Compensation: Examples from the SEC and CFTC (January 29, 2009). Administrative Law Review, Vol. 61, No. 1, 2009. Available at SSRN: http://ssrn.com/abstract=2031000

Contact Information

Verity Winship (Contact Author)
University of Illinois College of Law ( email )
504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
217-244-8161 (Phone)
HOME PAGE: http://www.law.illinois.edu/faculty-admin/directory/VerityWinship
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