Improving the Culture of Ethical Behavior in the Financial Sector: Time to Expressly Provide for Private Enforcement Against Aiders and Abettors of Securities Fraud

73 Pages Posted: 26 Jan 2011  

Mark Klock

George Washington School of Business

Date Written: January 25, 2011

Abstract

Financial markets do not function well when fraud is pervasive. It has been well documented that financial fraud has increased following changes in securities law that occurred in the 1990’s. Also around September of 2009, the investigations into the SEC examinations of Bernard Madoff Investment Securities, LLC were completed and released to the public. The simple facts reveal an alarming level of incompetence and lack of financial literacy on the part of the guardians of the integrity of our financial markets. I suggest two important tools for addressing these problems. One is to supplement enforcement of anti-fraud rules with more private attorney generals by expressly creating a private right of action for aiding and abetting violations of securities laws. This will foster a stronger culture of integrity and ethical conduct in the auditing profession. An additional tool is to increase financial literacy in our law schools which supply the regulators of our markets.

Keywords: securities fraud, private enforcement, aiding and abetting, financial markets, ethics

JEL Classification: G18, G28, G38, K22

Suggested Citation

Klock, Mark, Improving the Culture of Ethical Behavior in the Financial Sector: Time to Expressly Provide for Private Enforcement Against Aiders and Abettors of Securities Fraud (January 25, 2011). Available at SSRN: https://ssrn.com/abstract=1747910 or http://dx.doi.org/10.2139/ssrn.1747910

Mark Klock (Contact Author)

George Washington School of Business ( email )

2023 G Street
Washington, DC 20052
United States
202-994-8342 (Phone)
202-994-5014 (Fax)

HOME PAGE: http://savickas.net/cgi-bin/GWfinance/viewfaculty.cgi?fn=16

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