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Constraining Monitors

Fordham Law Review, Vol. 85, pp. 2227-2247, 2017

Notre Dame Law School Legal Studies Research Paper No. 1710

22 Pages Posted: 21 Jan 2017 Last revised: 7 Apr 2017

Veronica Root

Notre Dame Law School

Date Written: January 19, 2017

Abstract

Monitors oversee remediation efforts at dozens, if not hundreds, of institutions that are guilty of misconduct. The remediation efforts that the monitors of today engage in are, in many instances, quite similar to activities that were once subject to formal court oversight. But as the importance and power of monitors has increased, the court’s oversight of monitors and the agreements that most often result in monitorships has, at best, been severely diminished and, at worst, vanished altogether. Additionally, statutory efforts to provide formal guidance and restrictions on monitorships have stalled and published bar guidance has taken a nonbinding advisory form. Finally, the evolution of monitorships has resulted in monitors appointed in untraditional circumstances, without the typical involvement of regulatory actors who can serve as an additional check to ensure appropriate monitor behavior. As a result, a monitor is often charged with overseeing an institution’s effort to address misconduct within its walls, while the monitor herself acts without formal oversight or technical restraint.

The lack of regulation governing monitors is well documented; yet, the academic literature on monitorships to date has largely taken the state of monitorship regulation as a given and failed to explain adequately why monitors, who often are technical members of regulated professions, are not subject to professional regulation. This Article argues that one reason for the lack of regulation governing monitorships is the resistance of the bar to regulate quasi-legal positions undertaken by lawyers. Instead, the primary restraint on a monitor’s behavior is the monitor’s own interest in her reputation. This has resulted in monitoring roles undertaken by lawyers who are acting in a manner that is not subject to formal professional standards and by non-lawyers who have no mechanisms of constraint on their behavior. Consequently, several areas of concern for monitorships need careful study and attention in an attempt to achieve some semblance of legitimacy and standards for monitors and monitorships. Specifically, more research is needed to determine appropriate norms regarding (i) a monitor’s disclosure of information, (ii) how to facilitate monitor independence, and (iii) potential methods for utilizing personal responsibility as a mechanism of sanctioning a monitor for inappropriate conduct.

Keywords: antitrust law, white collar crime, criminal procedure, interdisciplinary approaches, securities, risk, regulation

JEL Classification: K10, K14, K19, K20, K21, K22, K23, K30, K39, K40, K41, K42, K49

Suggested Citation

Root, Veronica, Constraining Monitors (January 19, 2017). Fordham Law Review, Vol. 85, pp. 2227-2247, 2017; Notre Dame Law School Legal Studies Research Paper No. 1710. Available at SSRN: https://ssrn.com/abstract=2902159

Veronica Root (Contact Author)

Notre Dame Law School ( email )

361 Mendoza College of Business
Notre Dame, IN New South Wales 46556-5646
United States

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