Misinformed Depositors
University of Miami Business Law Review Volume 33, Issue 1 pp. 29–71 (2024)
44 Pages Posted: 27 Aug 2024 Last revised: 14 Dec 2024
Date Written: August 01, 2024
Abstract
Social media enables information to travel faster and wider than ever before, creating endless new possibilities. However, it also has also opened the door to misinformation or disinformation, which have already wreaked havoc in many industries, including the financial sector. Given the importance of accurate information in banking stability, false information poses a real risk of causing bank runs that lead to bank failures.
This article documents the risks that false information poses to the banking industry. It then turns its attention to the regulation of false information in securities markets, which has grappled with the issue for many years. Drawing on this regulation—as well as other sources—this article sketches out a variety of regulatory and legislative solutions that can be applied to the insured depository institution (IDI) context. These solutions are then evaluated for their feasibility.
Keywords: financial regulation, bank runs, bank regulation, misinformation, disinformation, securities regulation
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