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Regulatory Enforcement Against Organizational Insiders: Interactions in the Pursuit of Individual Accountability

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Original languageEnglish
Pages (from-to)298-316
Number of pages19
JournalRegulation & Governance
Volume15
Issue number2
Early online date23 Oct 2019
DOIs
Accepted/In press15 Aug 2019
E-pub ahead of print23 Oct 2019
Published2 Apr 2021

Bibliographical note

Funding Information: My grateful thanks are due to Professor Kate Malleson, Dr. Melissa Rorie, Dr. Nicholas Lord, Dr. Philip McDermott, and the three anonymous reviewers for their valuable comments on this manuscript. Earlier versions of the paper have benefited from the input of participants at the American Law and Society Conference, Mexico City, 2017, and a departmental seminar held at the Manchester Centre for Regulation and Governance (ManReg), School of Law, the University of Manchester, January, 2018. Part of the article was written while I was a Visiting Scholar at the Centre for the Study of Law and Society, University of California, Berkeley, April?May 2018. Publisher Copyright: © 2019 John Wiley & Sons Australia, Ltd

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Abstract

The UK Financial Conduct Authority has developed and implemented policies targeting individuals for regulatory non‐compliance in the post‐2008 crisis period. This article develops a tripartite framework that differentiates between individual–firm, regulator–individual, and regulator–firm interactions to capture the complexity of these enforcement proceedings. Drawing on interviews with stakeholders, administrative decisionmaking observations, and documentary analysis, it outlines the process of individualizing responsibility for non‐compliance and finds that this approach poses evidential and investigative challenges for the regulator as a result of individual and corporate responses. The evidence shows that individuals are more likely than firms to engage in an adversarial response to an investigation rather than to settle. At the same time, through an inverse process of “corporatization” of the enforcement proceedings, firms may employ resources and strategies aimed at obscuring individual responsibility or binding together more closely the corporate and the individual case. The article concludes that the prospects of a successful outcome in investigating individuals depend not only on regulators' activities but also on corporate responses and on which managers are considered assets to the firm and which may be thrown to the wolves.

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