Corporate Compliance
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Corporate Compliance

New Approaches to Regulatory Enforcement

Sharon Oded

This book considers how a regulatory enforcement policy should be designed to efficiently induce proactive corporate compliance. It first explores two major schools of thought regarding law enforcement, both the deterrence and cooperative approaches, and shows that neither of these represents an optimal regulatory enforcement paradigm from a social welfare perspective. It provides a critical analysis of recent developments in US Federal corporate liability regimes, and proposes a generic framework that better tailors sanction schemes and monitoring systems to regulatee performance. The proposed framework efficiently induces corporate proactive compliance, while maintaining an optimal level of deterrence.
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Introduction to Part III

New Approaches to Regulatory Enforcement

Sharon Oded


How should a regulatory monitoring regime be structured to efficiently induce corporate proactive compliance? Scholars, policymakers, and courts around the globe have acknowledged that in many contexts corporations can control their employees more efficiently than public authorities. In Part I of this book, I examined the two major philosophies in law enforcement – deterrence-based and cooperative enforcement approaches – each embracing different styles of enforcement aimed at inducing corporate proactive compliance. The analysis revealed the limited scope of each of these “stand-alone” approaches in producing a socially desirable enforcement policy and explored the virtues of regulatory mixed regimes that reconcile both enforcement styles within a composite framework. Additionally, the analysis revealed that the regulatory mixed regimes proposed in the scholarly literature up to this point are fraught with substantial perils. Therefore, Part I of this book poses the challenge of identifying innovative structures of regulatory enforcement regimes that are able to sustain the advantages of the existing mixed regimes, while overcoming their pitfalls. In Part II of this book, I addressed this challenge with respect to corporate liability regimes. In this part of the book, I focus the spotlight on regulatory monitoring systems. In an attempt to improve regulatees’ motivations to adopt a proactive approach to regulatory compliance, many regulatory enforcement authorities employ “targeted monitoring systems” in which they differentiate monitoring efforts among various regulatees. These systems resemble the regulatory mixed regimes discussed in Part I of this book.

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