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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Chapter 9: Concluding remarks

New Approaches to Regulatory Enforcement

Sharon Oded


Despite the recent “free market” global trends, governments in modern societies hold a central position in directing and controlling corporate activity through regulations. To attain socially desirable ends, such regulations must be adequately enforced, while taking into consideration the particularities of the regulatory ecology. This book seeks to identify a structure of enforcement policy that efficiently induces corporate proactive compliance. In pursuing this goal, the analysis considers the following particular factors regarding the regulatory ecology: Corporate regulatees – The organizational settings of corporations, in which various agents act on behalf of their corporate employers, involve unique aspects that pose certain challenges to the traditional enforcement systems which are directed at individual primary actors. The dispersion of responsibility within corporations, the difficulties involved in controlling incorporated groups of actors, as well as potential conflicts of interest within the corporate “black box,” require policymakers to avoid treating corporations as monoliths. Instead, enforcement policies must be attentive to the composite structures of corporate regulatees and produce compliance incentives tailored to such structures. Proactive compliance – Unlike traditional criminal laws, regulations normally provide detailed standards of behavior; they are frequently updated to meet ever-changing market needs; and they often require a certain level of expertise to be fully grasped and obeyed. Hence, an enforcement policy directed at inducing corporate regulatory compliance must encourage regulatees to move from a “reactive” to a “proactive” compliance approach, that is, to take the required steps to ensure adequate implementation of regulatory requirements.

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