The securities industry periodically seems to encounter plagues of misconduct. These abuses, while varying in their form and intensity, ultimately result in large losses and lurid headlines in the financial press. Each scandal also eventually manages to arouse the ire of the regulatory...

The massive subprime losses at Citigroup, UBS, Bank of America, Wachovia, Washington Mutual, and other banks astounded the financial world. Equally shocking were the failures of Lehman Brothers, Merrill Lynch, and Bear Stearns. The conversion of Goldman Sachs and Morgan Stanley into bank holding...

In the 1930s, corporate governance reformers attacked excessive executive compensation through lawsuits, claiming that corporate directors were breaching their fiduciary duties by making excessive bonus payments to executives. That effort was unsuccessful because the courts found themselves...

The 2000 presidential election focused attention on an idea that has been surfacing for some time--the privatization of Social Security. Although opposition remains fierce, proposals for privatization have been gradually gaining acceptance as the inadequacy of benefits from the present system...

One of the most striking developments in financial markets during the latter half of this century has been the growing dominance of the institutional investor. The expanding role of large, institutional investors has been accompanied by demands for lessened regulation of these entities, because...

On January 19, 1989, the Chicago Tribune published the remarkable story of an elaborate sting operation conducted by the FBI and the Office of the United States Attorney in Chicago. Undercover FBI agents had purchased seats on the Chicago Board of Trade and the Chicago Mercantile Exchange. The...

The leverage available from futures contracts and the price volatility of the commodities underlying such contracts may cause large losses and quickly threaten the financial viability of a futures commission merchant. The insolvency of a futures commission merchant in turn raises a concern that...

The phenomenal growth of derivative financial instruments has sparked a near revolution in finance. These instruments take many forms and come in literally hundreds of varieties. Some, such as commodity futures and options, are heavily regulated when they are traded on organized exchanges. Other...

In theory, the commodity futures markets are the essence of competition. All orders are required to be exposed to trading pits where traders vie competitively and aggressively to assure the best possible execution price. On the surface, as observed from the exchange galleries or on television,...

On ‘Black Monday,’ October 19, 1987, ‘perhaps the worst day in the history of U.S. equity markets,’ the Dow Jones Industrial Average fell by 508 points, representing a loss of approximately $1 trillion in the value of all outstanding United States stocks. In the wake of the crash,...