IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v109y2019i10p3681-3712.html

Does Regulatory Jurisdiction Affect the Quality of Investment-Adviser Regulation?

Author

Listed:
  • Ben Charoenwong
  • Alan Kwan
  • Tarik Umar

Abstract

The Dodd-Frank Act shifted regulatory jurisdiction over "midsize" investment advisers from the SEC to state-securities regulators. Client complaints against midsize advisers increased relative to those continuing under SEC oversight by 30 to 40 percent of the unconditional probability. Complaints increasingly cited fiduciary violations and rose more where state regulators had fewer resources. Advisers responding more to weaker oversight had past complaints, were located farther from regulators, faced less competition, had more conflicts of interest, and served primarily less-sophisticated clients. Our results inform optimal regulatory design in markets with informational asymmetries and search frictions.

Suggested Citation

  • Ben Charoenwong & Alan Kwan & Tarik Umar, 2019. "Does Regulatory Jurisdiction Affect the Quality of Investment-Adviser Regulation?," American Economic Review, American Economic Association, vol. 109(10), pages 3681-3712, October.
    • Handle: RePEc:aea:aecrev:v:109:y:2019:i:10:p:3681-3712
    Note: DOI: 10.1257/aer.20180412
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/aer.20180412
    Download Restriction: no
    File URL: https://www.aeaweb.org/content/file?id=10686
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/aer.20180412.appx
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/aer.20180412.ds
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    More about this item

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:109:y:2019:i:10:p:3681-3712. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.