A Tale of Two Enforcement Venues: Determinants and Consequences of the SEC's Choice of Enforcement Venue After the Dodd-Frank Act

The Dodd-Frank Act allows the SEC to choose either an administrative proceeding or a federal court as an enforcement venue for resolving violations of federal securities laws. I examine the determinants and consequences of the SEC's choice of enforcement venue after the Dodd-Frank Act. Results show that material cases are 28% - 35% more likely to be assigned to federal courts, and politically connected defendants are about 14% more likely to be routed to administrative proceedings. While monetary penalties by venue are statistically indifferent, politically connected defendants in administrative proceedings are associated with lower penalties. Additionally, I find that administrative proceedings process cases 27 times faster than federal courts. Results suggest that the SEC's private incentives affect enforcement venue selection and possibly enforcement outcomes. SEC is more likely to use administrative proceedings when political and economic costs are greater, and use federal courts when political and economic benefits are greater.

ECONOMISTS ON PRIVATE INCENTIVES, ECONOMIC MODELS, AND THE ADMINISTRATIVE STATE: THE CLASH BETWEEN HAPPINESS AND THE SO-CALLED PUBLIC GOOD

This essay examines the administrative state as a ubiquitous phenomenon that results in part from the mismatch of incentives. Using two dramatic episodes in the history of economics, the essay considers two types of mismatch. It then examines how economists increasingly endorsed the “general good” as a unitary goal for society, even at the expense of private hopes and desires. More than this, their procedures and models gave them warrant to design mechanisms and advocate for legislation and regulations to “fix” the supposedly suboptimal choices of individuals in service to the overarching goal. The rise of New Welfare Economics dealt an additional blow to the sovereignty of individual motivations, notwithstanding that Hayek and Buchanan warned that this engineering approach allowed social goals to override individual preferences. Throughout, the argument is that it is important to recognize that people within or advising the administrative state are influenced by the same sorts of (private) motivations as actors throughout the economy.

Equity Market Structure Regulation: Time to Start Over

Over the past half-century, the U.S. Securities and Exchange Commission (SEC)’s regulations have become key determinants of the way in which stocks trade and the fees that exchanges charge for their services. The current equity market structure rules are contained primarily in the SEC’s Regulation NMS. The theory behind Regulation NMS is that a system of dispersed markets operating pursuant to SEC-mandated information and order routing links will provide the benefits of consolidation and competition simultaneously. This article argues that Regulation NMS has failed in that quest. It has produced fragmented markets and created questionable incentives for market participants, possibly producing socially excessive investments in trading speed and secrecy. It also discourages exchange innovation, provides insufficient incentives for traders to price orders aggressively, requires brokers to act against their customers’ interests, and forces the SEC to act as a price regulator. The article contends that the SEC should replace Regulation NMS with three simple design principles—issuer choice, exchange autonomy, and regulatory consistency. These would allow market forces, rather than regulatory mandates, to determine the design and pricing of trading platforms and the trading strategies of broker-dealers. They would better align the private incentives of trading platforms with the social objectives of improving liquidity and price discovery.

Environmental Exigencies and the Efficient Voter Rule

Externality problems hinder solutions to existential threats, including climate change and mass extinction. To avert environmental crises, policymakers seek mechanisms that align private incentives with societal exigencies. Successful solutions bring individuals to internalize the broad repercussions of their behavior. In some cases, privatization, Coasian bargaining, or Pigouvian taxes effectively place the weight of externalities on the relevant decision makers. Yet, the available remedies often fail to provide satisfactory outcomes, and inefficiencies persist in the markets for energy, transportation, and manufactured goods, among others. This article explains how a simple voting mechanism can achieve socially optimal decisions about many of the innumerable externality problems that remain.

Tourism as one of the priority directions in Georgia

The article discusses the history of development and the stages that different countries have gone through so far, in details about the stages of tourism development in Georgia. And about the contribution of the state, to the best results from the long term perspectives. It also focuses on the increase of the country popularization, to the tourism programs developed by the government and for the detailed discussion of the set goals and objectives. Georgia has a great potential in the field of tourism, as it is distinguished by the ancient culture, beautiful nature, historic buildings, stunning landscapes and hospitable people. The final part of the article concludes that tourism is crucial for many countries, as it brings growing employment opportunities and large monetary incomes for local businesses. First of all, it is necessary to develop long-term strategic plans for tourism development, both at the national and regional levels and the adoption of them should be done through close consultation with interested parties. When developing long-term strategic plans, it is essential that government structures take the initiative, give private incentives to private structures, and implement relevant projects of the well-planned strategies.

Thirty years after water privatization—is the English model the envy of the world?

The paper considers whether water privatization 30 years ago has delivered the promised superior performance to nationalization, which remains the dominant model in Europe. The paper sets out the arguments at privatization, in particular in relation to efficiency, the managerial incentives, the role of private-sector balance sheets in facilitating investment, and the impacts on the cost of capital. Alternative explanations of relative performance, notably the regulation model adopted, are highlighted, and the paper concludes by outlining an alternative model of water regulation which better marries up public responsibilities and private incentives.

The problem with relying on profit-driven models to produce pandemic drugs

In this article, we explain why profit-driven models for developing treatments for epidemic pathogens produce sub-optimal and sometimes negative public health outcomes. Using the example of the drug remdesivir, we demonstrate how the divergence of private incentives from public health needs has led to such outcomes during the COVID-19 pandemic. We conclude that policy responses to this and future pandemics ought to be conceived and designed in ways that narrow the divergence of private interests from public health needs, including through greater public-sector involvement in pharmaceutical R&D.