The FSA’s principle-based approach to
regulation has won it a lot of favorable attention in the US. Leave it to the Wall Street
Journal to weigh in with criticism for its failure to protect individual
shareholders in the UK. The Journal sees the FSA as trying to protect the
London marketplace rather than the individual investor and quotes Jim Cousins,
a member of Parliament, saying the SEC would have been tougher in cases like
the split-capital investment trusts.
The Journal story leaves a lot to be
desired, focusing on one or two cases and quoting Cousins and a Harvard
business prof—its comparison of the number of FSA staff at 2,700 while the US
has 15 times as many in financial services doesn’t mention that includes 50
separate state insurance regulatory bodies, many of dubious value.
Nor does it look at the way the SEC in the
past has chased after kids while ignoring the huge conflicts of interest in
major Wall Street firms that Elliot Spitzer uncovered as New York’s Attorney
The differences between American and
British regulation are getting a lot of attention as many in the US including
Treasury Secretary Hank Paulsen argue for lighter regulation to keep New York
competitive with London. See my blog
review of commentary by Michael Bloomberg, Sen. Charles Schumer and skeptic
Ben Stein—an economics writer perhaps better known for his role as the teacher
in Ferris Bueller’s Day Off.
A lot of complex issues here and they
deserve better treatment than the Journal’s story.