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83 Geo. Wash. L. Rev. Arguendo 1 (2015)

handle is hein.journals/gwargu83 and id is 1 raw text is: RESPONSE Opacity, Complexity, and Self-Regulation in Investment Banking Alan D. Morrison* and William J. Wilhelm, Jr.** ABSTRACT We discuss the role of professional standards in investment banking in light of Professor Tuch's wide-ranging and thought-provoking analysis. Professor Tuch identifies an ethical role for regulation, and suggests that professional examinations should instill ethical standards into investment bankers. We have a good deal of sympathy for this position. Nevertheless, Professor Tuch's conclusions are contestable. Our analysis hinges upon a discussion of the origins of professional standards in investment banking. We suggest that many standards evolved as responses to complex commitment problems in situations where contract was ineffective. It follows immediately that professional standards naturally change as contracting technologies improve. Regulations that preserve standards that no longer serve an economic purpose therefore come at a cost, which must be justified using another normative criterion. We argue that more foundational work is required before clear moral criteria can be established. In particular, regulations that seek to constrain the choices that bankers and their clients make must justify their interference with the moral good of personal autonomy. TABLE OF CONTENTS IN TRODUCTION .......................................................................................... 2 . Professor of Law and Finance, Said Business School and Law School, University of Oxford. ** William G. Shenkir Eminent Scholar and Professor of Finance, McIntire School of Commerce, University of Virginia; Visiting Professor, Lingnan (University) College, Sun Yat-sen University. April 2015 Vol. 83 Arguendo

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