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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.**
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
IN TRODUCTION    ..........................................................................................  2
. Professor of Law and Finance, Said Business School and Law School, University of
** 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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