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Economic Patriotism After the Crisis: Explaining Continuity and Change in European Securities Enforcement

Chase Foster

Abstract: Since the global financial crisis, European governments have sought to intensify the supervision of financial markets. Yet, few studies have empirically examined whether regulatory approaches have systematically shifted in the aftermath of the crisis, and how these reforms have been mediated by longstanding national strategies to promote domestic financial interests in the European single market. Examining hundreds of enforcement actions in three key European jurisdictions, I find a mixed pattern of continuity and change in the aftermath of the crisis. In the UK, aggregate monetary penalties and criminal sanctions have skyrocketed since 2009, while in France and Germany, the enforcement pattern suggests continuity, with both countries assessing penalties and prosecuting insider trading at similar rates before and after the crisis. I conclude that financial regulation is still structured by longstanding industrial strategies (Story and Walter, 1997), but where pre-existing regulatory approaches were seen as contributing to the crisis, a broader regulatory overhaul has been pursued. Thus, in the UK, where the financial crisis served as a direct rebuke to the country’s “light touch” regulation, financial supervision was overhauled, and monetary sanctions dramatically increased, to preserve London’s status as an international financial centre. By contrast, in France and Germany, where domestic regulatory systems were implicated by the financial crisis, domestic securities supervision and enforcement was less dramatically altered. While the crisis has led to the further institutionalization of European-level supervisory institutions, these changes have not yet led to convergence in national regulatory approaches.
Keywords: financial crisis / enforcement / domestic / securities / European / financial supervision / structured

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