Redundant Regulation: Sanctioning Broker‐Dealers

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Abstract
Using data from the SEC Docket this paper examines Securities and Exchange Commission administrative actions involving broker‐dealer violations, focusing on disparities in the sanctioning of individual and organizational defendants. The analysis shows that the overall severity of sanctions received by individuals and organizations is similar, but the determinants of sanctions differ substantially. For individual violators, conventional measures of culpability figure prominently into the sanctioning decision. For organizations, operational viability is the principal determinant of sanction. This reliance upon measures of viability renders much of the SEC's control of organizations redundant: the most severe sanctions are reserved for firms that are already operationally or financially moribund. This pattern of regulatory redundancy is interpreted as an alternative accommodation to the difficulties of sanctioning organizations.