Professor Alan D. Morrison & Professor William J. Wilhelm, Jr · April 2015
83 Geo. Wash. L. Rev. Arguendo 1
Response to Andrew F. Tuch, The Self-Regulation of Investment Bankers
83 Geo. Wash. L. Rev. 101 (2014).
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.
