# kaal:claim:2273857-065

**Claim.** The threat of heightened scrutiny under a deferred prosecution or corporate integrity agreement optimizes incentives because increased government monitoring attaches only after a first time offense, giving institutions a reason to comply and self-regulate in order to avoid it.

**Type.** mechanism  **Support.** argued

**Holds when.**

- DPAs and CIAs applied broadly to financial institutions

**Source quote.**

> The threat of heightened scrutiny for institutions subject to a DPA/CIA may help optimize incentives because financial institutions would be subjected to increased monitoring by government regulators only after a first time offense had occurred.

**From.** Wulf A. Kaal, *Dynamic Regulation of the Financial Services Industry* (2013), IV. Implementation, page 30

**Cite as.** Wulf A. Kaal, Dynamic Regulation of the Financial Services Industry (2013). SSRN: https://ssrn.com/abstract=2273857

**Verify.** sha256 of source PDF `e7cb3dea40593135acc99a9b00690138fe01020514ebf388f5140e1b0e59e82a` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202013%20-%20Dynamic%20Regulation%20of%20the%20Financial%20Services%20Industry.pdf

**Topics.** compliance, risk-and-incentives

**Keywords.** deferred-prosecution-agreements, corporate-integrity-agreements, self-regulation, incentive-design

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