failure family

enforcement gap

80 claims across 39 works.

• bundled-product-suboptimality: The quality problems in Delaware adjudication mean it is not a foregone conclusion that the bundled product of statutes plus specialized courts leads
• civil-law-adjudication-discount: The weak link in a bundled package offered by a civil law Member State is likely to be its system of adjudication rather than its statute.
• delayed-enforcement: For cross border enforcement the critical question is not whether a judgment will be enforced in another Member State but when: eventual enforcement i
• absent-corrective-mechanism: Error correction is weak for Member State corporate law adjudication: national legislatures are unlikely to intervene unless judicial error affects do
• precedent-deficit-in-arbitration: One objection to arbitration of corporate governance disputes holds in Europe as in the United States: arbitration as ordinarily used yields little re
• unenforceable-charter-arbitration-clause: Unless the Member State of incorporation specifically provides in its corporate statute that arbitration is permissible when allowed in the charter or
• waste standard too narrow: Because U.S. law frames the inquiry around corporate waste, and most risk taking does not meet the waste standard, showing that a decision was hazardo
• Group structures excluded from voluntary reorganization: The German voluntary reorganization procedure has a structural gap: groups of financial institutions, financial holding groups and conglomerates canno
• no-private-right-offshore: Because Section 929P did not restore private rights of action, the most powerful weapon in plaintiffs' arsenal, the fraud-on-the-market theory in clas
• opt-in-class-size-ceiling: Without an opt-out mechanism, European class sizes will likely be substantially smaller than their U.S. counterparts, which in turn depresses settleme
• no-european-substitute: Despite signs of movement in that direction, there is as yet no genuine European substitute for the U.S. securities class action brought under the fra
• arbitrary-rulemaking-vacatur: The SEC's 2004 attempt to reach hedge fund advisers failed as a matter of administrative law: in July 2006 the D.C. Circuit vacated the hedge fund rul
• signalling failure of an unreachable liability standard: The nearly insurmountable standard for liability in oversight cases in the United States undermines the signalling of the expected standard of conduct
• signal undercut by unattainable liability threshold: Delaware's signalling of expected conduct is undermined when the state simultaneously imposes a near insurmountable standard for liability in cases in
• post-crisis oversight decay: Once crises recede, regulatory oversight diminishes as societies and markets return to their prior equilibrium, and this dichotomy causes reform legis
• regulator commitment failure: In the absence of crises the intensity of regulation diminishes, because regulators cannot commit to long-term regulatory strategies and instead fall
• non-enforcement of controversial provisions: Both the Sarbanes-Oxley Act and the Dodd-Frank Act were amended and revised, and some of their most controversial provisions were never enforced.
• de facto retraction through non-enforcement: Section 307 of Sarbanes-Oxley, the attorney up-the-ladder reporting mandate, has gone effectively unenforced: there is no evidence that the SEC ever c
• informal retraction of politically motivated rules: The SEC's failure to interpret Section 402 of Sarbanes-Oxley, while not a formal retraction, shows that Section 402 is another instance of politically
• inconsistent judicial application of old Rule 2019: Old Bankruptcy Rule 2019 was applied inconsistently in practice, with courts interpreting it with a high degree of variability both across and within
• non enforcement of Form PF obligations: Because the SEC is still working out the appropriate use of Form PF and still improving the form and its instructions, its enforcement division is unl
• no implied private right of action under the IAA: Enforcement of the IAA's prohibited transactions provision is limited because the Supreme Court in Transamerica Mortgage Advisors, Inc. v. Lewis held
• reliance on public enforcement only: With private enforcement foreclosed, enforcement of the IAA's prohibited transactions provision depends entirely on injunctive relief, administrative
• unreachable oversight liability threshold: The liability standard for breach of fiduciary duty is set so high that courts rarely find directors in violation, because only a board's sustained or
• ineffective preemptive remediation: The effectiveness of existing preemptive remedial measures is in question, because the majority of governmental contracts are executed only after thos
• low success rate of self remediation: Preemptive remedial measures have a low success rate, as evidenced by the fact that more than 60 percent of deferred and non prosecution agreements ex
• unproven-compliance-adoption: Existing corporate criminal liability combined with the absence of clear Department of Justice standards for charging businesses can push organization
• corporate-death-penalty-overstated: The authors contest the conventional wisdom that a corporate criminal indictment amounts to a corporate death penalty, pointing to recent guilty pleas
• supplemental-guidance-ineffective: The McCallum Memorandum failed as a corrective because it only supplemented rather than replaced the Thompson Memorandum and did little if anything to
• waiver-loophole-persists: The McNulty Memorandum did not resolve the privilege waiver problem because it still left prosecutors ample opportunity to treat a corporate defendant
• reform-does-not-stick: Because non and deferred prosecution agreements typically run for a limited term, it remains unclear whether the governance reforms they impose surviv
• settlement-not-reform: If corporate wrongdoing is not in fact caused by deficient corporate governance, then the governance reform imposed through a non or deferred prosecut
• remedy-scale-mismatch: The underlying corporate governance problems in United States corporations may be more severe than non and deferred prosecution agreements are capable
• post-term-governance-reversion: The negative market reaction at the end of the N/DPA term is the market acknowledging that suboptimal governance practices are likely to resume once t
• Subadviser regulatory gap: The subadvisory route leaves a regulatory gap: none of the mutual fund manager's obligations, such as daily valuation, public and SEC reporting, or in
• SIFI threshold underinclusion: The SIFI designation regime does not reach hedge funds in practice: because the asset threshold is set high, at $50 billion or more in aggregate total
• scienter gap for incompetent due diligence: Deficient due diligence does not create securities fraud liability unless it is intentional or highly reckless; conduct that is merely negligent or pr
• regulator declines to set effectiveness standard: Despite bringing enforcement actions over misrepresentations about due diligence, the SEC has not taken a rigid enforcement position on whether partic
• Vacated rule reversion: The SEC's 2004 attempt to require hedge fund adviser registration failed: after the D.C. Circuit vacated the rule in Goldstein v. SEC, the overwhelmin
• Judicial invalidation unwinds registration: After the D.C. Circuit vacated the SEC's 2004 hedge fund adviser registration rule in Goldstein v. SEC, the overwhelming majority of private fund advi
• Uncapped synthetic leverage: The SEC's interpretation of Section 18 leaves a mutual fund subject to no statutory limitation or cap on its ability to borrow through the use of deri
• Instrument-specific rule misses strategy-level risk: Proposed Rule 18f-4 would be highly limited in mitigating liquidity and other risks in an unconstrained mutual fund portfolio, because material levera
• Regulator inaction despite identified risk: Given the risks to retail investors of investing in complex unconstrained mutual funds and the SEC's own concern about the retailization of private fu
• crypto-tax-underreporting: Cryptocurrency gains are massively underreported to the IRS: despite Bitcoin rising from under twenty dollars in 2013 to over twelve hundred dollars i
• noncompliant-anonymous-participants: Enforcement against the blockchain is unlikely to work because it is maintained and owned by a distributed group of anonymous users worldwide who woul
• crypto-tax-underreporting: Crypto gains are being massively underreported: despite Bitcoin rising from under twenty dollars in 2013 to over twelve hundred dollars in 2017, the I
• governance-vacuum-mistrust: If the jurisdictional means necessary for conflict resolution mechanisms covering Ethereum blockchain based smart contracting are absent, consumers wi
• enforcement-impracticability: Personal jurisdiction technically still applies to parties transacting in encrypted distributed smart contracts, but the practicability of enforcement
• unenforceable-statutory-grant: Even if a state or the federal government passed a law granting a court authority over blockchain smart contract disputes, it is hard to see how the c
• code-not-interpretable-by-courts: Because smart contracts are coded for computer programming rather than for a human observer, courts may not be able to hypothesize a reasonable human'
• legitimacy-deficit-of-legacy-courts: Real world court decisions on smart contract disputes, even where attainable, may not carry the same legitimacy and authority for the parties as intra
• coerced-programmer-cannot-override-majority: Even if courts were given authority to order changes to smart contract code, a programmer coerced by a court could not override the will of the majori
• anonymity-defeats-embedded-law: Without strong external pressure from existing regulatory structures and a distributed jurisdiction responsive to that pressure, the anonymity of smar
• executory-buy-sell-avoided-in-bankruptcy: A buy-sell agreement survives bankruptcy more reliably when it is not merely executory: because bankruptcy trustees may void executory agreements, an
• agreement-omitted-from-charter: Shareholders frequently fail to place their agreements in the charter or bylaws, sometimes through ignorance or inadvertence and sometimes deliberatel
• speculative-damages-inadequate-remedy: Damages are usually an inadequate remedy for breach of a shareholder agreement because they are too speculative, even where the aggrieved shareholder
• denial-of-specific-performance-nullifies-agreement: Because damages rarely provide an adequate remedy for breach of a shareholder agreement, refusing specific enforcement amounts in substance to declari
• minimum compliance capture: Corporate governance intermediaries such as lawyers, accountants, auditors and consultants respond to governance requirements with minimum compliance,
• exchange-regulatory-gap: Although federal securities law is the main instrument countries use to regulate ICO technology, there is also concern about regulating exchanges, whi
• unanimity-blocks-innovation: A healthy expertise will have near unanimous consensus on every evidence of work validation pool, and that very unanimity creates an impediment to dev
• unenforceable-erasure-rights-on-chain: The GDPR's removal remedy cannot be enforced against a public blockchain: scrubbing private information would require more than half of the network's
• Regulatory Vacuum for Autonomous Products: Regulatory solutions tracked the characteristics of issuers, so the more decentralized, censorship resistant and autonomous products that regulators c
• self regulation gap: Code is law smart contracts deliver a genuine leap in efficiency and clarity through digital self execution, but their supposed self regulation will a
• regulatory vacuum for maximally decentralized products: The more decentralized products are, meaning more censorship resistant, autonomous, and beyond regulatory control, the more they are left in a regulat
• Incompleteness of static rule sets: No set of written rules can be made complete: the Folk Theorems demonstrate that however rules are written, strategies exist that follow those rules y
• Boundary probing under codified law: When a law is written down rigorously, specifying precisely what is acceptable and unacceptable, competition obliges people to find the most efficient
• Attack-induced decentralization: A decentralized organization cannot be conquered by attacking it from the outside: when attacked, the group merely decentralizes further, and its memb
• Decapitation strategy failure: The Spanish strategy of capturing or killing a group's leader, which succeeded against the Aztec and Incan empires, was impossible to apply to the Apa
• Regulation cannot reach private standard setting: Regulating centralized technology conglomerates addresses only part of the problem, because even fully regulated conglomerates retain the power to set
• Letter-of-the-law rule gaming: When the letter of the law becomes more important than the spirit of the law, internal competition for power makes the winning strategy to push behavi
• Escalating policing costs: As members constantly probe the edge of acceptable behavior, policing the rules becomes more expensive, the rules become divorced from the shared goal
• Formal rule subversion (Folk Theorem): The Folk Theorems of game theory prove that any rules that can be formally set down can be subverted: strategies always exist that follow the rules an
• Policing overhead drain: Strict legal enforcement is an inefficient remedy for opportunism because every unit of energy devoted to policing is energy that could instead have b
• regulatory-compliance-gap: Regulatory compliance is the weakest of all six categories, averaging 3.01 out of 10, and Services DAOs are the only category to outperform that avera
• unstoppable autonomous organization: AI powered DAOs that autonomously generate revenue are especially hard to regulate or dismantle, because the same blockchain security features that pr
• repeal-induced-legal-gaps: Removing laws without fully understanding their current applications or interdependencies creates legal gaps and unintended policy outcomes, so the ac
• forensic-latency-and-privacy-opacity: Latency in blockchain forensic analysis limits real time detection, and existing compliance services offer no strategy for overseeing transactions on
• nlp-static-rule-gap: Natural language processing driven compliance assumes static legal frameworks, so novel transaction types generated by evolving AI agents outstrip pre
• ODR and DDR fail New York Convention due process: Neither online dispute resolution nor decentralized dispute resolution complies with the minimum due process requirements defined and acknowledged in
• Juror competence and bias in decentralized adjudication: Decentralized dispute resolution relies on decentralized networks of jurors, which raises unresolved concerns about juror competence and bias.