Towards a paradigm shift in investor protection regulation in the post financial crisis era: analysis of its legal foundations and effectiveness

01 January 2014 → 31 December 2019
Research Foundation - Flanders (FWO)
Research disciplines
  • Social sciences
    • Law
analysis of its legal foundations and effectiveness
Project description

The 2007--‐08 financial crisis has brought at the surface numerous cases of mis--‐selling of securities, where complex financial instruments had been offered to unsophisticated investors. It appeared that the existing regulation, which took the form of extensive information and disclosure requirements had provoked an oversupply of information that investors did not use anymore to base their investment decisions upon. Regulators, both at national and at EU level, have therefore sought for further refinement of the information requirements, and for alternative approaches to investor protection, notably by providing supervisory bodies with more powers to intervene in the substance of the investment products offered on the market. The latter indicates that investor protection regulation undergoes a fundamental change, whereby supplying information is no longer considered sufficient to protect investors against wrong decisions. We analyse the new orientations in investor protection regulation in the European Union: a foundational analysis of the new regulatory initiatives enables to assess to what extent they effectively depart from the existing approaches to investor protection. The research then assesses the effectiveness of the regulatory innovations from a behavioural finance approach. Finally, the project will assess the effectiveness of increased interventionism from the side of financial supervisors from a legal perspective.