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Stockbroking, cinema, accountancy, law, life insurance, financial planning, nuclear power, real estate, medicine, advertising, media...[0][1] Self-regulation (

Stockbroking, cinema, accountancy, law, life insurance, financial planning, nuclear power, real estate, medicine, advertising, media...[0][1] Self-regulation (especially at the industry level rather than delegating to individual companies) doesn't seem completely broken. Actually it can work quite well. You keep some oversight, and reserve the right for the state regulator to step in if the SRO goes bad. The people who run the SRO have an interest in perpetuating their organization, so they if anything have an incentive to be stricter than the government would. If things do go wrong, the government demands direct oversight. That's what's happening here. [0] https://en.wikipedia.org/wiki/Self-regulatory_organization https://en.wikipedia.org/wiki/Self-regulatory_organization [1] https://www.investopedia.com/terms/s/sro.asp https://www.investopedia.com/terms/s/sro.asp

rkangel 3y ago
An industry regulating itself is different from an organisation regulating itself. Self regulation of the industry is common as you say. It tends to involve one central body enforcing the standards on the members, and acting as a central point for agreement of the standards. This is not the case with the Aviation regulation. The FAA is the regulator, and has delegated the testing to the people it is meant to be regulating.
- nerpderp82 3y ago
  Self regulation would mean that the org should face much stiffer penalties for failing in its regulation related duties. The increased agency needs to also come with increased responsibility. Something like notaries, guilds or unions that can speak the truth without retribution ... No, we need independent regulation. We don't have the societal norms to pull off self regulation.
  - mulmen 3y ago
    > Self regulation would mean that the org should face much stiffer penalties for failing in its regulation related duties. Why? How does this incentivize effective self-regulation? > No, we need independent regulation. We don't have the societal norms to pull off self regulation. We do though. This thread even points them out.
    - nerpderp82 3y ago
      Because they have autonomy. By having the regulators embedded, they can continually tell them how to improve. The regulation isn't to punish, but to conform and exceed to the specifications.
      - mulmen 3y ago
        Who are the “they”s in this example? The more I read this comment the less I understand it. Can you try again?
        nerpderp82 3y ago
        We are only talking about organizations that are participating in self regulation. Those that self-regulation have a greater duty to be truthful and in good faith, attempt to remain in compliance. If they cheat, not only should they lose the right to self regulate, but they should face stiffer penalties for breaking that trust.
- jncfhnb 3y ago
  That’s largely fine though because the stick to enforce good diligence is the threat that the ability to self regulate is removed. As is being seen.
  - Wytwwww 3y ago
    After (luckily) just a few hundreds of deaths
- bobthepanda 3y ago
  Also, generally speaking, self regulation involves a third party, like an impartial industry wide organization or a competitor. Inspecting the self is a bit bonkers.
- beambot 3y ago
  Prominent examples of "Self Regulating Organizations": The New York Stock Exchange (NYSE), The Financial Planning Association (FPA), Chicago Board of Trade (CBOT), American Council of Life Insurers (ACLI), Financial Industry Regulatory Authority, Inc. (FINRA), Fixed Income Clearing Corporation (FICC), Options Clearing Corporation (OCC), American Institute of Certified Public Accounts (AICPA) https://www.investopedia.com/terms/s/sro.asp https://www.investopedia.com/terms/s/sro.asp
  - mattmaroon 3y ago
    By organization he clearly meant single for-profit corporation. While the language was imprecise, he surely wasn’t referring to these types of entities.
    - WrongAssumption 3y ago
      NYSE and CBOT are single for profit corporations.
    - fakedang 3y ago
      NYSE is a for profit entity owned by Intercontinental Exchange. They also own Euronext. And they're regulated by the SEC, but carry out their own regulation efforts too. The parallel isn't that far off.
    - fakedang 3y ago
      NYSE is a for profit entity owned by Intercontinental Exchange. They also own Euronext. And they're regulated by the Sec, but carry out their own regulation efforts too. The parallel isn't that far off.
  - shutupnerd0000 3y ago
    All very upstanding and incorrupt organizations
    - vkou 3y ago
      Would you like to tell us how the NYSE is corrupt? Or do they just get tarred with 'Well, they work in finance, of course they are all crooks' brush?
- cycomanic 3y ago
  That's sort of the same with the SEC and (parts of) financial industry? One can even argue the tax office is sort of like it.
- deleted 3y ago
  [deleted]
- f1shy 3y ago
  That wasnot the OP question
- sircastor 3y ago
  And it's important to say that generally you want and industry to regulate itself. This prevents the regulation becoming a burden on the people, and maintains the threat that if the industry doesn't regulate itself then the government (the people) will regulate it. No industry wants oversight, so they do their best to stay in the lines.
keenmaster 3y ago
Self-regulatory bodies are usually centralized and separate from any individual corporation. They also tend to answer directly to a government agency and cannot be disciplined by a corporation. While there can still be issues such as a strong revolving door and potential indirect pressure to be nice to the regulated entities, it’s not as terrible as what Boeing and other airplane manufacturers get to do (inspect themselves in lieu of regulatory inspections). That’s strange, because lives are literally on the line, more so than some other industries with more independent examinations.
- emarsden 3y ago
  Historically, the fact that lives of the public are clearly on the line was part of the argument for allowing partial delegation of safety oversight. The idea has been that any engineer/manager making these decisions will be regularly flying themselves/loved ones, so is going to be suitably cautious. This differed from the situation in coal mines for example, where the miners exposed to the risk were socially/culturally disjoint from engineers/managers.
  - keenmaster 3y ago
    Right, that’s just bonkers logic though. When the stakes are higher, controls should be stronger.
pleasantpeasant 3y ago
SRO sounds like a middle-man in this process. And like all middle-man industries, they suck out money from both sides that they deal with. We can easily publicly fund over-sight committees to oversee these industries instead of relying on SROs who take tax-payer money and are in the perfect financial and power position to do some really corrupt and immoral things. Look at the National Association of Realtors, another SRO— On October 31, 2023, a federal civil jury found that the NAR had conspired to inflate commissions paid to home-buyers' real estate agents, and determined that NAR and its codefendants owed damages of almost US$1,800,000,000. Zillow and NAR have anti-trust lawsuits coming their way too. Relying on SROs is just asking for corruption, imo.
- itsoktocry 3y ago
  >We can easily publicly fund over-sight committees to oversee these industries instead of relying on SROs who take tax-payer money and are in the perfect financial and power position to do some really corrupt and immoral things. Easily, really? Why is the default position that industry players are corrupt and immoral, but the government overseers will act independently and altruistically and have no financial stake in the outcome? That doesn't jibe with my experience. People in government seem to do some of the most immoral acts out there.
  - pleasantpeasant 3y ago
    It's easier to vote out or force out a corrupt an immoral government overseer. A private corporate overseer cannot be voted out or forced out. Only a CEO or board can decide that. It's undemocratic. The public has an actual voice in government while having absolutely no voice in a private corporation.
SilasX 3y ago
This. It's not a problem as long as the self-regulator is kept in line with periodic checks from a higher regulator. It's similar to how income taxes work. You self-report all the figures, and then they are sampled and spot-checked and occasionally audited. The possibility of being caught by an audit, then prods people to generally submit truthful reports, because of the risk of penalties. And then, if that incentive ceases to work, the self-report/self-regulate status gets revoked.
JohnFen 3y ago
> Self-regulation (especially at the industry level rather than delegating to individual companies) doesn't seem completely broken. Maybe, maybe not. But I do know that I don't have much faith when companies "regulate" themselves. There's just too much conflict of interest there. A third party doing it is, on its face, more trustworthy.
asdff 3y ago
Those 10 sorts of industries you cited aren't exactly models of self regulation. Well, they are, in the sense of how to abuse regulatory capture to maximize returns, but not in the sort of sense most people think of regulation which is limiting harm to consumers.
logifail 3y ago
> The people who run the SRO have an interest in perpetuating their organization, so they if anything have an incentive to be stricter than the government would Except if the "people who run the SRO" are in fact employees of the very company they're supposed to be regulating... ? Then they surely have an even greater incentive to keep quiet in order to keep their jobs?
poulsbohemian 3y ago
>real estate What's funny about this is that if you were to ask a group of brokers (IE: the ones with authority over the business - terminology is inconsistent between states...), they would probably tell you that the state has a great deal of oversight, but I'd agree with you - by and large no one is actually watching them. I was with a group of fellow brokers not long ago and it came as a clear surprise to them that the state would no longer be actually auditing them. The state wouldn't make it official policy, but it was a wink and a smile that they wouldn't. There were gasps around the room and it was really rather an insightful moment. While I am new in this role, it was obvious to me the state wasn't actually auditing anything - and frankly, why should they unless they've had a consumer complaint? But the fact that very experienced brokers were surprised by this was interesting.

rkangel 3y ago

An industry regulating itself is different from an organisation regulating itself. Self regulation of the industry is common as you say. It tends to involve one central body enforcing the standards on the members, and acting as a central point for agreement of the standards. This is not the case with the Aviation regulation. The FAA is the regulator, and has delegated the testing to the people it is meant to be regulating.

nerpderp82 3y ago
Self regulation would mean that the org should face much stiffer penalties for failing in its regulation related duties. The increased agency needs to also come with increased responsibility. Something like notaries, guilds or unions that can speak the truth without retribution ... No, we need independent regulation. We don't have the societal norms to pull off self regulation.
- mulmen 3y ago
  > Self regulation would mean that the org should face much stiffer penalties for failing in its regulation related duties. Why? How does this incentivize effective self-regulation? > No, we need independent regulation. We don't have the societal norms to pull off self regulation. We do though. This thread even points them out.
  - nerpderp82 3y ago
    Because they have autonomy. By having the regulators embedded, they can continually tell them how to improve. The regulation isn't to punish, but to conform and exceed to the specifications.
    - mulmen 3y ago
      Who are the “they”s in this example? The more I read this comment the less I understand it. Can you try again?
      - nerpderp82 3y ago
        We are only talking about organizations that are participating in self regulation. Those that self-regulation have a greater duty to be truthful and in good faith, attempt to remain in compliance. If they cheat, not only should they lose the right to self regulate, but they should face stiffer penalties for breaking that trust.
jncfhnb 3y ago
That’s largely fine though because the stick to enforce good diligence is the threat that the ability to self regulate is removed. As is being seen.
- Wytwwww 3y ago
  After (luckily) just a few hundreds of deaths
bobthepanda 3y ago
Also, generally speaking, self regulation involves a third party, like an impartial industry wide organization or a competitor. Inspecting the self is a bit bonkers.
beambot 3y ago
Prominent examples of "Self Regulating Organizations": The New York Stock Exchange (NYSE), The Financial Planning Association (FPA), Chicago Board of Trade (CBOT), American Council of Life Insurers (ACLI), Financial Industry Regulatory Authority, Inc. (FINRA), Fixed Income Clearing Corporation (FICC), Options Clearing Corporation (OCC), American Institute of Certified Public Accounts (AICPA) https://www.investopedia.com/terms/s/sro.asp https://www.investopedia.com/terms/s/sro.asp
- mattmaroon 3y ago
  By organization he clearly meant single for-profit corporation. While the language was imprecise, he surely wasn’t referring to these types of entities.
  - WrongAssumption 3y ago
    NYSE and CBOT are single for profit corporations.
  - fakedang 3y ago
    NYSE is a for profit entity owned by Intercontinental Exchange. They also own Euronext. And they're regulated by the SEC, but carry out their own regulation efforts too. The parallel isn't that far off.
  - fakedang 3y ago
    NYSE is a for profit entity owned by Intercontinental Exchange. They also own Euronext. And they're regulated by the Sec, but carry out their own regulation efforts too. The parallel isn't that far off.
- shutupnerd0000 3y ago
  All very upstanding and incorrupt organizations
  - vkou 3y ago
    Would you like to tell us how the NYSE is corrupt? Or do they just get tarred with 'Well, they work in finance, of course they are all crooks' brush?
cycomanic 3y ago
That's sort of the same with the SEC and (parts of) financial industry? One can even argue the tax office is sort of like it.
deleted 3y ago
[deleted]
f1shy 3y ago
That wasnot the OP question
sircastor 3y ago
And it's important to say that generally you want and industry to regulate itself. This prevents the regulation becoming a burden on the people, and maintains the threat that if the industry doesn't regulate itself then the government (the people) will regulate it. No industry wants oversight, so they do their best to stay in the lines.

keenmaster 3y ago

Self-regulatory bodies are usually centralized and separate from any individual corporation. They also tend to answer directly to a government agency and cannot be disciplined by a corporation. While there can still be issues such as a strong revolving door and potential indirect pressure to be nice to the regulated entities, it’s not as terrible as what Boeing and other airplane manufacturers get to do (inspect themselves in lieu of regulatory inspections). That’s strange, because lives are literally on the line, more so than some other industries with more independent examinations.

emarsden 3y ago
Historically, the fact that lives of the public are clearly on the line was part of the argument for allowing partial delegation of safety oversight. The idea has been that any engineer/manager making these decisions will be regularly flying themselves/loved ones, so is going to be suitably cautious. This differed from the situation in coal mines for example, where the miners exposed to the risk were socially/culturally disjoint from engineers/managers.
- keenmaster 3y ago
  Right, that’s just bonkers logic though. When the stakes are higher, controls should be stronger.

pleasantpeasant 3y ago

SRO sounds like a middle-man in this process. And like all middle-man industries, they suck out money from both sides that they deal with. We can easily publicly fund over-sight committees to oversee these industries instead of relying on SROs who take tax-payer money and are in the perfect financial and power position to do some really corrupt and immoral things. Look at the National Association of Realtors, another SRO— On October 31, 2023, a federal civil jury found that the NAR had conspired to inflate commissions paid to home-buyers' real estate agents, and determined that NAR and its codefendants owed damages of almost US$1,800,000,000. Zillow and NAR have anti-trust lawsuits coming their way too. Relying on SROs is just asking for corruption, imo.

itsoktocry 3y ago
>We can easily publicly fund over-sight committees to oversee these industries instead of relying on SROs who take tax-payer money and are in the perfect financial and power position to do some really corrupt and immoral things. Easily, really? Why is the default position that industry players are corrupt and immoral, but the government overseers will act independently and altruistically and have no financial stake in the outcome? That doesn't jibe with my experience. People in government seem to do some of the most immoral acts out there.
- pleasantpeasant 3y ago
  It's easier to vote out or force out a corrupt an immoral government overseer. A private corporate overseer cannot be voted out or forced out. Only a CEO or board can decide that. It's undemocratic. The public has an actual voice in government while having absolutely no voice in a private corporation.

SilasX 3y ago

This. It's not a problem as long as the self-regulator is kept in line with periodic checks from a higher regulator. It's similar to how income taxes work. You self-report all the figures, and then they are sampled and spot-checked and occasionally audited. The possibility of being caught by an audit, then prods people to generally submit truthful reports, because of the risk of penalties. And then, if that incentive ceases to work, the self-report/self-regulate status gets revoked.

JohnFen 3y ago

> Self-regulation (especially at the industry level rather than delegating to individual companies) doesn't seem completely broken. Maybe, maybe not. But I do know that I don't have much faith when companies "regulate" themselves. There's just too much conflict of interest there. A third party doing it is, on its face, more trustworthy.

asdff 3y ago

Those 10 sorts of industries you cited aren't exactly models of self regulation. Well, they are, in the sense of how to abuse regulatory capture to maximize returns, but not in the sort of sense most people think of regulation which is limiting harm to consumers.

logifail 3y ago

> The people who run the SRO have an interest in perpetuating their organization, so they if anything have an incentive to be stricter than the government would Except if the "people who run the SRO" are in fact employees of the very company they're supposed to be regulating... ? Then they surely have an even greater incentive to keep quiet in order to keep their jobs?

poulsbohemian 3y ago

>real estate What's funny about this is that if you were to ask a group of brokers (IE: the ones with authority over the business - terminology is inconsistent between states...), they would probably tell you that the state has a great deal of oversight, but I'd agree with you - by and large no one is actually watching them. I was with a group of fellow brokers not long ago and it came as a clear surprise to them that the state would no longer be actually auditing them. The state wouldn't make it official policy, but it was a wink and a smile that they wouldn't. There were gasps around the room and it was really rather an insightful moment. While I am new in this role, it was obvious to me the state wasn't actually auditing anything - and frankly, why should they unless they've had a consumer complaint? But the fact that very experienced brokers were surprised by this was interesting.