Information Symmetry in U.S. Financial Market Regulation: A Community of Practice

ABSTRACT

In the last decade, regulation of the financial markets in the United States has received significant attention. In particular, the formal structures responsible for regulating the financial markets have come under heavy criticism. While we may emphasize the role that formal structures play in controlling behavior, informal structures play an important role too. This study examines an informal structure in financial market regulation. Using social network and interview data, this study defines and investigates the role of a community of practice among leaders involved in regulating the financial markets. The analysis empirically defines the characteristics of this community of practice and reveals that this informal structure serves as an information symmetricizer in this regulatory setting. Implications of information symmetry include both positive and negative consequences.