“One of the most important aspects of the ESG debate is the need to clarify the importance of ESG for corporations and investors,” said Prof. Lisa M. Fairfax.
At The Regulatory Review, Lisa M. Fairfax, Presidential Professor and Co-Director of the Institute for Law & Economics (ILE), offers insight into timely corporate governance topics such as environmental, social, and governance (ESG) and “stakeholderism.”
At the University of Pennsylvania Carey Law School, Fairfax teaches courses in the business area including Corporations, Contracts, ESG, and seminars in securities law and corporate governance. Her research and scholarly interests include corporate governance, board fiduciary duties, board-shareholder engagement, board composition and diversity, board oversight of ESG, shareholder engagement and activism, affinity fraud, and securities.
Fairfax currently serves as a public governor on the Board of Governors of the Financial Industry Regulation Authority (FINRA). Fairfax previously served as a member of the Investor Advisory Committee of the Securities and Exchange Commission (SEC). Fairfax also is a former member of both the National Adjudicatory Council of FINRA, where she served as chair of its subcommittee on waivers, and FINRA’s NASDAQ Market Regulation Committee.
Her article, “Dynamic Disclosure: An Exposé on the Mythical Divide between Voluntary and Mandatory ESG Disclosure,” published in the Texas Law Review, was recently named one of 2023’s best corporate and securities articles by Corporate Practice Commentator.
From The Regulatory Review:
The Regulatory Review: Can you explain the role of FINRA and how it works with the SEC to regulate brokerage firms and exchange markets?
FINRA has been around for 85 years under a framework created by Congress. It regulates one critical part of the U.S. securities industry—brokerage firms doing business with the public. FINRA oversees about 3,600 brokerage firms and 630,000 registered individuals. FINRA’s mission is investor protection and market integrity. It provides education and compliance tools to investors and firms, writes rules governing day-to-day brokerage operations that augment the investor protections of the federal securities laws, and examines member firms for compliance with those rules and securities laws.
FINRA is a not-for-profit organization funded by industry fees, not by taxpayer dollars. FINRA leadership is not appointed by the government, but FINRA is closely supervised by the government and, in particular, by the SEC, which has a number of different programs that oversee FINRA’s operations and rulemaking. The SEC has a particular office dedicated to overseeing FINRA on an ongoing basis.
TRR: What do you see as some of the biggest challenges that financial regulatory or oversight organizations, such as FINRA, face today?
Most financial regulators are faced with challenges presented by an accelerated pace of change in markets, investment products, and how investors are communicating and consuming information. Fortunately, FINRA’s status as a self-regulatory organization has given it the ability to keep up with these changes and prepare for emerging risks.