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Symposium 2009

Proposal - Greater Understanding of this New Area, Especially in Financial Services

The Challenge

In the aftermath of the collapse of the western financial system, many observers agree that neither unfettered financial markets nor invasive regulation are able to ensure that financial and busines ...

In the aftermath of the collapse of the western financial system, many observers agree that neither unfettered financial markets nor invasive regulation are able to ensure that financial and business leaders will necessarily act in the public interest.

Regulators are rightly feeling a bit “gun-shy” about innovation in financial markets—especially around investment vehicles. The explosion of many of the newest asset classes has left both regulators and investors with declining risk appetites. The fact that social entrepreneurs and many of the socially minded investors behind them are not solely interested in financial returns at all costs makes them unusual—and in our view, well-suited to the New Economy. However, by definition that means that existing financial instruments are also not suitable. The social mission of the enterprise is very ruthlessly protected and not subject to the “market for control”. Thus equity investment, in particular, needs to be re-defined or reformed in order to suit this sector. This and other financial innovation can have a strong social element and needs to be encouraged rather than stifled by investment regulators.

Rodney Schwartz

ClearlySo

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