Supervision and Class Action Against Conflicts of Interest in 'Universal Banking': US Experience vis-a-vis Recent Italian Initiatives

The recent wake of financial scandals has prompted also in Italy a heated debate on how to regulate conflicts of interest emerging when banks simultaneously carry out commercial banking, on the one hand, and investment banking, on the other. Following this debate the article focuses its attention on US legal instruments that prevent and sanction abuses from conflicts of interests. Hence, it illustrates the guidelines of the US supervision system after the Gramm-Leach-Bliley Act (Paragraph 2) and the essential and most debated features of the US class action (Paragraph 3). The analysis carried out is the basis for a number of final remarks on the Italian initiatives concerning: (a) rules establishing organizational constraints in order to prevent conflicts of interest in universal banks; (b) proposed procedural rules which, aggregating lawsuits, aim at facilitating investors' access to justice. The evolution of the US regulatory framework about conflicts of interest in universal banks provides two useful indications. First, with regard to protection of investors through supervision over financial conglomerates, it suggests that in order to have efficient and competitive intermediaries it seems more appropriate to adopt a flexible approach, holding financial intermediaries responsible for the selection and implementation of the governance system that they deem more adequate to their specific structure. Second, with regard to protection of investors through an easy access to judicial redress, the US experience suggests to focus our attention on legal and market instruments that can help mitigate the risk that the collective action become an opportunity for the extraction of "private benefits" of various agents involved in the representation of investors' interests.