Regulation of the London Stock Exchange: Share Trading, Fraud and Reform 1914–1945

In 1914, the notion of statutory regulation of trading in shares was anathema to both the Government and the London Stock Exchange. By 1945, a statutory scheme of regulation had been introduced. This book serves to:

• Track the steps by which this outcome came about,
• Explain why the Exchange felt obliged in the process to abandon long-cherished policies,
• Analyse the forces which led to it, and
• Account for the form in which it was implemented.

Throughout the period, the attitudes of both the Stock Exchange and Government were affected by widening interest in share ownership, the increasing tendency for business interests to look to the Exchange for long-term finance, and the increasing challenge of financing the Government’s expenditure. At a disaggregated level, the market was able to respond to changing circumstances taking advantages of opportunities and weaknesses. At an aggregated level, the Exchange was not able to foresee the implications of change or to forestall unfortunate consequences. This exposed the weakness of the criminal justice system and its failure to serve as a deterrent for abuse.

This study, the only book to take full account of the documents held by the National Archives in relation to the Bodkin Committee, examines the stages by which share trading in the United Kingdom came to be a statutorily regulated activity and by which the London Stock Exchange moved from being antagonistic towards public regulation in 1914 to lobbying in 1944 for the new scheme to be implemented.