N.Y. (Loves) S.E.C.

Pop quiz: America's strict rules-based regulations are destroying the nation's competitiveness as a global financial center. True or false?

Okay, that was easy. Try this: It's far too easy for disgruntled investors to sue corporations in U.S. courts. True or false?

The answers to both questions, of course, usually depend on where you sit at the annual shareholders' meeting -- on stage, or facing it.

Sometimes, though, a group can be on either side of the argument, or even both sides as circumstances dictate.

Take, for example, the Partnership for New York City, which describes itself as the city's leading business organization.

Not quite a year ago, it was one of several pro-business groups warning -- despite ample contrary evidence in the form of Enron, WorldCom, Adelphia, et al. -- that American financial regulations were far too strict.

According to them, rigid rules (not to mention the lawsuits that such rules permitted) were among the many ills that "threaten New York's standing in the global marketplace." New York, they said, was in imminent peril of being surpassed by London as the world's capital of capital.

"Corporate governance laws and restrictive listing requirements are disadvantaging the U.S. in the competition for foreign international business," the partnership warned at another point.

Well, that was all before the black hole of poorly regulated subprime mortgage lending began to suck dry the world's credit markets, sending stocks reeling and threatening to precipitate a global recession.

Now, according to an article in the Financial Times (subscription required), business leaders in New York "are touting the benefits of tight regulation, saying that, with volatile markets, many investors value watchful regulators, tight listing standards, and the right to sue."

The article posits that London has scared off big international investors with its hamfisted handling of the collapse of mortgage lender Northern Rock.

"What Northern Rock demonstrates is that a business-friendly regulatory system may have its disadvantages as well," Kathryn Wylde, president of the Partnership for New York City, tells the FT.

Noted.

by Mark Stein