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Abstract

How, in a context of growing critiques of financialization, can law contribute to protecting the legitimacy of finance? This paper argues that the assignment of responsibilities between individuals and organizations plays a decisive role, using the recent Libor scandal as an empirical illustration. To do so, the paper offers a Foucauldian framework, the differential management of financial illegalisms, dedicated to the study of illegalities in financial capitalism. The comparison of the legal treatment of two manipulations of Libor, this key benchmark in financial markets, reveals how mid‐level traders have been the object of criminal prosecution, while law undervalued the role of top managers and organizations. To capture how differential management is performed in practice, I analyze precisely how the conflict‐resolution devices (criminal trial vs. settlement) and the social categorizations prevailing in the two manipulations of Libor favor different forms of responsibility, individual or organizational. I conclude by exploring the implications of law's relationship to financial legitimacy.