The Intersection of Law and Finance: Why Legal Literacy Matters

Regulation is one of the defining complexities of the financial sector.¹ While compliance departments manage many of the industry’s regulatory requirements, every finance professional should have an understanding of the legal framework that governs their work.² Legal literacy is no longer just a specialized skill—it’s an essential part of the job description for most careers in finance.

This post looks at the finance law basics that govern the financial industry and how the Online Master of Legal Studies (MLS) with a Concentration in Finance from William & Mary can give you the foundation in law and finance to advance your career in banking, fintech or regulatory roles.

How Legal Frameworks Shape the Financial Industry

Legal frameworks provide the rules and regulations that govern how financial institutions and professionals operate. They establish standards for transparency, fairness and consumer protection, ensuring that financial markets function reliably and ethically. The industry is subject to a high degree of regulatory scrutiny, which only increases as the number and complexity of financial instruments proliferate.

Legal frameworks can reduce systemic risk, build investor confidence and protect consumers. They also influence how new products are developed, how firms structure operations, and how quickly they can respond to market opportunities.

The Regulatory Landscape

The financial sector is governed by a number of regulations, including the Dodd-Frank Act, an 800+ page piece of U.S. legislation enacted after the 2008 financial crisis to reduce systemic risk and increase transparency.³ Compliance with Dodd-Frank, and the constant changes to it over the years, must be balanced with compliance of other regulations, such as the Sarbanes-Oxley Act (SOX)⁴ and Basel III,⁵ laws governing financial reporting and international banking standards, respectively. Basel III was implemented to help protect economies from financial shocks by requiring banks to hold more high-quality capital and maintain adequate liquidity. SOX was enacted in response to corporate scandals like Enron and WorldCom, which revealed widespread fraud and weaknesses in corporate governance and financial reporting. The act was designed to protect investors by improving the accuracy and reliability of corporate disclosures and requiring strict internal controls and financial reporting procedures.⁶

These frameworks help maintain financial stability and shape how institutions design products, interact with clients, and manage risk on a global scale.

The Cost of Non-Compliance

Failure to comply with financial regulations—or worse, deliberately flouting them—can be costly. In 2021, the U.S. Securities and Exchange Commission levied a $62 million penalty against the Kraft Heinz Company for SOX violations, and charged two executives with personal fines and sanctions.⁷

Non-compliance is extremely expensive. A 2017 Boston Consulting Group study estimated that banks around the world paid out around $321 billion in fines for non-compliance with regulations enacted since the 2008 financial crisis.⁸

The Future of Compliance

Businesses in the finance sector invest a lot of time, money and expertise in compliance and legal services to protect their bottom line in a complex regulatory environment. Demand for professionals skilled in regulations like Sarbanes-Oxley (SOX) continues to grow as regulatory scrutiny and corporate governance standards intensify. Companies, particularly publicly traded and global organizations, seek experts who can manage internal controls, risk, and financial reporting while addressing evolving challenges in technology and cybersecurity.⁶

With advances in digitization, cryptocurrency and the increasing use of AI, compliance is becoming more complex with emerging areas of law.⁹ As a recent EY report noted, AI poses challenges to banking that are only just being anticipated by regulators. These challenges will ultimately require "robust governance frameworks,"⁹ i.e., there’s more regulation and legislation ahead for the industry.

Why Financial Professionals Need Legal Skills

Beyond compliance, there are many finance roles that require knowledge of legal concepts and regulatory frameworks.

Investment managers are expected to have knowledge of the laws governing investing, disclosures, fair dealing and handling confidential information.¹⁰ A good financial analyst has an understanding of regulatory frameworks and how vulnerable a particular company or product is to legal challenges.¹¹

Traders are essentially highly specialized salespeople, usually selling complex financial instruments in a high-pressure environment. Understanding what you’re selling and how you are allowed to sell it is critical to the job.¹²

Product development for the financial industry often requires considerable professional experience because there are so many regulations governing what financial instruments do, how they can be marketed and how they can be sold.¹³ This is just one of many roles in the industry where the ability to communicate effectively with legal and regulatory teams is critical to success.

Per a report from PwC, in the future, "transactional activities within the finance sector will be increasingly automated,"¹⁴ putting a greater importance on advanced analytical and communications skills.

How the MLS in Finance Law Prepares You

William & Mary’s online MLS in Finance Law is designed to prepare you for a wide range of roles in the finance industry, such as banking legal compliance, audit, risk and financial regulations careers.

Our MLS curriculum is structured around core courses in U.S. law and the foundations of regulatory law, guiding you through the details of antitrust, privacy and tax regulations. In the Finance concentration, you’ll dive deep into banking law fundamentals and consumer financial law.

Throughout the program, you’ll receive guidance from our renowned faculty, experienced teachers and seasoned professionals who understand the real-world demands of the legal and financial services industries. You will have many opportunities for practical application of the knowledge you’re acquiring through case studies and legal writing.

Ultimately, the training and experience you gain from the William & Mary online MLS in Finance Law is designed to prepare you for success in careers such as compliance, financial analysis, risk management and many other roles at the intersection of finance and law. We want to see our graduates grow their expertise, boost their earning power and launch fulfilling and successful careers.

Take Charge of Your Future in Finance With William & Mary Online

For finance professionals, legal knowledge is no longer optional. A foundation in finance law basics is a core competency. William & Mary’s online MLS in Finance Law is a bridge between finance and law, a finance law degree designed to prepare an emerging generation of leaders in the financial sector.

Contact us today for more information about William & Mary’s online MLS program and our admissions process. Schedule a call with one of our admissions outreach advisors to discuss how to advance your finance career.