Regulatory Arbitrage

Regulatory Arbitrage

The practice of making small changes to one's company so as to come under the jurisdiction of a different regulator agency with more lenient rules. For example, a corporation unwilling to pay corporate taxes to the state of California may move its head office to Arizona, outside the jurisdiction (in most circumstances) of the California tax authorities. See also: Jurisdictional Arbitrage, Federal Deposit Insurance Act of 2005.