One of the most startling differences between America and Britain is the way we treat our white-collar criminals and other financial wrongdoers. America goes after the rogues and incompetents with gusto and punishes them heavily. Crimes against honest capitalism are seen as particularly unAmerican and are treated with appropriate gravity. Britain pursues the rule-breakers with heavy feet and, on conviction, prefers to administer a light slap.

The latest research from John Coffee of Columbia University is noteworthy. Even after adjusting for the greater size of the US economy, the US Securities and Exchange Commission levies at least ten times as much in fines as the UK’s Financial Services Authority. The gulf is actually more extreme because the FSA has a much wider remit than the SEC.

On insider dealing, the difference is even more marked, both in the number of cases pursued and in the severity of punishment. The largest insider dealing penalty in the UK has been a £750,000 fine; the highest in the US has been $71 million: Joseph Nacchio, former chief executive of Qwest was fined $19 million, ordered to forfeit another $52 million – and sentenced to six years in jail.

The conventional wisdom is that the heavier-handed regulation of the US has become excessive. First the Paulson Committee and then a report commissioned by New York mayor Michael Bloomberg found that financial services business was migrating from Wall Street to friendlier financial centres such as London and Hong Kong, making the US less competitive.

But Professor Coffee questions this conclusion. Companies choosing to list in America rather than other jurisdictions are rewarded with a much higher stock market valuation – a premium averaging 37 per cent, according to one calculation. Investors like firmly policed markets. Better disclosure standards, the higher threat of enforcement and - yes, perhaps even the detested Sarbanes-Oxley rules – may be helping US-listed corporations to a lower cost of capital.

Britain prefers the softly-softly approach. Yet, by keeping fines so low, it risks watering down the deterrent effect of its hard-won victories. Aviva was last month fined just four hours’ profits for an egregious saga of incompetence and negligence that allowed fraudsters to empty the accounts of policyholders.

Is there much incentive for other financial institutions to redouble their antifraud efforts when the penalty for not doing so is less than the price of the staff Christmas party? The FSA should ramp up its fines. Who knows, if Professor Coffee is right, it could even help reduce the cost of capital for UK plc.