Justice Lewis F. Powell, Jr., and the Counter-Revolution in the Federal Securities Laws

Abstract

The confirmation of Lewis F. Powell, Jr., to the Supreme Court led to a dramatic shift in the court's approach to securities law. This article relies on Powell's internal court files to document Powell's influence in changing the court's direction in securities law. Powell's influence was the product of his extensive experience with the securities laws as a corporate lawyer, which gave him much greater familiarity with that body of law than his fellow justices had. That experience also made him skeptical of civil liability, particularly class and derivative actions. Powell's skepticism led him to interpret the securities law in a consistently narrow fashion to reduce liability exposure and increase predictability. Powell also rebuffed the sec's efforts to expand its reach, particularly in insider trading and takeover regulation. Powell's experience and interest produced a counter-revolution in the federal securities law.