Arizona Securities Law: How Relevant Is Federal Securities Law?

Abstract

Both the Arizona Supreme Court and the Arizona legislature have approved using federal securities cases to interpret Arizona’s securities statutes when federal law is settled and the Arizona and federal statutes are substantially the same. In practice though, federal law has limited utility. One reason is the U.S. Supreme Court’s small volume of securities-law precedent. The Supreme Court averages only 1.3 securities cases per term. This leaves swaths of federal securities law on which the Supreme Court has not spoken and on which the lower-federal courts often disagree. The Supreme Court’s decisions involve one or more of nine federal securities acts that frequently turn on uniquely federal issues of little or no relevance to state securities law. Differences in Supreme Court and Arizona securities-law policy and approaches to statutory interpretation further reduce the number of relevant federal cases. The article analyzes the 50 state and federal decisions interpreting Arizona securities law that have been reported since 1980. Through these cases, the article identifies the patterns and reasoning that have guided the courts in deciding when to rely on federal interpretations to interpret Arizona’s securities statutes. The article concludes by presenting a set of interpretative principles through which truly relevant federal securities law can be identified.

Keywords: Statutory Interpretation, State Securities Law, Arizona

JEL Classification: K22