A Glass-Half-Empty Approach to Securities Regulation
Maryland Law Review, Vol. 76, p. 360, 2017
45 Pages Posted: 18 May 2017
Date Written: January 17, 2017
Abstract
In this Article, I propose a novel approach, which I call the “glass-half-empty” approach, to analyze the appropriate boundaries of securities regulation. This approach assumes a baseline of “full” regulation and then analyzes which regulations should be stripped away because the costs exceed the benefits. This is the opposite of the traditional approach, which assumes a baseline of zero regulation, identifies a market failure, and then weighs the costs and benefits of regulatory intervention. Although, in theory, the two approaches should reach the same conclusions about the appropriate bounds of securities regulation, the glass-half-empty approach yields new insights because it is a clearer way to identify boundary lines in a heavily-regulated field, reveals areas that have been overlooked under the traditional approach, is more likely to result in a coherent regulatory scheme than the current piecemeal approach, and defrays any bias against adding regulatory burdens that may infect the glass-half-full approach. The glass-half-empty approach, when applied to the fundamental components of securities regulation, supports several dramatic reforms to the current boundaries of securities regulation.
Keywords: Securities Regulation, Securities Litigation, Registration, Exemptions, Disclosure
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