Oregon Law Review : Vol. 89, No. 1, p. 175-262 : Fairness, Utility, and Market Risk
Date
2010
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
University of Oregon Law School
Abstract
I argue that securities regulation is best viewed as part
of a larger societal framework that serves to protect individuals from
stock market risk. I contend that management of market risk is a
valid societal goal; that securities regulation is one component of a
societal risk-management structure that has never been identified as
such; and that we can improve upon this structure, not by pursuing
traditional avenues of securities law reform, but by restructuring the
institutional framework through which investors participate in the
stock market. This Article proceeds in three Parts. In the first, I argue that we
lack a satisfactory theory about how securities regulation protects
investors. I focus on the lack of a sound intellectual foundation for
the modern notion that it is accurate share prices, which come about
thanks in part to SEC-mandated disclosures, that provide protection.
In the next Part, I describe a new theory for how to conceptualize
securities regulation. I argue that we can rationalize our regulatory
framework if we look at it as part of a larger societal riskmanagement
system. I first discuss why protection from risk is a
valid societal goal; then, I outline what securities regulation
contributes to this endeavor (I focus on whether the efficient markets hypothesis (EMH) should
continue to inform our understanding of securities regulation even
under this new framework); and last, I look at the exogenous
mechanisms available to investors for managing market risk. In the
final Part of this Article, I analyze the normative implications of this
analysis. I argue that today’s risk-management framework does not
do enough to help investors and consider several avenues of reform.
Description
88 p.
Keywords
Securities, Market risk
Citation
89 Or. L. Rev. 175 (2010)