Seeking Sunlight in Santa Fe's Shadow: The SEC's Strategic Pursuit of Managerial Accountability
Donald C. Langevoort
Georgetown University Law Center
Forthcoming in Washington University Law Quarterly
Recent research in corporate governance points to the importance of transparency as a device for controlling agency costs, among other functions. That speaks to a long-standing issue in American securities regulation: whether there is (or should be) a conceptual separation between federal securities law and state corporation law on matters of managerial accountability, or whether the disclosure orientation of the federal law should be expansive enough to pursue accountability without undue concern with jurisdictional divisions. This paper explores the ways that the SEC confronts the apparent constraints on its ability to act aggressively in this area. It first revisits the law, showing that many of the restrictive holdings dealing with fiduciary responsibility under the securities law are really about the affirmative duty to disclose rather than any overarching federalism principle. Because the SEC has so much unused authority over duty to speak, this indicates that the doctrinal constraint is less than the rhetoric of some of the case law suggests. The paper then turns to other, more powerful, constraints: resources, remedies and human nature's resistance to the kinds of legal incentives often employed by the SEC. It ends with a look at the SEC's use of rhetoric and symbols in the face of the constraints on its ability to act in this sphere.
Number of Pages in PDF File: 43Accepted Paper Series
Date posted: March 29, 2001
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