Buy, Sell, or Hold? Analyst Fraud from Economic and Natural Law Perspectives
Ronald J. Colombo
Hofstra University - Maurice A. Deane School of Law
February 27, 2007
Brooklyn Law Review, Vol. 73, p. 91, 2007
Hofstra University Legal Studies Research Paper No. 07-7
Investor protection and healthy capital markets are commonly acknowledged as the objectives historically driving U.S. federal securities legislation and policy. Less commonly appreciated, or perhaps intentionally neglected, is the critical role that virtue was understood to play in realizing these objectives by the architects and original enforcers of the securities laws. This understanding has largely been lost, in no small part, due to the success that law and economics has had in dominating securities law thinking. This Article posits that this original understanding can be rediscovered, and the role of virtue restored to its rightful place in securities regulation, via application of a natural law approach to securities law issues. Within the context of the recent research analyst conflict-of-interest problem, this Article compares a natural law approach to the problem with a law and economics approach. The conclusion reached is that the natural law approach is preferable on account of its endorsement of solutions that are more comprehensive, and, moreover, more harmonious with the historical values and objectives of U.S. securities law.
Number of Pages in PDF File: 65
Keywords: natural law, law and economics, aristotle, aquinas, securities regulation, securities law, virtue, virtue ethics, Rule 10b-5, securities analysts, research analysts
JEL Classification: A13, K22Accepted Paper Series
Date posted: March 1, 2007 ; Last revised: April 18, 2008
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