Investor-Protection Advice for the New Administration

Abstract

The transition from the Trump Administration to the Biden one is well underway. Much change will follow. In the securities area, that change is expected to involve regulatory expansion in the name of investor protection. In this Article, I explain why that expansion should not involve use of disclosure, fraud, and insider trading law to regulate the stock market. In particular, I show that these core securities laws now provide, at best, extremely limited benefits on the margin for passive investors in the post-new issuance market. Importantly, this conclusion holds true even if one disagrees with the dominant law and economics thinking in the area (i.e., that there is little to no relevant investor-protection problem in the first place). I therefore attempt to shift the expected investor-protection focus to less prominent areas of securities regulation where more value may be obtained.

Keywords: Securities Regulation, Securities Law, Mandatory Disclosure, Securities Fraud, Insider Trading