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Full-Text Articles in Law
Regulating Irrational Exuberance And Anxiety In Securities Markets , Peter H. Huang
Regulating Irrational Exuberance And Anxiety In Securities Markets , Peter H. Huang
All Faculty Scholarship
This paper analyzes the regulatory implications of irrational exuberance and anxiety in securities markets. U.S. federal securities laws mandate the disclosure of certain information, but regulate only the cognitive form and content of that information. An important and unstudied question is how to regulate securities markets where some investors respond not only cognitively to the form and content of information, but also emotionally to the form and content of information. This paper investigates that question when some investors feel exuberance or anxiety that is unjustified by cognitive processing of the available information. This paper develops the implications for mandatory securities …
Petrochina Syndrome: Regulating Capital Markets In The Anti-Globalization Era, Stephen F. Diamond
Petrochina Syndrome: Regulating Capital Markets In The Anti-Globalization Era, Stephen F. Diamond
Faculty Publications
To explore this new social fracture and its challenge to the legitimacy of Anglo-American capitalism, this Article presents a case study of the attempt by the Chinese government and major Wall Street investment banks to complete an initial public offering by a major Chinese corporation. Their efforts represented a classic example of the effort to build a new global capitalist order from above without significant concern for the legitimation question. And, as we shall see, the effort was met from below with a vigorous social response. Thus, I suggest that a kind of syndrome, the PetroChina Syndrome if you will, …
Behavioral Economics And The Sec, Stephen J. Choi, Adam C. Pritchard
Behavioral Economics And The Sec, Stephen J. Choi, Adam C. Pritchard
Articles
Not all investors are rational. Quite apart from the obvious examples of credulity in the face of the latest Ponzi scheme, there is no shortage of evidence that many investors' decisions are influenced by systematic biases that impair their abilities to maximize their investment returns. For example, investors will often hold onto poorly performing stocks longer than warranted, hoping to recoup their losses. Other investors will engage in speculative trading, dissipating their returns by paying larger commissions than more passive investors. And we are not just talking about widows and orphans here. There is evidence that supposedly sophisticated institutional investors-mutual …
Trust, Guilt, And Securities Regulation, Peter H. Huang
Trust, Guilt, And Securities Regulation, Peter H. Huang
Publications
This Article analyzes the importance of trust in securities investing and how guilt about breaching such trust has implications for securities regulation. Both U.S. federal securities laws and the regulations of the National Association of Securities Dealers impose high standards of professional conduct upon securities professionals. But exactly what are and should be the legal responsibilities of securities professionals remain the subject of much debate. In particular, courts disagree over when broker-dealers are fiduciaries of their clients. A legal consequence of a fiduciary relationship is a duty of fair dealing. This Article is the first to analyze the emotional, moral, …
The Sarbanes-Oxley Yawn: Heavy Rhetoric, Light Reform (And It Might Just Work), Lawrence A. Cunningham
The Sarbanes-Oxley Yawn: Heavy Rhetoric, Light Reform (And It Might Just Work), Lawrence A. Cunningham
GW Law Faculty Publications & Other Works
A thorough examination of the much ballyhooed Sarbanes-Oxley Act reveals dominantly a federal codification of extant rules, regulations, practices, and norms. Despite advertising it as "the most far-reaching reforms of American business practices since the time of FDR," a soberly apolitical view sees the Act as more sweep than reform. Important are provisions calling for nine studies; redundant but much publicized were the certification requirements imposed during the summer of 2002; other moves are mere patchwork responses to precise transgressions present in the popularized scandals. The Act is far from trivial, however. A silver bullet relates to the structure and …