Rethinking U.S. Securities Laws in the Shadow of International Regulatory Competition

Abstract

The world we live in is a much smaller one than we faced twenty, ten, or even five years ago. Consequently, no issue of securities regulation today can be examined without considering its extraterritorial effects. This article offers a unique perspective on the concerns posed by the internationalization of our securities markets. Rather than considering how the securities laws of the United States impact international securities transactions, the traditional focus of commentators, my purpose is to develop a set of principles that can guide U.S. policymakers in reaching agreement with other nations on the minimum content of all nations' securities laws. I also suggest approaches for bringing about a wholesale revolution in domestic securities laws because, in the wake of international regulatory competition, dramatic and sweeping changes in the content of U.S. securities laws are long overdue and most certainly will occur. I will support this position with data that demonstrate that U.S. issuers and markets are disadvantaged by the greater regulatory demands U.S. securities laws impose as compared with the relatively light regulation foreign governments impose on their issuers and markets. The boldness of my thesis is that it is both inappropriate and unnecessary to disaggregate international and domestic transactions in the formulation of regulatory regimes. To the observers of recent regulatory developments at the Securities and Exchange Commission (SEC), my thesis is not simply radical, but borders on heresy. The traditional and well-accepted response to internationalization has been the crafting of selective accommodations for international transactions, not changes in the domestic securities laws. Moreover, because my thesis carries a distinct deregulatory message, it surely will meet with skepticism from those who resist any sunsetting of disclosure or enforcement efforts. This certain reaction will be based on the fear that any