Another Role for Securities Regulation: Expanding Opportunity

Jasmin Sethi

Abstract

Securities regulation can be justified on a number of grounds, but historically, expanding opportunities for wealth accumulation across sectors of the population has not been a justification given credence. This paper examines the implications of integrating an opportunities based perspective in evaluating securities regulation for policy decisions. I demonstrate how the policy implications of such a perspective are often distinct from those implicated by other approaches, such as a public welfare approach to securities regulation. In this article, I apply this perspective and what we know about human behavior to examine how securities policy could be shaped by an opportunities-based perspective in four areas: (1) providing access across the board to financial institutions and venues; (2) improving the regulation of disclosures; (3) facilitating the ability of investors to overcome the behavioral biases that can often limit their own wealth accumulation; and (4) impacting the incentives of investment professionals to better facilitate the wealth accumulation of disparate investors. When we apply an opportunities-based approach to financial regulation, we see that promoting greater opportunities for wealth accumulation requires a nuanced approach to evaluating the impact of regulations on the incentives and behavior of individual investors, investment professionals, and financial institutions.