The Myth of Protecting the Public Interest The Case of the Missing Mandate in Federal Securities Law .pdfJournal of Business & Securities Law (2016)
Protecting the public interest is at the core of federal securities laws. To protect the public interest is the mission of the Securities and Exchange Commission and its raison d’être. At least, that is what the public is encouraged to believe.
Protecting the public interest in Federal securities laws has been blindly accepted without questioning the basic assumption that the purpose of securities laws is to protect the public interest. However, a recent analysis of the Securities and Exchange Act of 1934 (“’34 Act”) has shown that protecting the public interest in the ’34 Act is a myth and that it is not the public interest, or even investors’ interests, that the ’34 Act was primarily intended to protect, but the market interest.
Contrary to popular belief, protecting investors’ interests is not the primary purpose of the securities laws, and protecting investors’ interests is merely derivative of the primary purpose—protecting the market interest—and protecting the public interest is non-existent. As the Supreme Court has recently commented, “The magnitude of the federal interest in protecting the integrity and efficiency of the national securities market cannot be overstated.”
Recognizing the true purpose of federal securities laws and the reasons for creating the Securities and Exchange Commission (“Commission” or “SEC”) provides a greater understanding of the policy underlying the decisions (including rule-making and enforcement actions) of the SEC. It changes the nature of discourse concerning the best type of regulatory regime.
Available at http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=371197.
- securities laws,
- public interest,
- market interest,
- investors’ interest
Publication DateAugust 29, 2016
Citation InformationWm. Dennis Huber. "The Myth of Protecting the Public Interest The Case of the Missing Mandate in Federal Securities Law .pdf" Journal of Business & Securities Law Vol. 16 Iss. 2 (2016) p. 401 - 423
Available at: http://works.bepress.com/wmdennis_huber/14/