In this Article, I propose a novel approach, which I call the “glass-half-empty” approach, to analyze the appropriate boundaries of securities regulation. This approach assumes a baseline of “full” regulation and then analyzes which regulations should be stripped away because the costs exceed the benefits. This is the opposite of the traditional approach, which assumes a baseline of zero regulation, identifies a market failure, and then weighs the costs and benefits of regulatory intervention.
Although, in theory, the two approaches should reach the same conclusions about the appropriate bounds of securities regulation, the glass-half-empty approach yields new insights because it is a clearer way to identify boundary lines in a heavily-regulated field, reveals areas that have been overlooked under the traditional approach, is more likely to result in a coherent regulatory scheme than the current piecemeal approach, and defrays any bias against adding regulatory burdens that may infect the glass-half-full approach. The glass-half-empty approach, when applied to the fundamental components of securities regulation, supports several dramatic reforms to the current boundaries of securities regulation.
I hope that the glass-half-empty approach, alongside the traditional approach, will become an integral part of future scholarly analysis about the appropriate bounds of securities regulation and that the insights that this approach reveals will be incorporated into future reforms of securities regulation, leading to a more comprehensive, coherent, and unbiased regulatory scheme that furthers accuracy in securities pricing.
76 Md. L. Rev. 360 (2017)