Using the framework articulated by Thomas S. Kuhn in his book, The Structure of Scientific Revolutions, this Article traces the evolution of equity market regulation in terms of its epistemological foundations and operative paradigms. It examines the SEC’s growth from a more passive partner with the securities industry to being an aggressive and perhaps overly intrusive arbiter of equity market operations. This Article identifies two distinct paradigms of securities regulation—the “Self-Regulatory Paradigm” and the “Micro-Intervention Paradigm.” The Self-Regulatory Paradigm and the Micro-Intervention Paradigm are not compatible, and this Article explains how the intellectual dissonance between them ultimately allowed the Micro-Intervention Paradigm to gain acceptance and replace the Self-Regulatory Paradigm. It then identifies issues with the Micro-Intervention Paradigm and argues that the adoption of the more interventionist approach it requires has strained the resources of the SEC, and may now be inhibiting innovation and improvement in the equity markets.
A Bridge too Far: A Critical Analysis of the Securities And Exchange Commission's Approach to Equity Market Regulation,
11 Brook. J. Corp. Fin. & Com. L.
Available at: http://brooklynworks.brooklaw.edu/bjcfcl/vol11/iss2/3