Changing the Rules of the Game: Beyond Disclosure Framework for Securities Regulation

A disclosure -based framework is at the heart of U.S. securities regulation. This paper examines this model’s emphasis on disclosure and discuss why it is inherently flawed. Specifically, the disclosure model is outdated and does not seem to reflect the current trading patterns that dominate the United States’ securities market. Instead, this paper argues that what is required is a radical response to the current trading patterns of American consumers in the securities markets - one that establishes a regulatory framework that examines the trading market as a whole instead of focusing on the disclosures of public companies. This would offer better protection against the problems that led to corporate scandals and crises in the market, including the 2008 recession.