New Study Launched Into the Future of Financial Regulation

Michael Piwowar, acting chairman of the SEC, addresses initiating conference of a new comprehensive study of the securities markets. Photo credit: Michael Motala

Leading lawyers, economists, academics, and regulators from around the world came together last month at Columbia Law School for a two-day conference on the future direction of financial regulation. The March 23 and March 24 convening was organized by the Program in the Law and Economics of Capital Markets, a joint program of Columbia Law School and Columbia Business School in conjunction with its launch of the New Special Study of the Securities Markets.  

The study is a multi-year project that responds to calls by current and former U.S. Securities and Exchange Commission (SEC) commissioners and others for a new comprehensive study of the securities markets. Led by Columbia Law School Professor Merritt Fox, Columbia Business School Professor Lawrence Glosten, and Columbia Law School Lecturer in Law Edward Greene—co-directors of the Program in the Law and Economics of Capital Markets—the project will culminate in a final report for federal financial regulators, the U.S. Congress, private practitioners, and the public, to guide the direction of financial regulation in the decades to come.

“A renewed analysis of securities markets—where we are today, how we got here, and whether we should shift course—is long overdue,” remarked Michael Piwowar, acting chairman of the SEC, in his keynote address. “Columbia University is also an ideal host for this occasion,” he added, before elaborating on the Law School’s historic connection to the original Special Study and U.S. securities law reform.

The first comprehensive review of U.S. securities markets took place in 1963 at the behest of then–SEC Chairman William Cary, who was for many decades a renowned professor at Columbia Law School. The effort was organized within the commission by SEC lawyer Milton Cohen, who assembled an independent team of lawyers, economics, statisticians, and staff. In his speech, Piwowar also noted that Sydney Robbins, a Columbia economics professor, had served as the first Special Study’s chief economist.

Fox explained that “there is an urgent need for a comprehensive evaluation of securities markets and their effective regulation.” The New Special Study responds to the marked changes in U.S. and global securities markets that have occurred in the half century since the publication of the first special study, which according to Fox have generated significant gaps in our understanding of the operation and proper regulation of our securities markets. Quoting President John F. Kennedy’s 1962 State of the Union address in light of sustained American prosperity, and the relative soundness of the extant securities law regime, Piwowar advised conference participants that “the time to repair the roof is when the sun is shining.”

“Iron sharpens iron, and it takes a diamond to cut another diamond,” said Piwowar. “In the same way, the SEC is relying on the wits of the esteemed scholars and devoted practitioners assembled here today to sharpen our own understanding of market structure. The success of the New Special Study will hinge on your leadership and participation.”

# # #

Story and photo by Michael Motala, research assistant in the Program in the Law and Economics of Capital Markets

Posted on April 10, 2017