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Abstract: In discussions of the federal securities laws, the SEC usually gets most of the attention. This makes some sense. After all, it is the agency charged with administrating the securities laws and regulating the industry as a whole. It makes the majority of the laws; it engages in enforcement actions; it reacts to crises; and it, or sometimes even its individual commissioners, intervene publicly in policy debates. Often overlooked in such discussion, however, is the role of the Supreme Court in shaping securities law, and a new book by Adam Pritchard and Robert Thompson demonstrates why this is an oversight. The reason? Because, as we learn from Pritchard and Thompson, the Supreme Court has been hugely influential in federal securities law since really their inception. Perhaps not surprisingly, certain Justices have left a more significant mark than others on the field. But in Pritchard & Thompson’s telling, few have left a more significant influence than Lewis Powell.
The mark of a great book is the reflection that it generates. And by that standard, Pritchard and Thompson’s book is truly great. Which brings us back to our original question: How then should one interpret the federal securities laws? The answer is that we should interpret them in the common law tradition, by considering the deficiency in the common law that led to their passage. This approach is arguably so thoroughly entrenched in the Court’s insider trading jurisprudence, it’s hard to imagine how (let alone why) to disentangle it. And with respect to everything else, that’s simply how the Court interpreted the securities laws for the first years of their existence. And, thus, while there might be disagreement about whether the common law tradition of reading statutes should be preserved as a general matter, when it comes to securities law, the answer should be far less controversial.
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