Structuring Securities Regulation in the European Union: Lessons from the U.S. Experience

Abstract

Politics aside, the question of whether the EU should create an SEC is about the trade-offs between scale and accountability. This paper considers that trade-off in the U.S. context, with specific attention the SEC's apparent role as a "global" securities regulator on matters relating to issuer disclosure. The principal claim is that in making enforcement decisions, there will likely be a "home bias" toward domestic enforcement actions that makes extraterritorial actions less likely, thus reducing the incentives to comply. To the extent that this is typical of regulatory behavior, then there may be lessons for Europeans considering the question of institutional design. More broadly, the paper also considers some of the institutional features that make SEC enforcement policy what it is, which may or may not be exportable (or which policy makers in Europe may not want to import) to the European context.