Freedom of Contract and the Securities Laws: Opting Out of Securities Regulation by Private Agreement

Abstract

This article considers whether parties should be permitted to waive coverage of the securities laws. Several securities law scholars have called for selective securities law deregulation. The article examines these proposals from both theoretical and practical perspectives. The thesis of this article is that the reform initiatives present more than a choice of rules over standards, certainty over flexibility, and law over facts--they present a choice of values. The article also challenges the premise that bright-line rules, such as opting out by entity type or waiver, promote fairness, equity, equality, predictability, efficiency, and utility better than the current regulatory regime. Finally the article questions whether we should permit parties to waive their rights and bargain away their statutory protections. Particularly, since the reform initiatives would result in the adoption of industry-protective terms that indivdual investors would have little or no power to change.