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The Logic of Securities Law

  • Date Published: May 2018
  • availability: Available
  • format: Paperback
  • isbn: 9781316610992


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About the Authors
  • This book opens with a simple introduction to financial markets, attempting to understand the action and the players of Wall Street by comparing them to the action and the players of main street. Firstly, it explores the definition of a security by its function, the departure from the buyer beware environment of corporate law and the entrance into the seller disclose environment of securities law. Secondly, it shows that the cost of disclosure rules is justified by their capacity to combat irrationalities, fads, and panics. The third section explains how the structure of class actions is designed to improve deterrence. Next it explores the economic harm from insider trading and how the law fights it. In sum, the book shows how all these parts of securities law serve the virtuous cycle from liquidity to accurate prices and more trading and how the great recession showed that our securities regulation reacted mostly adequately to the crisis.

    • Reveals the central theme of securities law, allowing students, lawyers and judges to understand how to interpret securities law
    • Explains the virtuous cycle from accurate securities prices to more trading, and to greater market liquidity, which explains the virtuous cycle to non-specialists
    • Shows how the rules of securities law are synergistic with the virtuous cycle, allowing readers to understand the central single theme of securities law
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    Reviews & endorsements

    'One does not need to agree with Professor Georgakopoulos' core thesis (I have a much more deregulatory view) to love this book. It is strong and provocative without being partisan. It contains an impressive up-to-date summary of legal doctrine, relevant institutions, current empirical research in finance and accounting, peppered with anecdotes and what old-school print press quaintly calls 'human interest stories'. It manages to explain basic finance concepts without math in the way that's both correct and comprehensible. Students of law will find it useful to impose structure on the otherwise unwieldy and political field of securities law. Students of finance and accounting could use it to replace their favorite source of legal doctrine - a lunch with a law professor. The text strikes me as something that the author actually wants to be read, which deserves separate pondering and admiration.​' Katherine Litvak, Northwestern University, Washington, DC

    'American securities law has developed, since its creation in the 1930s, in response to changing practices and changing problems. As judges, regulators and legislators attempted to respond to the pressing issue of the day, focus turned from the forest to the trees and the theoretical coherence of securities laws as a whole has diminished. In The Logic of Securities Law, Professor Georgakopoulos acts to restore some of the lost coherence, tying together different strands of securities law around a simple yet powerful theoretical focal point - a virtuous circle in which liquid markets, accurate securities prices and low trading costs reinforce each other. By directing securities law to facilitate this virtuous cycle, law is given a clarity of purpose and those who study and practice the law are given a simple yet supple roadmap to understand and evaluate this complex and important legal field.' Amitai Aviram, Director of the Corporate Law Program, University of Illinois

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    Product details

    • Date Published: May 2018
    • format: Paperback
    • isbn: 9781316610992
    • dimensions: 230 x 153 x 11 mm
    • weight: 0.33kg
    • contains: 14 b/w illus.
    • availability: Available
  • Table of Contents

    Foreword Richard Posner
    1. Introduction. Real markets and financial markets
    Part I. Definition of a Security: When to Leave Buyer Beware for Seller Disclose?:
    2. Toward defining a security
    3. The vacuous definition of a security
    4. The function of investment contract
    5. Pricing mechanisms
    6. From the sale of business doctrine to Gustafson
    7. Gustafson works!
    8. Definition conclusion
    Part II. Disclosure: Why Subsidize Informed Traders?:
    9. Introduction
    10. An overview of disclosure theories
    11. The failure of the corporate disclosure decision
    Part III. Deterrence of Securities Fraud:
    12. Introduction to deterrence intensity
    13. Comparing the economic function of deceit to that of securities fraud
    14. Reliance in deceit and securities fraud
    15. Conclusion of deterrence intensity
    Part IV. Insider Trading:
    16. Introduction to insider trading
    17. Insider trading law
    18. Defining insiders
    19. Concluding the insider trading analysis
    Part V. The Virtuous Cycle of Liquid Markets, Accurate Prices and Cheap Trading:
    20. The virtuous cycle
    21. Closing note: financial crises and securities law.

  • Author

    Nicholas L. Georgakopoulos, Indiana University
    Nicholas L. Georgakopoulos is the H. R. Woodard Professor of Law at the Robert H. McKinney School of Law, Indiana University. He has extensively researched and published on securities law and related fields. His previous publications include Principles and Methods of Law and Economics (Cambridge, 2005), and a co-authored five-volume treatise Blumberg on Corporate Groups.


    Richard Posner

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