Download This PaperThe Administrative Origins of Mandatory Disclosure
The Journal of Corporation Law (forthcoming)
72 Pages Posted: 13 Sep 2023
Date Written: September 5, 2023
Abstract
The birth of mandatory corporate disclosure is one of the defining narratives of the modern regulatory state. The brightest legal minds of their generation were called down from the ivory tower to help FDR rein in the excesses of Wall Street. Inspired by their intellectual mentor Louis Brandeis, they overcame fierce resistance from the securities industry (who opposed any regulation) as well as from the corporatist wing of New Deal reformers (who favored a broader economic planning role for the government) to craft a legislative solution that was so well-conceived that it has remained in place essentially unchanged for nearly a century – the Securities Act of 1933.
Except this foundational narrative turns out to be more of an origin MYTH. Drawing on archival sources, oral histories, and other primary documents, this paper presents a revisionist history of the origins of mandatory disclosure that looks past the abstractions of statutory text to the realities of administration. I show that the real mandatory disclosure regime implemented in the 1930s was not the Brandeisian statutory system crafted by legal luminaries, but was an entirely different, more corporatist regime invented by an obscure mid-level official in defiance of those legislative directives.
This paper excavates the lost history of mandatory disclosure. It is a story of how creative and resourceful administration by an ordinary mid-level official transformed – and likely redeemed – one of the foundational regulatory programs of the modern administrative state. But it is also a story of legislative failure by iconic lawyer intellectuals and their favored model of economic regulation.
Keywords: Mandatory Disclosure, Securities Regulation, Administrative Capacity, Corporatism, Administrative Law, IPOs, Comment Letters, Deficiency Letters, Louis Brandeis, Felix Frankfurter, James Landis, Benjamin Cohen, New Deal, Administration, Legal History, Baldwin Bane
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