Monday, February 29, 2016
Federal and state securities regulation is the personification of what conservatives refer to pejoratively as “big government.” Businesses can’t raise money unless they first get permission from the government and, in many states, that permission turns on a regulator’s determination of whether the offer is fair. The cost of compliance is a serious drag on capital formation, especially small business capital formation. Federal and state securities laws also generate a tremendous amount of plaintiff’s litigation, another conservative bugaboo.
We’ve seen conservative efforts at the federal level to limit securities regulation and litigation—for example, the Private Securities Litigation Reform Act and the JOBS Act. But, unless things are going on at the state level that I’m not aware of, there doesn’t seem to be a corresponding effort at the state level.
That’s surprising, because the Republicans have greater control at the state level than they do at the federal level. There are 31 Republican governors and the Republicans control both chambers of the state legislature in 30 states, plus Nebraska’s unicameral legislature. Republicans control both the governorship and the state legislature in 24 states.
Why hasn’t there been a push to change state securities regulation? Are Republicans satisfied with state regulation? If so, that’s surprising because Rutheford Campbell and others have pointed to state securities regulation as a major drag on small business capital formation. Are politicians at the state level not as anti-government? Or is there something else going on that I’m missing?
I’m not arguing that state securities laws should be limited (at least, not in this post). I’m just curious why it hasn’t happened.