Regulatory Systemic Risk in US Securities Regulation

The concept of regulatory systemic risk – a long-term imbalance, resulting from the misalignment between regulatory initiatives and market realities, that impacts multiple areas of the regulatory framework – is developed in the context of US securities regulation. The discussion offers two theses: one descriptive and the other normative. Descriptively, drawing on institutional approaches to the study of regulation, I show how regulatory systemic risk emerges in the US securities regulatory framework. The issue is examined by looking at s. 971, Proxy Access, of the Dodd-Frank Act. Normatively, the discussion highlights the failure of the Dodd-Frank Act to mitigate regulatory systemic risk