EMPOWERING INVESTORS - A MARKET APPROACH TO SECURITIES-REGULATION

in the debate on securities regulation, even those who consider the U. S. regime unnecessarily burdensome have, by urging preemption of state securities lawsuits, looked to federal law as the potential source of solutions. In this Article, Professor Romano advocates instead a mark et-oriented approach of competitive federalism that would expand the r ole of the states in regulating securities and would fundamentally rec onceptualize the regulatory scheme. Under a system of competitive fede ralism far securities regulation, only one sovereign would have jurisd iction over all transactions in the securities of a corporation that i nvolve the issuer or its agents and investors: the sovereign chosen by the issuer from among the federal government, the fifty states, the D istrict of Columbia, or foreign nations. The aim of the proposal is to replicate for the securities setting the benefits produced by state c ompetition for corporate charters-a responsive legal regime that has t ended to maximize share value. As a competitive legal market supplants a monopolist federal agency in the fashioning of regulation, it will produce rules more aligned with the preferences of investors, whose de cisions drive the capital market. Competitive federalism for U.S. secu rities regulation would also have important implications for internati onal securities regulation. The jurisdictional principle applicable to domestic securities transactions would be equally applicable: Foreign issuers selling shares in the United States would be able to opt out of the federal securities laws and choose the law of another nation, s uch as their country of incorporation, or a U.S. state, to govern thos e U.S. transactions.