UCLA Law Review Volume 53, Issue 5

The Hidden Contradiction Within Insider Trading Regulation

Regulation of insider trading in the United States centers around two types of rules. The first and most publicized is the set of rules prohibiting “illegal” insider trading—trades based on material, nonpublic information. These laws are designed to increase investor confidence in the stock market by making the market seem fair and honest. However, the roughly 475,000 insider trades executed each year consistently net higher returns than the trades of ordinary investors. And the vast majority are simply ignored by the Securities and Exchange Commission, either because the trades were made for reasons other than the insider’s confidential knowledge, or because the government simply could not prove otherwise. Nevertheless, the second set of rules mandates that each of these trades be posted within two days on the Securities and Exchange Commission website, where they are quickly made available for perusal by the investing public. This Comment proposes that mandatory disclosure, by flaunting the ubiquity of these profitable trades to ordinary investors, most likely works against the stated goal of bolstering investor confidence. Instead, the author proposes a more persuasive justification for mandatory-disclosure rules—promoting market efficiency.

The Fable of the Nationalist President and the Parochial Congress

One of the most widespread contemporary assumptions in the discourse of separation of powers is that while the president tends to have preferences that are more national and stable in nature, Congress is perpetually prone to parochial concerns. This deeply ingrained assumption not only pervades legal scholarly treatment of the administrative state, but it is also used to frame debates about the division of foreign relations powers and the proper scope of judicial review of executive branch agency regulations. This Article examines the three explanations commonly given for the president’s more national outlook and introduces institutional considerations that reveal them to be more myth than fact: (1) The president has a broader geographic and population constituency than members of Congress; (2) the fact that members of Congress are elected frequently means that they are more susceptible to special interest or parochial legislation than the president; and (3) the president tends to care more about the overall health of the national economy than Congress does. This Article shows that under the winner-take-all system of our electoral college, the president will often have an incentive to cater to a narrower geographic and population constituency than that of the median member of Congress. Furthermore, this Article also contends that while the preferences of individual members of Congress may often be shortsighted and parochial, the collective wisdom of these parochial members of Congress will often produce policy outcomes that are more national and public-regarding than those produced by any single elected official. Finally, this Article critically analyzes the implications of debunking the fable in three areas of public law where it has been particularly pervasive: the unitary presidency model, judicial deference to executive branch agency decisions, and the allocation of international trade authority.

Punishment and Accountability: Understanding and Reforming Criminal Sanctions in America

The vast majority of Americans favor sanctions that require offenders to engage in responsible behavior—to work, pay restitution, or support dependents; to participate in a mandatory job-training, literacy, or drug-treatment program; or to meet some other prosocial obligation. While this intuitive preference crosses political and ideological divides, nothing in our classical theories of punishment properly accounts for or develops this intuition. In this Article, Donald Braman explores the popular preference for and the benefits that attach to these accountability-reinforcing sanctions. Reviewing existing and original ethnographic, interview, and survey data, he describes why these sanctions have such broad appeal, and he advances a theory that suggests a number of benefits that are generally ignored when evaluating sanctions in terms of deterrence and rehabilitation. He concludes by reviewing and suggesting ways to reform existing punishment practices in light of accountability concerns.

Melville B. Nimmer Memorial Lecture: Deception and the First Amendment: A Central, Complex, and Somewhat Curious Relationship

Each year, the UCLA School of Law hosts the Melville B. Nimmer Memorial Lecture. Since 1986, the lecture series has served as a forum for leading scholars in the fields of copyright and First Amendment law. In recent years, the lecture has been presented by such distinguished scholars as Lawrence Lessig, Robert Post, Mark Rose, Kathleen Sullivan, and David Nimmer. The UCLA Law Review has published each of these lectures and proudly continues that tradition by publishing an Article by this year’s presenter, Professor Jonathan D. Varat.