"A History of Corporate Law Federalism in the Twentieth Century" by William Wilson Bratton
 

Document Type

Article

Publication Date

Spring 2024

Abstract

This Article describes the emergence of corporate law federalism across a long twentieth century. The period begins with New Jersey's successful initiation of charter competition in 1888 and ends with the enactment of the Sarbanes-Oxley Act in 2002. The federalism in question describes the interrelation of state and federal regulation of corporate internal affairs. This Article takes a positive approach, pursuing no normative bottom line. It makes six observations: (1) the federalism describes a division of subject matter, with internal affairs regulated by the states and securities issuance and trading regulated by the federal government; (2) the federalism is an artifact of history rather than an instantiation or reflection of a theory of government; (3) competition for charters at the state level resulted in a stable, as opposed to a volatile legal regime; (4) just as economic contractions lead to new regulatory constraints on the conduct of business, so do economic expansions lead to increased regulatory slack; (5) even though regulation on the ground never fully adhered to the subject matter division, the division became increasingly salient over time, taking on positive normative implications; and (6) federal lawmakers came to adhere to a norm of noninterference in state regulation of internal affairs.

Comments

Berle XV: Perspectives on Pritchard and Thompson's A History of Securities Law in the Supreme Court: Symposium

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