Microsoft Word - 10. Pritchard & Thompson (8-22-21 9.55PM) PRITCHARD & THOMPSON 8/22/2021 9:55 PM THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT A.C. Pritchard & Robert B. Thompson* Since the enactment of the first federal securities statute in 1933, securities law has illustrated key shifts in the Supreme Court’s jurisprudence. During the New Deal, the Court’s secu- rities law decisions shifted almost overnight from open hostil- ity toward the newly-expanded administrative state to broad deference to agency expertise. In the 1940s, securities cases helped build the legal foundation for a broadly enabling ad- ministrative law. The 1960s saw the Warren Court creating new implied rights of action in securities law illustrative of the Court’s approach to statutes generally. The stage seemed set for the rise of “federal corporate law.” The Court swiftly reversed itself, however, with Justice Lewis F. Powell, Jr. leading the effort to confine the reach of the securities laws. Powell suc- ceeded in imposing a strict constructionism in securities law that never quite took hold in criminal or constitutional law. When there was a significant shift for the Court, securities law was prominent—at least until Powell’s retirement. Since then, the Court has meandered in its approach to securities law, its decisions neither expansive nor restrictive. The Court’s docket in this space has become a random walk of indifference. What is the future of securities law in the Supreme Court? We doubt that securities law’s bellwether status during its early days is likely to recur. The Securities and Exchange Com- mission, a groundbreaking agency of the 1930s, now seems like a small cog in a much larger administrative machine. Without prompting from the SEC, it is quite possible that the Court will continue to meander in the field of securities law. The Court— which Franklin Delano Roosevelt populated with appointees * Frances and George Skestos Professor of Law, University of Michigan and Peter P. Weidenbruch Jr. Professor of Business Law, Georgetown Uni- versity, respectively. Pritchard acknowledges the generous financial sup- port of the William W. Cook Endowment of the University of Michigan. PRITCHARD & THOMPSON 8/22/2021 9:55 PM 882 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 having front-line experience writing the securities statutes, running the SEC, or defending the constitutionality of the se- curities laws—has not had a member with any direct experi- ence with securities law for more than thirty years. If the Court’s spotlight were to shine again on securities, we suggest it might well be a Chevron question of the SEC’s au- thority. Proponents of corporate social responsibility could push the boundaries of the securities laws beyond the SEC’s historical focus on disclosure. Such a move could also be met by a federalism challenge to securities law preempting the field of state corporate law. These possibilities might once again put securities law at the center of the Court’s work to develop the law of the administrative state. I. Introduction ............................................................... 882 II. The Supreme Court’s Evolution in Federal Securities Law 1933–2021 .......................................................... 886 A. From Restrictive Oversight of Regulation to Broad Support of Agency Expertise ............................... 886 B. A Purposivist Court Further Extends the Reach of the Securities Laws ............................................. 889 C. A Strict Constructionist Approach ...................... 891 D. Equipoise or Indifference .................................... 893 III. What the Past May Tell Us About the Future .......... 894 A. The Likelihood of the Reappearance of the Drivers of the 1930s, 60s, or 70s ...................................... 895 B. New Sources of Securities Litigation before the Supreme Court .................................................... 903 1. Technology Advances and Market Innovations ..................................................... 904 2. Chevron Questions ......................................... 908 3. Federal Corporate Law as a Possible Twenty-First Century Setting........................ 910 IV. Conclusion .................................................................. 913 I. INTRODUCTION The future path of securities law in the U.S. will be influ- enced by a variety of factors and actors: statues passed by PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 883 Congress, regulations promulgated by the Securities and Ex- change Commission (SEC) and its enforcement of those stat- utes and regulations, SEC interpretive guidance and occa- sional special studies; innovations in the markets, international influences, and developments among the private parties who buy and sell securities. These disparate influ- ences may generate descriptions of securities law that seem hard to reconcile at times, as in the traditional fable of the three blind men who provide widely different descriptions of touching the same thing because they, individually, are sepa- rately interacting with the trunk, body, and tail of an ele- phant. In this Article, we provide a perspective on the future of securities law that embraces one part of that elephant: the role of the Supreme Court. Our comparative advantage on this topic derives from our study of the role of the Supreme Court in securities law up until now. In a forthcoming book—The History of Securities Law in the Supreme Court—we chronicle the Court’s work in securities law.1 This history documents several distinct ap- proaches by the Court since the inception of the federal secu- rities laws in 1933. Each new approach was a sharp departure from its predecessor. In the 1930s, the tumultuous challenges of the Great De- pression were met by a dramatic expansion of the federal gov- ernment. Nowhere was the expansion more visible than in se- curities law. The radical changes in the scope of federal regulation of the securities markets triggered an epic conflict between the administration of Franklin Delano Roosevelt and the Supreme Court. That conflict would eventually be re- solved by Roosevelt’s appointment of a cadre of progressive 1 That book builds on a series of articles by this Article’s authors, in- cluding: A.C. Pritchard & Robert B. Thompson, Securities Law in the Six- ties: The Supreme Court, the Second Circuit, and the Triumph of Purpose Over Text, 94 NOTRE DAME L. REV. 371 (2018) [hereinafter Pritchard & Thompson, Securities Law in the Sixties]; A.C. Pritchard & Robert B. Thompson, Securities Law and the New Deal Justices, 95 VA. L. REV. 841 (2009) [hereinafter Pritchard & Thompson, New Deal Justices]; and A.C. Pritchard, Justice Lewis F. Powell, Jr., and the Counterrevolution in the Federal Securities Laws, 52 DUKE L.J. 841 (2003) [hereinafter Pritchard, Powell and the Counter-Revolution]. PRITCHARD & THOMPSON 8/22/2021 9:55 PM 884 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 Justices to the Court, many of them warriors in the legislative and judicial battle to assert “social control of finance.” Their appointments led to a seismic change in the Court’s approach to federal legislation. The Court’s prior hostility toward eco- nomic regulation that interfered with freedom of contract— the hallmark of the “classical” tradition—dissolved, seemingly overnight. The new attitude reflected deference to the fledg- ling SEC. After a period of relative neglect in the 1950s, the securi- ties cases of the 1960s unleashed a dramatic change in the Court’s role, if not its direction. Moving beyond mere defer- ence to the SEC’s expertise, the Court took the lead in shifting insider trading from a clunky statutory regime to one built on judicially defined rules. The Court also implied private causes of action for fraud under federal securities law. Those new- found causes of action paved the way for securities fraud class actions to overshadow the public enforcement regime passed by Congress in the 1930s. The Court’s newfound activism would be short lived, and not repeated. For most of the 1970s and 80s, the Court’s secu- rities decisions were as restrictive as the earlier periods had been expansive, with the SEC repeatedly rebuffed. That coun- terrevolution reflected the impact of one Justice in particular: Lewis Powell. After Powell’s retirement in 1987, the Court’s path in se- curities law took yet another direction or, perhaps more accu- rately, became directionless. The Court’s decisions were nei- ther consistently expansive nor restrictive. The pattern might be described as equipoise or, less charitably, indifference. These distinct shifts illustrate four approaches by the Court in dealing with securities law. Such patterns, in turn, can help frame predictions for the future. Will history repeat itself? We acknowledge, and indeed have emphasized in our prior work, the specific features of each period that shaped the Court’s jurisprudence during those eras. Those features may well not be replicated going forward. Add the impact of con- stant evolution in the markets, and the predictive enterprise becomes still more fraught. Past results are no guarantee of future performance. PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 885 At the same time, as our elephant metaphor suggests, the Supreme Court’s docket is a small slice of the universe of se- curities law. The Court’s cases have skewed toward certain topics, although the topics have varied with each era. For ex- ample, the Public Utility Holding Company Act (PUHCA),2 the New Deal statute that dominated the Court’s securities docket in the 1930s and 40s, quickly lost pertinence. Rule 10b- 5,3 promulgated by the SEC in 1942 but not addressed by the Court until 1969,4 has repeatedly captured the Court’s atten- tion in the time since. Other broad areas, no less important in the practice of securities law, have drawn little attention from the Court. For example, issues under the Securities Act,5 such as registration, exemptions, and resales, have been the sub- ject of few Court decisions. The Court’s lack of attention to these areas, notwithstanding their enormous economic signif- icance, is likely inevitable, reflecting the vagaries of litigation and the certiorari process. Nonetheless, that process results in the Court addressing only a narrow sub-sample of securi- ties law issues. The Court’s limited focus is likely to persist. With these caveats in mind, we look to the history of secu- rities law in the Supreme Court to offer some predictions about its future. Part II describes the prior eras and the dis- tinctive judicial approaches visible in the Supreme Court’s se- curities cases. Part III evaluates the predictive power of the previous four dominant Supreme Court approaches in 2 Public Utility Holding Company Act (PUHCA), Pub. L. No. 74-333, 49 Stat. 803 (1935), repealed by Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594. 3 Prohibition of Fraud by Any Person in Connection with the Purchase or Sale of Securities, 7 Fed. Reg. 3,804 (May 22, 1942) (codified as amended at 17 C.F.R. § 240.10b-5 (2020)). 4 SEC v. Nat’l Sec., Inc., 393 U.S. 453 (1969). More than a decade prior, in Black v. Amen, the Court was prepared to remand to the lower court to consider if Rule 10b-5 carries with it a private cause of action, see Letter of Felix Frankfurter, Just., U.S. Sup. Ct., to Earl Warren, Chief Just., U.S. Sup. Ct. (Nov. 20, 1957) (on file with the Felix Frankfurter Collection pt. 3, reel 4, Harvard Law School), but the case settled before the Court’s order was issued. 355 U.S. 600 (1958). 5 Securities Act of 1933 (Securities Act), Pub. L. No. 73-22, 48 Stat. 74 (codified as amended at 15 U.S.C. §§ 77a–77mm (2019)). PRITCHARD & THOMPSON 8/22/2021 9:55 PM 886 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 explaining the current environment for securities law at the high court. We also speculate about some issues that may be- come prominent in the Court’s docket down the road. II. THE SUPREME COURT’S EVOLUTION IN FEDERAL SECURITIES LAW 1933–2021 The federal securities laws and their administrator, the SEC, were born at a time when the constitutional framework of American government was being fundamentally rethought. The widespread economic distress of the Great Depression brought calls for reform, captured by the phrase “social control of finance.”6 As part of that process, the Supreme Court was challenged to reconsider its role in enforcing constitutional limits on the federal government. In less than a decade, the Court abandoned its “classical” approach, reflecting hostility toward regulation that interfered with “freedom of contract” or businesses that had only an “indirect” effect on interstate commerce. The Court essentially abandoned the limits it had enforced, more or less rigorously, over the prior half century. The Court’s new trajectory—directed by a wave of Roosevelt appointees—enthusiastically embraced the New Deal agenda of social control of finance. This radical transformation was the first of four very visible shifts in how the Court has ap- proached securities law. A. From Restrictive Oversight of Regulation to Broad Support of Agency Expertise The Supreme Court’s first federal securities law decision, Jones v. SEC in 1936, was a shocking rebuke to the Roosevelt administration, then beginning its fourth year.7 The Court overturned an administrative action brought by the still nas- cent SEC. The question before the Court was a narrow one of a registrant’s right to withdraw a registration statement. The agency had sought to rein in the behavior of a promoter of oil 6 See Pritchard & Thompson, New Deal Justices, supra note 1, at 846– 72. 7 Jones v. SEC, 298 U.S. 1 (1936). PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 887 and gas securities, and the promoter had sought to evade the agency’s regulatory reach by abandoning his offering. The Court’s language was caustic, impugning the dogged efforts of the SEC as threatening civil liberties. Justice George Suther- land, the intellectual leader of the “classical” tradition on the Court, wrote for the majority, going so far as to compare the fledgling agency’s procedures with the infamous Star Cham- ber of sixteenth-century England.8 Despite the narrow ques- tion decided (the agency had no authority over Jones after he withdrew his offering), the Court’s rhetoric did not bode well for the judicial prospects of the other securities statutes that had been enacted by Congress during Franklin Roosevelt’s first term, which were making their way up the judicial lad- der toward the Supreme Court. Sutherland’s rhetoric in Jones was shrill, but his approach proved to be the last gasp of the ancien régime that had pre- vailed for decades. The following term, the Court embraced a more accommodating approach to the regulatory statutes of the New Deal.9 By the end of that term, Willis Van Devanter, one of the “Four Horsemen” resisting the constitutional revo- lution, had retired.10 His retirement, encouraged by Congress providing more generous retirement pay for the Justices,11 was quickly followed by others. Those departures opened the 8 Id. at 28. 9 The change is usually marked by West Coast Hotel Co. v. Parrish, 300 U.S. 379, 400 (1937) (upholding Washington’s state minimum wage act). See also NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 43 (1937) (upholding the National Labor Relations Act); Charles C. Steward Mach. Co. v. Davis, 301 U.S. 548, 598 (1937) (upholding Social Security tax). 10 Letter from Willis Van Devanter, Just., U.S. Sup. Ct., to Franklin Roosevelt, President, United States (May 18, 1937), http://3197d6d14b5f19f2f440- 5e13d29c4c016cf96cbbfd197c579b45.r81.cf1.rackcdn.com/collection/pa- pers/1930/1937_0518_VanDevanterRetirement.pdf [https://perma.cc/EGA6-KGYC]. 11 See Judge Glock, Unpacking the Supreme Court: Judicial Retirement and the Road to the 1937 Court Battle, 106 J. AM HIST. 47, 49 n.6 (2019). PRITCHARD & THOMPSON 8/22/2021 9:55 PM 888 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 door for Roosevelt to appoint eight Justices in just over five- and-a-half years.12 Roosevelt’s appointees came to the Court with back- grounds that substantially differed from their predecessors’. Almost all his picks had gained front-line experience across the legislative, executive or judicial processes in (1) the battle to enact the securities and other regulatory statutes of the New Deal, (2) shaping the initial policies of the agencies that oversaw an increased regulatory oversight of the economy, or (3) defending the new laws against a hostile judiciary during Roosevelt’s first term. Felix Frankfurter, for example, while serving as a Harvard law professor was a key advisor to the Roosevelt administration in its efforts to draft the Securities Act of 1933 and the Securities Exchange Act of 1934,13 which empowered the SEC to oversee the stock exchanges and im- pose disclosure requirements on public corporations. He also lobbied for PUHCA in 1935, playing a critical role in mid- wifing its notorious “death sentence” provision intended to dismantle the public utility conglomerates of the day.14 Hugo Black, Roosevelt’s first appointee to the Court, also played a key role in enacting PUHCA, leading the battle in the Senate against public utility lobbying.15 Stanley Reed had been Solic- itor General, among other key legal posts in the Roosevelt ad- ministration, and he argued the first regulatory cases that went to the Supreme Court.16 His successor as Solicitor Gen- eral, Robert Jackson, had worked his way to that post in part by playing a key role defending the new securities laws in court.17 Jackson left his role as the government’s top advocate 12 Those appointed were Hugo Black, Stanley Reed, William Douglas, Felix Frankfurter, Frank Murphy, Robert Jackson, James Byrnes, and Judge Wiley Rutledge. Roosevelt also appointed Associate Justice Harlan Fiske Stone as Chief Justice when Charles Evans Hughes retired in 1941. 13 Securities Exchange Act of 1934 (Securities Exchange Act), 73 Pub. L. No. 291, 48 Stat. 881 (codified as amended at 15 U.S.C. §§ 78a–78qq (2019)). 14 Pritchard & Thompson, New Deal Justices, supra note 1, at 862–68. 15 See id. at 867. 16 Id. at 879. 17 See id. PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 889 to replace Frank Murphy as Attorney General when Roosevelt appointed Murphy to the Court. William O. Douglas, like Jackson a close confidant of Roosevelt’s,18 was the third chair of the SEC. In that role, he pushed the agency to displace the traditional power brokers of the New York Stock Exchange and began the process of dismantling the public utility con- glomerates.19 The new securities laws reflected a fundamental shift in the role of government and administrative agencies. Social control of finance called for a new kind of government relying on agency expertise. The securities laws, and the SEC in par- ticular, were at the center of this political movement.20 Roose- velt’s transformation of the Court laid the groundwork for the SEC to enjoy an almost unbroken winning streak in the Su- preme Court for the first four decades after the agency’s crea- tion in 1934. During that time, the Court consistently deferred to the SEC’s financial expertise. Moreover, the Court seldom departed from an expansive interpretation of the securities laws. B. A Purposivist Court Further Extends the Reach of the Securities Laws After a somewhat fallow period for securities law generally in the 1950s, the 1960s brought the second shift in the Su- preme Court’s approach to securities. This decade is better known to lawyers and historians for the Warren Court’s ex- pansion of constitutional rights in multiple areas. The securi- ties decisions that expanded the reach of federal law were of a piece with the Court’s dominant jurisprudence of this era, if not as well known. The phrase “federal corporate law” was coined to capture the trend.21 18 L.A. Powe, Jr., Evolution to Absolutism: Justice Douglas and the First Amendment, 74 COLUM. L. REV. 371, 405 (1974). 19 Pritchard & Thompson, New Deal Justices, supra note 1, at 926. 20 See id. at 872. 21 See Arthur Fleischer, Jr., ‘‘Federal Corporation Law”: An Assess- ment, 78 HARV. L. REV. 1146, 1146 & n.2 (1965) (noting the rise of the similar phrase “federal law of corporations”). PRITCHARD & THOMPSON 8/22/2021 9:55 PM 890 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 During that decade, the Court not only continued the ex- pansive approach to interpreting the securities statutes that it had begun in the 1930s22 but went beyond the text of those statutes to find new remedies for investors. This judicial leg- islation to create remedies beyond those Congress had ex- pressly written into the securities laws was done in the name of extending those laws’ purpose, namely investor protection. This aggressive judicial expansion was primarily evident in two areas of the law—insider trading and the extension of im- plied private rights of action. The lower courts had relied on Rule 10b-5, promulgated by the SEC in 1942, to tackle many fiduciary breaches that were traditionally the province of state corporate law. The Supreme Court validated those broadly remedial interpretations in the 1960s and early 1970s, giving a green light to the lower courts to push still further in the name of investor protection.23 Congress had addressed insider trading in 1934, but only via the clunky, mechanistic remedy in section 16(b) of the Ex- change Act.24 That provision targeted manipulation by insid- ers more than trading on informational advantages, leaving many abuses unaddressed. By the end of the 1960s, the SEC had persuaded the Second Circuit to deploy the antifraud pro- visions of the Exchange Act to regulate insider trading,25 re- lying on an earlier Supreme Court decision in that decade em- bracing a broad reach for a similar provision of the Investment 22 On the rise of this approach in that era, see William N. Eskridge, Jr., The Case of the Speluncean Explorers: Twentieth-Century Statutory Inter- pretation in a Nutshell, 61 GEO. WASH. L. REV. 1731, 1737–40 (1993). 23 See J. I. Case Co. v. Borak, 377 U.S. 426, 432 (1964) (“While th[e] language [of section 14(a) of the Exchange Act] makes no specific reference to a private right of action, among its chief purposes is ‘the protection of investors,’ which certainly implies the availability of judicial relief where necessary to achieve that result.”). 24 Securities Exchange Act of 1934 (Securities Exchange Act), 73 Pub. L. No. 291, § 16(b), 48 Stat. 881, 896 (codified as amended at 15 U.S.C. § 78p(b) (2019)). 25 See generally SEC v. Tex. Gulf Sulphur Co., 401 F.2d 833 (2d Cir. 1968) (en banc). PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 891 Advisers Act.26 This move to attack insider trading had seemed impossible in 1934 and for decades thereafter,27 but the Second Circuit was emboldened by the Supreme Court’s purposivist approach. Similarly, the lower courts, and eventually the Supreme Court,28 extended the reach of Rule 10b-5’s prohibition against fraud in connection with the purchase or sale of a se- curity to give shareholders new remedies. These implied rights of action for shareholders allowed them to pursue mis- management claims against corporate directors, traditionally the province of fiduciary duty litigation under state corporate law.29 In Bankers Life, Justice William O. Douglas, writing for a unanimous Court, painted with a broad brush, linking tra- ditional securities regulation and fiduciary breaches by man- agers as all part of “a single seamless web” and therefore ac- tionable under federal securities laws.30 “Federal corporate law,” developed by the judiciary under the ostensible author- ity of the securities statutes, appeared poised to occupy the field. C. A Strict Constructionist Approach Until it didn’t. Securities law at the Supreme Court took a dramatic turn beginning in 1972. As with the two earlier shifts discussed above, the change reflected a broader trend afoot at the Court. Once again, securities cases were at the leading edge. Richard Nixon had run for the presidency in 1968, calling for the Supreme Court to follow “strict 26 See id. at 855 (citing SEC v. Cap. Gains Rsch. Bureau, 375 U.S. 180, 195 (1963)). 27 See WILLIAM H. PAINTER, THE FEDERAL SECURITIES CODE AND CORPO- RATE DISCLOSURE 221-23 (1979) (discussing the traditional approach to fraud that did not extend to nondisclosure in trading in anonymous mar- kets). 28 Superintendent of Ins. v. Bankers Life & Cas. Co., 404 U.S. 6, 13 n.9 (1971). 29 See generally Arthur Fleischer, Jr., Federal Regulation of Internal Corporate Affairs, 29 BUS. LAW. 179 (1974). 30 Bankers Life, 404 U.S. at 11–12 (attempting to distinguish, however, mere “internal corporate mismanagement”). PRITCHARD & THOMPSON 8/22/2021 9:55 PM 892 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 construction” in construing the Constitution.31 Nixon’s cam- paign, and subsequent appointments, were directed more to- ward criminal procedure, and produced some incremental change in that space.32 By contrast, the change was consider- ably more pronounced in the field of securities law. Nixon had made two appointments to the Court in his first two years—Chief Justice Warren Burger and Justice Harry Blackmun—but neither altered the path of securities law set in the 1960s. Indeed, Burger and Blackmun joined the most expansive of the securities decisions, including Douglas’s Bankers Life “seamless web” decision, the apogee of the pur- posivist approach.33 But the arrival of Lewis Powell and Wil- liam Rehnquist on the same day in January 1972 marked a 180 degree turn in the Court’s approach to securities law. The SEC’s winning streak at the Court ended; the Court’s next twenty-five securities decisions would be uniformly restric- tive, with opinions emphasizing statutory text.34 It is difficult to imagine a sharper turnabout of a dominant trend on any topic regularly addressed by the Supreme Court. This sea change was driven by the influence of one Justice: Lewis Powell.35 Powell had practiced corporate and securities law for three decades prior to joining the Court.36 When he donned the black robe, Powell did not leave his interest in se- curities law behind. More particularly, he viewed the Court’s free-wheeling approach of the 1960s as a disaster.37 Powell’s influence, backed by experience and expertise, not only 31 See Keith E. Whittington, Taking what They Give Us: Explaining the Court’s Federalism Offensive, 51 DUKE L.J. 477, 505 (2001). 32 See id. 33 The other notably broad decision is Blackmun’s opinion for the Court in Affiliated Ute Citizens v. United States, 406 U.S. 128, 152–53 (1972) (adopting a presumption of reliance for fraudulent omissions). 34 See E. Thomas Sullivan & Robert B. Thompson, The Supreme Court and Private Law: The Vanishing Importance of Securities and Antitrust, 53 EMORY L.J. 1571, 1584 & fig.1, 1629 app. A (2004) (showing a nearly-unbro- ken stretch of “restrictive” securities decisions in the period after 1972). 35 See generally Pritchard, Powell and the Counter-Revolution, supra note 1. 36 Id. at 847–48. 37 See id. at 863–65. PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 893 pushed the Court toward more restrictive decisions, but also to take more securities cases. The result was a spike in the Court’s securities docket and a counterrevolution in the re- sults. Powell would be in the majority in thirty-nine of the forty securities decisions in which he participated during his tenure and would write eleven of the opinions, far more than any other Justice.38 The implied private rights of action that the Court had announced over the previous decade were re- stricted.39 Barriers were erected to the implication of any new implied claims.40 The deference that the SEC had tradition- ally enjoyed at the Court gave way to a much more skeptical view from the majority.41 Powell’s dominance of securities law during his fifteen years on the Court illustrates how one Jus- tice can influence the Court’s docket and direction. D. Equipoise or Indifference Powell’s influence can be seen not only in the Court’s hold- ings during his time on the bench—he wrote more majority opinions for the Court in securities cases than any other Jus- tice since the adoption of the securities laws42—but also in the change in the Court’s securities decisions once he retired. The restrictive view of the prior fifteen terms gave way to what 38 See id. at 858 tbl.1 (tallying that Justice Powell was in the majority of forty of forty-one securities decisions during his tenure, of which he wrote twelve). We are now of the view that there were forty securities decisions during Justice Powell’s tenure, and that Justice Powell wrote eleven of those opinions. Id. at 858 tbl.1 categorized Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974) as a securities decision. However, that case actually concerns an antitrust claim involving securities brokers where the Court decided the correct interpretation of Fed. R. Civ. P. 23. Eisen, 417 U.S. at 159. As such, while it is an important decision for securities law, it is not a securities de- cision per se. 39 See id. at 866–73. 40 See id. at 885–91. 41 Id. at 947. 42 See id. at 858 tbl.1 (tallying cases during Justice Powell’s tenure); John C. Coates IV, Securities Litigation in the Roberts Court: An Early As- sessment, 57 ARIZ. L. REV. 1, 8 tbl.2 (2015) (extending tally of securities law cases through 2014); Sullivan & Thompson, supra note 34, at 1629 app.A (collecting securities cases from 1936 onward). PRITCHARD & THOMPSON 8/22/2021 9:55 PM 894 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 has been essentially a fifty-fifty split between expansive and restrictive outcomes during the more than thirty years since Powell’s retirement.43 Moreover, the number of securities cases taken by the Court, which jumped dramatically when Powell arrived, dropped back to its pre-Powell level upon his retirement.44 In addition to that numerical decline, the issues resolved have seemed less important to the practice of securi- ties law.45 In the absence of the frontline experience of the New Deal Justices, the purposivist resolve of the 1960s Court, or the dominance of Powell, securities law has lost its bell- wether status in illustrating the larger movement of the Court. This most recent period thus offers a fourth pattern, with the Court’s decisions perpetually meandering. Securities law does not generate issues at the top of the country’s politi- cal agenda, as it did in the 1930s, and the Court has not had a Justice with a particular interest in the topic since Powell retired.46 The resulting path of securities law in the Supreme Court now looks more like a random walk. III. WHAT THE PAST MAY TELL US ABOUT THE FUTURE What does the past tell us about the future of the Supreme Court in the field of securities law? We begin in Section III.A by examining the likelihood that any of the four patterns iden- tified in Part II will recur. We then turn in Section III.B to consider issues that could alter the path of the Court’s deci- sions in securities. 43 See Coates, supra note 42, at 20. 44 See id. at 7, 8 & tbl.2. 45 For example, the Court now seems obsessed with statute of limita- tions issues in securities law. See, e.g., Merck & Co., Inc. v. Reynolds, 559 U.S. 633, 646–48 (2010) (interpreting statute of limitations for Rule 10b-5 claims). 46 See Coates, supra note 42, at 26 (“[N]o transactional lawyer—corpo- rate or securities from a nonlitigation perspective—has served on the Su- preme Court since Justice Powell.”). Coates’s observation remains true in 2021. PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 895 A. The Likelihood of the Reappearance of the Drivers of the 1930s, 60s, or 70s The first shift described in Part II was principally a re- sponse to the Great Depression, but it also reflected a rethink- ing of the constitutional status of federalism. State securities law was deemed inadequate to the task of investor protection, and federal law was introduced to shore up that weakness. Historical limits on Congress’s power under the Commerce Clause were swept away.47 The role of federalism would reemerge in each of the shifts of the Sixties and Seventies, al- beit in opposite directions. The aggressive purposivism of the Sixties was driven in part by dissatisfaction with the role of state courts in enforcing fiduciary standards.48 The Seventies represented a sharp repudiation of that trend and an affirma- tion of the states’ role in corporate law.49 Looking to the im- mediate future, however, we see little chance of another fun- damental shift of authority between the state and federal governments in the fields of corporate and securities laws. The Court’s first dramatic shift in securities law was the product of the devastating economic dislocation of the Great Depression. Both elites and the public had lost faith in the status quo given the breadth and depth of the economic pain of the era; the laissez faire of the classical legal tradition seemed repudiated by events on the ground. Franklin Delano Roosevelt’s Commonwealth Club speech during the 1932 pres- idential campaign presaged dramatic developments ahead.50 47 West Coast Hotel Co. v. Parrish gets much of the attention. 300 U.S. 379 (1937). United States v. Carolene Products Co. reflects the broader trend. 304 U.S. 144, 152 & n.4 (1938) (describing rational basis review). 48 See e.g., Superintendent of Ins. v. Bankers Life & Cas. Co., 404 U.S. 6, 11–12 (1971) (federal securities claims part of “a single seamless web” with state fiduciary duty claims). 49 See, e.g., Santa Fe Indus. v. Green, 430 U.S. 462, 473–74, 478–79 (1977). 50 Franklin Delano Roosevelt, Commonwealth Club Address (Sept. 23, 1932), https://www.americanrhetoric.com/speeches/fdrcommonwealth.htm [https://perma.cc/8FME-QN6F] (“Our task now is not discovery or exploita- tion of natural resources, or necessarily producing more goods. It is the so- berer, less dramatic business of administering resources and plants already PRITCHARD & THOMPSON 8/22/2021 9:55 PM 896 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 Felix Frankfurter, who played a role in the drafting of the first three securities acts during Roosevelt’s first term,51 had al- ready identified the need for a new approach to government in his Dodge Lectures at Yale in 1930. He set out the govern- ment’s failings and the skills that expert administrative agen- cies could bring in responding to economic crises.52 A similar fundamental change was visible—although slow to gain mo- mentum—in the Supreme Court’s approach to constitutional law and statutory interpretation. Over a fairly short period in the later 1930s and early 1940s, the Court abandoned the clas- sical approach that had dominated its early-twentieth century jurisprudence.53 The Court, rapidly transformed by Roose- velt’s second-term appointments, embraced a much broader role for the federal government and expert agencies in ad- dressing the country’s economic problems. The second and third shifts discussed in the previous Part saw a yo-yoing of authority between the state and federal gov- ernments. The free-wheeling interpretive approach of the Six- ties was propelled by a dominant liberal majority on the Court and dissatisfaction with the deficiencies of state law in ad- dressing fiduciary breaches to tame corporate mismanage- ment.54 Federal securities law—”federal corporation law”— threatened to displace state corporate law in governing the in hand, of seeking to reestablish foreign markets for our surplus produc- tion, of meeting the problem of under consumption, of adjusting production to consumption, of distributing wealth and products more equitably, of adapting existing economic organizations to the service of the people. The day of enlightened administration has come.”). 51 Pritchard & Thompson, New Deal Justices, supra note 1, at 842 (de- scribing how Frankfurter helped choose the drafters of the SEC’s founding statutes). 52 FELIX FRANKFURTER, THE PUBLIC AND ITS GOVERNMENT 72–73 (1930). 53 The Court had struck down more than twenty Congressional laws between 1920 and 1932. See ARTHUR M. SCHLESINGER, JR., THE AGE OF ROO- SEVELT: THE POLITICS OF UPHEAVAL 455 (1st ed. 1960). 54 See Louis Loss, Remarks at the Conference on Codification of the Federal Securities Laws (1966), in 22 BUS. LAW. 917, 918 (1967) (“[W]hat we have from 10b-5 was overdue . . . . The common law was strangely lag- gard in appreciating the fiduciary obligations of directors and other insiders to shareholders.”). PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 897 relationship between management and shareholders.55 The pushback of the 1970s and 1980s, in turn, was a response to the perceived overreaching of the judiciary in promoting fed- eral corporate law on the basis of limited statutory author- ity.56 A more conservative Court shifted course to preserve the traditional views of limited federal government and the role of the states in corporate governance.57 We are skeptical that any of those shifts are likely to recur soon. The nation has experienced subsequent economic chal- lenges, with the Great Recession that began in 2007/2008 standing out as the most serious financial crisis since the 1930s.58 The lead-up to Great Recession exhibited some of the same greed and unconstrained market excesses that had marked the 1920s.59 The problems were exacerbated by the failure of regulators—including the SEC—to anticipate the rising dangers.60 The bailouts of key financial players and 55 Fleischer, supra note 21, at 1148 (“It is the thesis of this article that the growth of federal law in the corporate area is sound and consistent with the scope and purposes of the securities laws and that the critics’ attacks are misdirected.”). 56 See Pritchard & Thompson, Securities Law in the Sixties, supra note 1, at 430. 57 See Santa Fe Indus. v. Green, 430 U.S. 462, 473–74, 478–79 (1977). 58 See, e.g., Chart Book: The Legacy of the Great Recession, CTR. ON BUDGET & POL’Y PRIORITIES (June 6, 2019), https://www.cbpp.org/re- search/economy/the-legacy-of-the-great-recession [https://perma.cc/45JR- TWBK] (describing the Great Recession as the worst economic downturn in the United States since the Great Depression). 59 See, e.g., Systemic Risk: Examining Regulators’ Ability To Respond to Threats to the Financial System: Hearing Before the H. Comm. on Fin. Servs., 110th Cong. 12–13 (2007) (statement of Robert Kuttner, Editor, Am. Prospect) (“Although the particulars [of the Great Depression and the Great Recession] are different . . ., financial history suggests that the risks and abuses are enduring. They are variations on a few hearty perennials: Excess leverage, conflicts of interest, nontransparency, misrepresentation, and en- gineered euphoria.”). 60 See, e.g., Stephen Labaton, S.E.C. Concedes Oversight Flaws Fueled Collapse, N.Y. TIMES (Sept. 26, 2008), https://www.ny- times.com/2008/09/27/business/27sec.html [https://perma.cc/Z75E-YAJ3] (describing an Inspector General’s report that concluded “that the S.E.C. division that oversees trading and markets had failed to update the rules of PRITCHARD & THOMPSON 8/22/2021 9:55 PM 898 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 enhanced financial reforms such as the Volcker Rule61 and the creation of the Financial Stability Oversight Council (FSOC)62 were the most dramatic regulatory changes in finance since the New Deal. But it was scarcely the regulatory tsunami of the 1930s. These new regulatory interventions were overlaid over the plethora of regulatory bodies that had grown up since 1929. The Great Recession did not fuel a political movement to displace the SEC and other regulators, although Congress did lay on additional responsibilities.63 In the 1930s, the SEC had been the fair-haired child of reg- ulatory reform, perhaps because the agency was starting from a blank slate, unencumbered by pre-New Deal political com- promises. Moreover, the new agency was not populated with carry-overs from prior administrations, but instead became a magnet for enthusiastic New Dealers, many of them new to Washington.64 It was no surprise, then, that the Roosevelt ad- ministration assigned the SEC the central role when the gov- ernment took on the daunting task of reorganizing the holding companies that controlled electrical power production and gas distribution across the country.65 Three years later, the the [voluntary supervision] program and was ‘not fulfilling its obliga- tions.’”). 61 See Dodd–Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, § 619, 124 Stat. 1620–31 (2010) (codified as amended at 12 U.S.C. 1851 (2019)). 62 See id. § 113 (codified at 12 U.S.C. § 5323). 63 The Dodd-Frank Act in 2010 did add one new regulatory agency, the Consumer Financial Protection Bureau (CFPB). Id. § 1011 (codified at 12 U.S.C. § 5491). But the CFPB was limited in its impact by the Trump ad- ministration’s hostility including the pursuit of a Supreme Court challenge in which the Court declared the statute’s “for cause” limitation of the Pres- ident’s removal power over the Bureau’s single director unconstitutional. Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2197 (2020). 64 James Landis, a Harvard faculty member whom Felix Frankfurter brought to Washington to help draft the 1933 Act (along with two other Frankfurter protégés, Thomas Corcoran and Ben Cohen) became the second chair of the SEC. See Pritchard & Thompson, New Deal Justices, supra note 1, at 850, 870. William O. Douglas from the Yale faculty joined the staff of the new SEC and became its third chair. See id. at 852, 870. 65 See generally Public Utility Holding Company Act (PUHCA), Pub. L. No. 74-333, 49 Stat. 803 (1935) (entrusting administration of the statute to PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 899 Chandler Act gave the SEC a critical role in business reorgan- izations generally.66 In between, the agency, under the hard- driving leadership of William O. Douglas, a future Supreme Court Justice, had seized the lead in regulating the stock mar- kets. In his more ambitious moments, Douglas flirted not only with federal incorporation, but also with a government takeo- ver of investment banking.67 The SEC was the New Deal’s “go to” agency for regulating business. By 2008, the SEC seemed a much smaller cog in a much larger federal regulatory system, with the Treasury, the Fed- eral Reserve, and other agencies thought to be more signifi- cant. Moreover, the agency had utterly failed in its role of overseeing the risk management practices of the investment banks that played an outsize role in the unraveling of the fi- nancial markets.68 The implementation of the Volcker Rule, intended to limit that risk, was shared among five agencies.69 The SEC is one of nine agencies whose chairs serve on the FSOC under the Secretary of the Treasury.70 The SEC in- creasingly appears to be a small voice in a larger chorus. The financial crisis leading to the Great Recession demon- strated that the country remains susceptible to existential the SEC), repealed by Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594. 66 See Chandler Act, Pub. L. No. 75-696, ch. 10, 52 Stat. 840, 883–905 (1938), repealed by Bankruptcy Reform Act, Pub. L. No. 95-598, 92 Stat. 2549 (1978). 67 Letter from William O. Douglas, Professor, Yale L. Sch., to Felix Frankfurter, Professor, Harvard L. Sch. 2 (Feb. 19, 1934); Letter from Wil- liam O. Douglas, Chairman, U.S. Sec. & Exch. Comm’n, to Henry A. Wal- lace, Sec’y, U.S. Dep’t of Agric. 3–4 (Apr. 11, 1938) (on file with the William O. Douglas Collection, Library of Congress) (advocating a system of govern- ment investment banking). 68 See, e.g., Labaton, supra note 60. 69 Volcker Rule, BD. OF GOVERNORS OF THE FED. RSRV. SYS., https://www.federalreserve.gov/supervisionreg/volcker-rule.htm [https://perma.cc/R5LF-FBP6] (last updated Jan. 30, 2020); Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111–203, § 619, 124 Stat. 1376, 1620–31 (2010) (codified as amended at 12 U.S.C. 1851 (2019)). 70 Dodd–Frank Wall Street Reform and Consumer Protection Act § 111(b)(1) (codified at 12 U.S.C. 5321(b)(1)). PRITCHARD & THOMPSON 8/22/2021 9:55 PM 900 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 crises of the sort seen in 1929. But the threats that loom larg- est today—climate change and pandemics, for example—are more environmental than financial. They seem removed from the core of securities law, although politicians will endeavor to squeeze them in, as with conflict minerals.71 It seems un- likely that finance will prove the key battleground for working out larger issues of government anytime soon, as it did in the Thirties and Forties. The enactment of PUHCA in 1935,72 and the Chenery cases in the 1940s,73 were major steps forward in bold experiments in government. So, too, albeit in a different space, were the implied private rights of action cases decided by the Court in the 1960s.74 Those cases gave rise to the con- cept of the “private attorney general,” revolutionary in its day.75 Today, the securities cases that do reach the Court do not seem important even for the securities field itself, much less for any other area of the law or government. The run of Democratic control of both the White House and Congress that paved the way for the federal securities laws in the Thirties has given way to frequently divided government and regular trading of control of the White House and the two chambers of Congress.76 That alternating hold on power has 71 Requirement of Report Regarding Disclosure of Registrant’s Supply Chain Information Regarding Conflict Minerals, 17 C.F.R. § 240.13p-1 (2020) (reporting requirements for registered companies that need conflict minerals for “the functionality or production of a product manufactured” by the company). 72 Public Utility Holding Company Act (PUHCA), Pub. L. No. 74-333, 49 Stat. 803 (1935), repealed by Energy Policy Act of 2005, Pub. L. No. 109- 58, 119 Stat. 594. 73 SEC v. Chenery Corp. (Chenery I), 318 U.S. 80 (1943); SEC v. Chenery Corp. (Chenery II), 332 U.S. 194 (1947). 74 See, e.g., J. I. Case Co. v. Borak, 377 U.S. 426, 430–31 (1964) (recog- nizing a private cause of action under Rule 14a-9 of the Securities Exchange Act). 75 See, e.g., Piper v. Chris-Craft Indus., 430 U.S. 1, 61 & n.13 (1977) (Stevens, J. dissenting)) (describing and defending private attorney general enforcement of securities, antirust, and civil rights law). 76 From 1933 until 1947, Democrats controlled the Presidency, the House, and the Senate. One political party has not had a unified govern- ment for more than four years in a row since 1969. See Party Divisions of the House of Representatives, 1789 to Present, U.S. HOUSE OF PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 901 generated little legislation to drive the Court’s caseload in se- curities, as PUHCA did in the Forties. Tender offer regulation, which generated a brief run of cases after Congress enacted the Williams Act in 1968, no longer gets any attention from the Court.77 Proxy regulation has infrequently returned to the Court since the lightning bolt of J. I. Case Co. v. Borak in 1964 gave rise to implied rights of action.78 The spike in the Court’s securities docket during Powell’s time can mainly be at- tributed to his influence;79 Congress did next to nothing in the field of securities law during Powell’s era to provoke a judicial response. The two biggest deregulatory acts in the history of federal securities law, the Private Securities Litigation Re- form Act of 1995 (PSLRA)80 and the Jumpstart Our Business Startups (JOBS) Act of 2012,81 both passed during times of divided government,82 have not generated Supreme Court cases that changed the direction of securities law, much less the law more generally. The key PSLRA issues were largely resolved by Congress, leaving the Court to resolve residual REPRESENTATIVES, https://history.house.gov/Institution/Party-Divi- sions/Party-Divisions/ [https://perma.cc/4KWH-ZSGP] (last visited Mar. 3, 2021); Party Division, U.S. SENATE, https://www.senate.gov/history/party- div.htm [https://perma.cc/39FL-QJCK] (last visited Mar. 3, 2021); Presi- dents, THE WHITE HOUSE, https://www.whitehouse.gov/about-the-white- house/presidents/ [https://perma.cc/A3GT-S67A] (last visited Mar. 3, 2021). 77 See, e.g., Rondeau v. Mosinee Paper Corp., 422 U.S. 49 (1975). The most recent Supreme Court case interpreting the Williams Act was decided in 1997. See United States v. O’Hagan, 521 U.S. 642 (1997). 78 Borak, 377 U.S. at 430–31. 79 See supra Section II.D. 80 Private Securities Litigation Reform Act of 1995 (PSLRA), Pub. L. No. 104-67, 109 Stat. 737 (codified as amended in scattered sections of 15 U.S.C.). 81 See Jumpstart Our Business Startups Act (JOBS Act), Pub. L. No. 112-106, 126 Stat. 306 (2012) (codified as amended in scattered sections of 15 U.S.C.). 82 Republicans controlled one or both houses of Congress, while Demo- crats were in the White House for both. See Party Divisions of the House of Representatives, 1789 to Present, supra note 76; Party Division, supra note 76; Presidents, supra note 76. Congress adopted the PSLRA over President Bill Clinton’s veto. MITCHEL A. SOLLENBERGER, CONG. RSCH. SERV., 98-147, PRESIDENT CLINTON’S VETOES 2 tbl.1 (2004). PRITCHARD & THOMPSON 8/22/2021 9:55 PM 902 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 ambiguity, a routine task of statutory interpretation.83 We have not seen a return to the wholesale judicial legislation of the 1960s, with the Court filling in gaps in securities laws af- ter two decades of Congressional neglect. The issues raised by the JOBS Act—new regulatory exemptions for Reg A+ or pri- vate offerings or resales,84 or broader ways to avoid public company status85—have yet to generate any litigation for the Court and seem unlikely to do so. The important issues will be resolved by the SEC with minimal judicial intervention. Another key factor that has historically pushed securities law to the fore of the work of the Supreme Court—the pres- ence of Justices with experience or interest in the field—has also disappeared. We do not anticipate the return of a Justice with a deep personal knowledge of the regulatory context of securities law, a key feature of all three periods discussed above. There has been no Justice with knowledge or experi- ence in the field of securities since Powell retired in 1987. If anything, that gulf is wider than even the long passage of time suggests. Except for Chief Justice John Roberts, the Justices have who have joined the Court since Powell left have had no sustained experience working as attorneys for private enti- ties.86 Former academics and government lawyers now domi- nate the Court. All but one Justice—Justice Elena Kagan, who had been Solicitor General after a career as an academic— came to the Court from one of the federal appellate courts.87 Roosevelt’s appointees, by contrast, had cut their teeth in drafting the securities statutes, litigating the constitutional 83 See, e.g., A.C. Pritchard, Securities Law in the Roberts Court: Agenda or Indifference?, 37 J. CORP. L. 105, 108–09 (2011). 84 See JOBS Act sec. 401, § 3(b) (codified at 15 U.S.C. § 77c(b) (2019)). 85 See, e.g., JOBS Act § 501 (codified at 15 U.S.C. § 78l(g)(1)(A)). 86 See Coates, supra note 42, at 26. John Roberts served as an appellate lawyer at a law firm for nearly fifteen years. See Aaron M. Houck, John G. Roberts, Jr., BRITANNICA, https://www.britannica.com/biography/John-G- Roberts-Jr (on file with the Columbia Business Law Review) (last updated Jan. 23, 2021). However, he spent about as much of his career practicing in the public sector as in the private sector, and his work as an appellate law- yer at a Washington law firm traded on his government experience. See id. 87 Current Members, SUP. CT., https://www.supremecourt.gov/about/bi- ographies.aspx [https://perma.cc/98KT-ZPJQ] (last visited Mar. 3, 2021). PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 903 status of those statutes, or running the SEC.88 Given the cur- rent state of the nomination process, the likelihood that an- other Justice Powell is nominated to renew the Supreme Court’s interest in securities law seems vanishingly small. Where does that leave the Court in the field of securities law? The obvious answer is the continuance of the current norm, which has persisted since Powell left the Court in 1987. The Court takes far fewer securities cases, and its opinions bounce back and forth between those that expand the reach of regulation and those that cut it back. Rarely does a Supreme Court opinion make much of a difference at all to the practice of securities law. Basic Inc v. Levinson is the exception that proves the rule, and even that decision stands out for its fail- ure to grapple with the enormous economic consequences it engendered.89 The Court, presented with an opportunity to rein in the class action juggernaut it had released, took a pass in Halliburton II, going out of its way to disclaim any judicial role in reforming securities class actions notwithstanding the judiciary’s role in creating that cottage industry.90 The Court instead left it to Congress to develop any reforms. Given that hands off approach, underscored by the meandering path that the Court has followed for thirty years—a third of the Su- preme Court’s history with the federal securities law—we can- not discount the likelihood that the Court will continue to wander in the field of securities law. B. New Sources of Securities Litigation before the Supreme Court The random walk is the most obvious prospect, but not all that interesting. The theme of this Symposium calls on us to speculate, so we will. What could change the Court’s direction 88 See supra Section II.A. 89 Basic Inc. v. Levinson, 485 U.S. 224, 246–47 (1987) (permitting class action plaintiffs in a private securities fraud action under Rule 10b-5 to in- voke a rebuttable presumption of reliance, opening the way for broader set of 10b-5 claims against public companies). 90 Halliburton Co. v. Erica P. John Fund (Halliburton II), 573 U.S. 258, 277 (2014) (“These concerns are more appropriately left to Congress[.]”). PRITCHARD & THOMPSON 8/22/2021 9:55 PM 904 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 in securities law? One possibility is the impact of rapidly ad- vancing technology and international competition on securi- ties markets. It also seems possible that administrative law will return to the fore, this time driven by Chevron concerns. The latter possibility may be prompted by new federal regula- tory interventions to expand federal rules for public corpora- tions. 1. Technology Advances and Market Innovations Technology has disrupted securities markets in the twenty-first century more than either politics or any financial crisis. Consider, for example, the strict regulatory approach of the Securities Act with regards to new issues of securities.91 The Securities Act provoked controversy almost immediately upon its enactment.92 The intrusive regulatory approach of the initial act, with its draconian liability standards, survived an immediate effort to water it down during the first year af- ter its passage.93 In the decades that followed, the Act main- tained a strongly pro-regulatory approach. Wall Street made an uneasy peace with the regime developed by the SEC, per- haps because the industry profited from its anti-competitive aspects.94 Nonetheless, the Act’s rigorous disclosure require- ments and liability provisions have pushed market intermedi- aries to develop technologically-driven alternatives. As a re- sult, the economic footprint of the Act has been limited. 91 See 15 U.S.C. § 77e (2019). 92 See Pritchard & Thompson, New Deal Justices, supra note 1, at 856– 57. 93 See id. 94 Cf. Letter from Thomas Corcoran to Felix Frankfurter, Professor, Harvard L. Sch. 1 (May 11, 1934), http://3197d6d14b5f19f2f440- 5e13d29c4c016cf96cbbfd197c579b45.r81.cf1.rackcdn.com/collection/pa- pers/1930/1934_05_11_Corcoran_to_Frank.pdf [https://perma.cc/7AV6- EYVN] (“If Ray [Moley] is any barometer of what’s going on in the White House mind, the plan of battle is to avoid any further attempt at reforms that might bring down more criticism during the present Congress, arrange a ‘truce of God’, reorganize the machinery down here to help along business recovery this summer, and in every other way postpone all other considera- tions to the necessarily primary objective of winning the Congressional elec- tions.”). PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 905 Direct listing has now transformed from a seldom used means of accessing public trading markets into an attractive option.95 Companies following that route can raise new capital without jumping through the traditional hoops of extensive disclosure, SEC staff review, and market intermediaries whose potential liability has provided a restraining influence on issuer overreach.96 Special Purpose Acquisition Companies (SPACs), have gained an even larger presence as an alternative way to go public, essentially splitting the IPO process in two and by- passing some of the traditional scrutiny IPOs receive.97 Public investors are invited to buy shares in an empty shell company (i.e., a non-operating company) backed by a sponsor, often a celebrity.98 Only after the SPAC has gone public does the sponsor focus on a suitable, privately-held acquisition candi- date; a merger leaves the operating company as the surviving entity—now with publicly traded shares. The key difference is that the price of the operating company is not set, as in a tra- ditional IPO by an investment banker’s “book building” to see what price public investors are willing to pay for the shares, but rather by the sponsor negotiating the price with the pri- vate company’s managers.99 This alternative process has 95 The SEC approved new and broadened NYSE rules for direct listing in December 2020 as consistent with the Exchange Act. See Order Setting Aside Action by Delegated Authority and Approving a Proposed Rule Change, as Modified by Amendment No. 2, To Amend Chapter One of the Listed Company Manual To Modify the Provisions Relating to Direct List- ings, 85 Fed. Reg. 85,807, 85,807–10 (Dec. 29, 2020). 96 See Donald C. Langevoort & Robert B. Thompson, “Publicness” in Contemporary Securities Regulation After the JOBS Act, 101 GEO. L.J. 337, 338–39 (2013) (discussing attempts to avoid these obligations). 97 Amrith Ramkumar & Maureen Farrell, When SPACs Attack! A New Force Is Invading Wall Street, WALL ST. J. (Jan. 23, 2021, 12:00 AM) (on file with the Columbia Business Law Review), https://www.wsj.com/arti- cles/when-spacs-attack-a-new-force-is-invading-wall-street-11611378007. 98 See Celebrities Involvement with SPACS—Investor Alert, U.S. SEC. & EXCH. COMM’N (Mar. 10, 2021), https://www.sec.gov/oiea/investor-alerts- and-bulletins/celebrity-involvement-spacs-investor-alert [https://perma.cc/R5HW-GJ8V]. 99 See Ramkuma & Farrell, supra note 97 (describing several such ar- rangements). PRITCHARD & THOMPSON 8/22/2021 9:55 PM 906 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 allowed more ordinary investors to participate in IPOs, albeit in a more volatile market that has been more susceptible to short selling.100 Apart from these lightly-regulated ways to go public, the dramatic changes in availability of private capital have made it possible for startup companies to fund their capital needs for a much longer time without going to the public markets.101 The growth of private equity and venture capital have made the public markets optional for many growth companies. Such deep pools of finance were unavailable for most of the twenti- eth century. Regulatory changes have also facilitated the trend of staying private longer or even indefinitely. The JOBS Act raised the threshold for the number of shareholders that a company can have before triggering public company status, which carries with it the disclosure and governance require- ments of the Exchange Act.102 None of these market innovations affecting the regulatory footprint of securities laws have yet to find their way to the Supreme Court. The greater reliance on private finance and markets has left a greater share of securities transactions out- side the space from which the Supreme Court has tradition- ally drawn its securities docket. One of the most prominent examples in the innovative space known as FinTech has been bitcoin and other cryptocur- rencies. In the initial period of bitcoin use, it regularly 100 See Matt Wirz & Juliet Chung, Short Sellers Boost Bets Against SPACs, WALL ST. J. (Mar. 14, 2021, 5:30 AM) (on file with the Columbia Business Law Review), https://www.wsj.com/articles/short-sellers-boost- bets-against-spacs-11615714200. 101 See Robert B. Thompson & Donald C. Langevoort, Redrawing the Public-Private Boundaries in Entrepreneurial Capital Raising, 98 CORNELL L. REV. 1573, 1604–24 (2013) (tracing changes in the regulatory environ- ment and noting that startup companies have “[a]n alternative . . . to bypass [the securities] regulatory systems by staying indefinitely in the private, ac- credited-only markets” and that such an alternative is a “threat to public markets like NASDAQ and NYSE”). 102 Jumpstart Our Business Startups Act (JOBS Act), Pub. L. No. 112- 106, sec. 501, § 12(g)(1)(A), 126 Stat. 306, 326 (2012) (codified at 15 U.S.C. § 78l(g)(1)(A) (2019)). PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 907 generated the question whether the bitcoin itself was a secu- rity.103 The definition of a security is a question that has come before the Court more often than any other issue since 1933.104 The SEC initially took a cautious approach with cryp- tocurrency, suggesting it could be a security, but not launch- ing widespread enforcement.105 More recently, cryptocurrency issues have moved away from the definition of a security. In- stead, the debate around digital currencies addresses broader questions of payment systems and foreign exchange. Central bank digital currencies and Digital Dollars pose complex ques- tions regarding public and private developments of crypto money as innovative digital forms of currency.106 The move toward a cashless society has accelerated in recent years. These developments could remake the business of companies focused on payment systems. International issues likely will be recurring questions given the potential to transform for- eign exchange transactions and the potential effects on the money supply affecting both domestic economies and interna- tional economics. These questions could come to the Supreme Court, but it is unlikely they will put securities law at center stage. 103 See, e.g., generally, Jeffrey E. Alberts & Bertrand Fry, Is Bitcoin a Security?, 21 B.U. J. Sci. & Tech. L. 1 (2015). 104 See, e.g., generally, SEC v. W. J. Howey Co., 328 U.S. 293 (1946); Landreth Timber Co. v. Landreth, 471 U.S. 681 (1985); Reves v. Ernst & Young, 494 U.S. 56 (1990); SEC v. Edwards, 540 U.S. 389 (2004). 105 See Kevin Helms, SEC Chairman Jay Clayton Explains US Crypto Regulation, Calls Bitcoin a Store of Value, BITCOIN: NEWS (Nov. 23, 2020), https://news.bitcoin.com/us-cryptocurrency-regulation-sec-chairman-jay- clayton-bitcoin/ [https://perma.cc/2UUX-ZG2J] (reporting SEC Chairman Jay Clayton’s statement that “we are going to see more regulation around the payment space” (internal quotation marks omitted)). 106 See, e.g., generally John Crawford, Lev Menand & Morgan Ricks, FedAccounts: Digital Dollars, 89 GEO. WASH. L. REV. 113 (2021); Paul Wong & Jesse Leigh Maniff, Comparing Means of Payment: What Role for a Cen- tral Bank Digital Currency?, BD. OF GOVERNORS OF THE FED. RSRV. SYS., https://doi.org/10.17016/2380-7172.2739 [https://perma.cc/5HD5-MQF2] (last updated Apr. 12, 2021). PRITCHARD & THOMPSON 8/22/2021 9:55 PM 908 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 2. Chevron Questions One area that could take the Court’s work in securities law back to its origins is the Chevron doctrine. The doctrine takes its name from the Court’s unanimous 1984 decision upholding an Environmental Protection Agency regulation interpreting multiple pollution devices as a single statutory source under the Clean Air Act,107 but it has become the central focus of administrative law more generally. The case arose under en- vironmental statutes, but the underlying issue hearkens back to the Court’s earliest interactions with the securities laws. In particular, the Court’s 1940s securities decisions frequently sounded more in administrative law generally, rather than the specifics of securities law. The central question in many of the Court’s decisions that decade—most prominently in Chenery I and II—turned on how to interpret statutory si- lence. How much deference would the Court afford the SEC in filling in gaps in legislation? (The answer then was quite a lot).108 The Court held in Chevron, generally consistent with the views of the Court in Chenery II, that where Congress has not directly spoken on the precise question at issue, the agency determination is entitled to deference if it is a “reason- able accommodation of . . . competing interests.”109 The Court’s Chevron holding found a booster in Justice An- tonin Scalia, even though he did not join the Court until two years after the decision. Soon after coming to the Court, Scalia devoted a law school lecture to Chevron’s defense.110 More re- cent conservative Justices have been more skeptical, most no- tably Justice Clarence Thomas, who has specifically urged the Court to reexamine the doctrine.111 Justices Samuel Alito, 107 Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 866 (1984). 108 SEC v. Chenery Corp. (Chenery I), 318 U.S. 80, 92 (1943); SEC v. Chenery Corp. (Chenery II), 332 U.S. 194, 201–-03 (1947). 109 Chevron, 467 U.S. at 865. 110 See generally Antonin Scalia, Judicial Deference to Administrative Interpretations of Law, 1989 DUKE L.J. 511. 111 See Michigan v. EPA, 576 U.S. 743, 761–64 (2015) (Thomas, J., con- curring). PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 909 Neil Gorsuch, and Brett Kavanaugh have expressed skepti- cism, if not hostility, toward the doctrine.112 The challenge has been described as a desire to turn away from a system of bu- reaucratic rule that “has its root[s] in . . . the Progressive Era.”113 Those “roots” got room to grow from the New Deal Justices who played such an important role in enacting and defending the fledgling securities laws in the 1930s. Skepti- cism of Chevron strikes at the heart of the Progressive faith in expert decisionmaking that drove the creation of the SEC. The issue of deference to administrative agencies might well come to the fore during a time in which the presidency and the agencies are in the hands of one party, but legislative initiatives remain difficult with Congress closely divided. The current political environment, with a clear majority of the Court having been appointed by Republican Presidents and a Democrat in the White House working with thin majorities in both houses of Congress, may set the stage for a sequel to the confrontations of the 1930s. If such a disagreement arose in the field of securities law, a likely setting might be SEC rule- making relating to climate change disclosure or political con- tributions by public companies, current lightning rods on the SEC’s potential regulatory agenda. 112 See Jonathan H. Adler, Shunting Aside Chevron Deference, THE REGUL. REV. (Aug. 7, 2018), https://www.theregreview.org/2018/08/07/adler- shunting-aside-chevron-deference/ [https://perma.cc/99BB-BT6N]; Kent Barnett, Christina L. Boyd & Christopher J. Walker, Judge Kavanaugh, Chevron Deference, and the Supreme Court, THE REGUL. REV. (Sept. 3, 2018), https://www.theregreview.org/2018/09/03/barnett-boyd-walker-kavanaugh- chevron-deference-supreme-court/ [https://perma.cc/RW96-Q3WE] (re- counting Justice Kavanaugh’s doubts about Chevron); Gutierrez-Brizuela v. Lynch, 834 F.3d 1142, 1152–58 (2016) (Gorsuch, J., concurring). 113 Perez v. Mortg. Bankers Ass’n, 575 U.S. 92, 129 n.6 (2015) (Thomas, J., concurring in the judgment); see also Examining the Federal Regulatory System to Improve Accountability, Transparency and Integrity: Hearing Be- fore the S. Comm. on the Judiciary, 114th Cong. 3 (2015) (statement of Charles J. Cooper, Founding Partner and Chairman, Cooper & Kirk, PLLC) (“This vision of expansive bureaucratic power took hold in the Supreme Court’s jurisprudence in the early twentieth century, particularly during the New Deal.”). PRITCHARD & THOMPSON 8/22/2021 9:55 PM 910 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 3. Federal Corporate Law as a Possible Twenty- First Century Setting Corporate governance rules have long been the province of state law. Dissatisfaction with the perceived management bias in such rules has generated recurring efforts to displace the state system with federal incorporation. The initial push for federal incorporation during the Progressive period at the turn of the twentieth century garnered the most attention, with three consecutive Presidents—Theodore Roosevelt, Wil- liam Howard Taft, and Woodrow Wilson—supporting the move but no bill ever clearing Congress.114 During the New Deal, key players such as Adolf Berle and William O. Douglas supported federal incorporation,115 but they never persuaded Franklin Delano Roosevelt, who had other political priorities. Instead, the federal securities legislation of the 1930s—with the notable exceptions of PUHCA and the Chandler Act—fo- cused on disclosure to help make effective the corporate gov- ernance rights conferred by state law on shareholders. Wil- liam Cary, who personified the reinvigoration of securities regulation as Chair of the SEC during the 1960s, triggered a boomlet for federal corporate law with his insider trading de- cision for the SEC in 1961 in Cady Roberts.116 After his return to Columbia Law, Cary wrote an important law review article in the 1970s calling for federal minimum standards for corpo- rations.117 No broad legislation followed, however, as 114 See generally Camden Hutchinson, Progressive Era Conceptions of the Corporation and the Failure of the Federal Chartering Movement, 2017 COLUM. BUS. L. REV. 1017 (discussing the Progressive Era history of federal incorporation, the presidential support for it, and its loss of momentum dur- ing the Wilson administration). 115 Letter from William O. Douglas, Professor, Yale L. Sch., to A.A. Berle, Jr., Professor, Columbia L. Sch. (Jan. 3, 1934) (on file with the Wil- liam O. Douglas Collection, Library of Congress) (“You can count on me to pull an oar on federal incorporation . . . . [P]erhaps we can begin to get at the really fundamental problem of the increment of power and profit inher- ent in our present forms of organization[.]”). 116 See generally Cady, Roberts & Co., 40 S.E.C. 907 (1961). 117 William L. Cary, Federalism and Corporate Law, Reflections upon Delaware, 83 YALE L.J. 663, 700 (1974). PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 911 Congress was distracted by more salient political questions in the post-Watergate era. The only legislation was the Foreign Corrupt Practices Act of 1977118 targeting foreign bribery by U.S. companies, which fit awkwardly in the pattern of the fed- eral securities laws. Instead, one-off pieces of legislation provided repeated, if never comprehensive, federal requirements for public corpo- rations. For example, the two most significant securities stat- utes of the twenty-first century, Sarbanes–Oxley in 2002119 and Dodd–Frank in 2010,120 for the first time provided federal rules as to the required composition of boards of directors, re- quiring that the audit and compensation committees be com- prised of independent directors.121 State laws, by contrast, say nothing about requirements for directors. Federal law has also increased the items on which shareholders must vote, in- cluding requiring their approval of executive compensation, albeit only in an advisory role.122 The SEC, too, continues to use its existing powers to create broader disclosure require- ments and to expand shareholder rights. SEC rules have ex- panded disclosure in multiple areas to regulate the substance of corporate governance indirectly through “comply or ex- plain” disclosure requirements.123 The agency was requiring disclosure to put a thumb on the scale, not issuing mandates. 118 Pub. L. No. 95-213, 91 Stat. 1494 (1977) (codified as amended at 15 U.S.C. §§ 78m, 78dd-1 to -3). 119 Sarbanes–Oxley Act of 2002, Pub. L. No. 107-204, § 301, 116 Stat. 745, 775–77 (codified at 15 U.S.C. § 78j-1(m) (2019)) (directing the SEC to refuse to list issuers without an audit committee that is entirely independ- ent). 120 Dodd–Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, § 952, 124 Stat. 1376, 1900–03 (2010) (codified at 15 U.S.C. § 78j-3) (directing the SEC to decline to list issuers without an independent compensation committee). 121 Principal executive officers must certify that they have reported to the independent committees. 17 C.F.R. § 240.13a-14(b)(5) (2020). 122 15 U.S.C. §§ 78n(i), 78n-1. 123 See, e.g., 17 C.F.R. § 229.407(c)(1) (2020) (“If the registrant does not have a standing nominating committee or committee performing similar functions, state the basis for the view of the board of directors that it is appropriate for the registrant not to have such a committee and identify PRITCHARD & THOMPSON 8/22/2021 9:55 PM 912 COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 The D.C. Circuit—the most common court for reviews of regulatory challenges—has on occasion struck down SEC rulemaking efforts, particularly if new rules strayed beyond disclosure. For example, the appellate court struck down SEC rulemaking in 1990 that effectively banned dual class shares, a management entrenchment device which long had been per- mitted by state laws.124 The court reasoned that the rule would establish a federal corporate law which exceeded the agency’s statutory authority.125 Twenty years later, another D.C. Circuit panel struck down an SEC rule that expanded shareholder powers to use the company’s proxy to nominate candidates for election to the board of directors.126 That chal- lenge could have been based on federalism, as was the one to dual class rulemaking just discussed. During the SEC rule- making process, however, Congress in the Dodd–Frank Act included a specific section authorizing the agency to adopt such a rule,127 so the appellate court instead rejected the rule as arbitrary and capricious for failing the cost-benefit require- ments for SEC rulemaking imposed by the Exchange Act.128 Neither of these decisions were reviewed by the Supreme Court. But if a securities case were to be the basis for a Chev- ron decision, it likely would be one grounded in corporate gov- ernance rulemaking or a disclosure mandate relating to cor- porate social responsibility. Proposals for federal incorporation resurfaced during the Democratic presidential primaries in 2020 but failed to gain much traction.129 Pro- posals relating to corporate social responsibility have become each director who participates in the consideration of director nominees.”); Sarbanes-Oxley Act of 2002 § 406(a) (codified at 15 U.S.C. § 7264(a)) (re- quiring companies to adopt a code of ethics or explain why they have not). 124 Bus. Roundtable v. SEC, 905 F.2d 406, 407, 417 (D.C. Cir. 1990). 125 Id. at 412 126 Bus. Roundtable v. SEC, 647 F.3d 1144, 1146 (D.C. Cir. 2011). 127 Dodd–Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, sec. 971(a), § 14(a), 124 Stat. 1376, 1915 (2010) (codi- fied at 15 U.S.C. § 78n(a)(2)). 128 Business Roundtable, 647 F.3d at 1148. 129 See, e.g., Empowering Workers Through Accountable Capitalism, WARREN DEMOCRATS, https://elizabethwarren.com/plans/accountable-capi- talism [https://perma.cc/Z4AL-YBRD]. PRITCHARD & THOMPSON 8/22/2021 9:55 PM No. 2:881] THE FUTURE OF SECURITIES LAW IN THE SUPREME COURT 913 a prominent part of progressives’ political agenda for public corporations.130 If one or more became part of the SEC’s agenda, a challenge in the D.C. Circuit—which retains a ma- jority of Democratic appointees—would be likely. It is not dif- ficult to imagine that such a challenge to agency rulemaking on Chevron grounds might attract the Supreme Court’s atten- tion. IV. CONCLUSION The securities context that so captured the New Deal Court’s embrace of agency deference—in the Chenery cases and others—might well provide a twenty-first century Su- preme Court revisit of that almost century-old switch. Absent such a combination, securities are likely to be something of a backwater for some time to come, with meandering results. The pathbreaking role that securities law played during the New Deal and the Sixties and Seventies remains a remote pos- sibility for the Supreme Court as currently configured. 130 See, e.g., BUS. ROUNDTABLE, STATEMENT ON THE PURPOSE OF A COR- PORATION 1 (2021), https://system.businessroundtable.org/app/up- loads/sites/5/2021/02/BRT-Statement-on-the-Purpose-of-a-Corporation- Feburary-2021-compressed.pdf [https://perma.cc/D9CD-4NQB]. The Busi- ness Roundtable released its statement in 2019, but it continues to collect signatures. Id.