On March 15, Brooklyn Law School hosted the 2011 Abraham L. Pomerantz Lecture to discuss securities regulation in the context of today’s lightening-speed financial markets and the snap decisions they demand.
Frank Partnoy, the George E. Barrett Professor of Law and Finance and co-director of the Center for Corporate and Securities Law at the University of San Diego School of Law, as well as one of the world’s leading experts on the complexity of modern finance and financial market regulation, gave a thoughtful and nuanced keynote speech.
In his talk, entitled “Don’t Blink: Snap Decisions and Securities Regulation,” Partnoy addressed the speed of contemporary securities markets, the “crush of technology” responsible, and the costs and benefits of the rate at which new information comes to light and decisions are made. He argued that few had time to think carefully during the 2008 financial crisis or the “flash crash” of May 6, 2010 (when stocks plunged roughly six percent in minutes and then rebounded almost as quickly).
“Two seconds is rarely the optimal amount of time to make a decision,” Partnoy said. “The financial crisis could have been avoided had more time been taken to analyze information.” He argued that current-day securities regulation would benefit greatly from “the art and science of delay: knowing when to go fast, and when to go slow.” He also advocated more and better discussion of worst-case scenarios in securities law, but, he explained, “Dodd/Frank doesn’t do that.” As a result, banks are not incentivized to exercise more protracted decision-making processes.
Commentators Kent Greenfield, Professor of Law and Law Fund Research Scholar at Boston College Law School, and Kristin Johnson, Associate Professor of Law at Seton Hall University School of Law, both specialists on the law of financial products, remarked on Partnoy’s keynote and discussed their recent scholarship.
Greenfield addressed how group decision-making can be influenced by common biases of human thought and judgment, and argued that “when we make decisions as groups, we should encourage dissent, encourage different perspectives” and focus by individuals on their respective areas of expertise to prevent negative outcomes. Johnson shared her thinking on microeconomic factors and individual versus deliberative decision-making in the context of risk management. All three participants agreed that delay strategies – for example adding infrastructural delays that prevent hasty action or even mandating lunch breaks during the trading day – could lead to effective restructuring of securities laws.
The discussion was moderated by Professor James Fanto, Brooklyn Law School’s resident securities law expert, who also organized the lecture. Those in attendance had the opportunity to engage in rich discussion with the speakers at a post-lecture reception.
The Pomerantz Lecture honors the life and work of Abraham L. Pomerantz ’24, a highly respected securities lawyer and a champion of investors’ rights. The annual lecture series is sponsored by Pomerantz Haudek Grossman and Gross LLP and focuses on topics of corporate securities law and related issues of professional responsibility.
Learn more about the lecture series.
View the 2011 lecture.