EXPRESS LANE OR TOLLBOOTH IN THE DESERT? THE SEC'S FRAMEWORK FOR SECURITY ISSUANCE

• DOI: http://doi.org/10.1111/j.1745-6622.1998.tb00074.x
• Author: Erik R. Sirri,Jennifer E. Bethel
• Published date: 01 March 1998
• Date: 01 March 1998

Journal of Applied Corporate Finance

SPRING 1998 VOLUME 11.1

Express Lane or Tollbooth in the Desert?

The SEC’s Framework for Security Issuance

by Jennifer E. Bethel and Erik R. Sirri,

U.S. Securities and Exchange Commission

25

JOURNAL OF APPLIED CORPORATE FINANCE

by Jennifer E. Bethel and Erik R. Sirri,

U.S. Securities and Exchange Commission*

25

BANK OF AMERICA JOURNAL OF APPLIED CORPORATE FINANCE

I

n 1935, issuers registered $913 million

of securities in 284 issues with the

nascent Securities and Exchange Com-

EXPRESS LANE OR

TOLLBOOTH

IN THE DESERT?

THE SEC’S FRAMEWORK

FOR SECURITY ISSUANCE

mission (SEC). We know little about what went

through the minds of treasurers of that day when they

considered options for raising capital, but we can

make some reasonable guesses. First, they were

operating in a country that at the time did not have

an “equity culture,” in that most companies’ equity

holdings were concentrated in the hands of a few

wealthy and financially sophisticated investors. The

average person did not own common stock. Commu-

nication between issuers and investors was relatively

simple and slow, at least by modern standards.

Finally, the country was in the midst of a depression

during which, half a decade before, the stock market

had lost 50% of its value within a year.

* We gratefully acknowledge helpful discussions with Joe Babits, John Britt,

Tamar Frankel, Stuart Gillan, Julie Hoffman, Barbara Jacobs, Anita Klein, Brian

Lane, Patricia Miller, and Petros Tsirigotis. The Securities and Exchange Commis-

sion, as a matter of policy, disclaims responsibility for any private publication or

statement by any of its employees. The views expressed in this paper are those

of the authors and do not necessarily reflect those of the Commission or its staff.