Efficient Markets and the SEC: Examining the Relationship Between Markets and Their Legal Constituent

Abstract

This paper will address two main ideas. The first will deal with the experiences gained through a two-month internship at Springstead Law Offices. This section will succinctly describe the work done, activities participated in, and provide an in-depth look into concepts learned and studied throughout the duration of the internship. This portion will provide insight into the daily responsibilities that a lawyer encounters and the immense difficulty of balancing time between these tasks and a sense of normalcy with the rest of their life outside of the law. The second section of this paper will discuss markets as they relate to the efficient market hypothesis and the positive and negative effects of the actions and laws of the legal body governing these markets, the SEC, from the perspective of an investor and from a legal standpoint as well. This paper will closely examine the SEC and provide specific and detailed examples that both support and refute the efficient market hypothesis in an attempt to answer the following question: Do the regulations set forth by the SEC make the market more or less efficient, hopefully confirming the former, and are there possibly other laws and or regulations the SEC could put in place to alleviate some of the issues that may be the cause of some inefficiency? This paper will intertwine both topics on a detailed and broad spectrum in attempt to provide a cohesive interpretation of how markets interact with their legal constituent. The aim is to apply the experiences gained during the legal internship and apply them to previously learned economic theory to determine whether economics or legal concepts are more influential on the efficiency of the market as a whole.