State Regulation of Securities

The events of the last two decades have raised the question of regulating securities into one of national importance. Inasmuch as the federal government has assumed the task of regulating the sale of securities in interstate commerce or through the mails,' it seems desirable to limit the scope of this article to the question of intra-state regulation. The possible limits of state regulation extend from a laissez faire policy to the other extreme of strict regulation and control for the benefit of society in general, without regard to the effect on the stockholders. In our modern industrial society, a laissez faire policy seems to be entirely out of the question. Likewise, regardless of the possible merits, the other extreme must also be discarded on the assumption that extremes are ipso facto undesirable. Although the two extremes have been eliminated, we still face the fact that regulation for the mere sake of regulation cannot be justified. Regulation must be beneficial to society in order to be justifiable. It would be possible to have regulation for the sole benefit of customers, creditors, society, bondholders, stockholders, or the corporation itself. But which group should receive preferential treatment?