26 J. Corp. L. 63 (2000-2001)
Disorderly Conduct: Day Traders and the Ideology of Fair and Orderly Markets

handle is hein.journals/jcorl26 and id is 73 raw text is: Disorderly Conduct: Day Traders and the Ideology of Fair
and Orderly Markets
Caroline Bradley*
I.  INTRO DUCTION  ........................................................................................................ 63
II. FINANCIAL MARKETS AND TECHNOLOGY .................................................................. 66
III. THE IDEOLOGY OF FAIR AND ORDERLY MARKETS? ............................................... 73
IV. REGULATING TO ACHIEVE FAIR AND ORDERLY MARKETS ..................................... 83
V. DAY TRADERS AND REGULATION ........................................................................... 88
V I.  C ONCLUSION  ........................................................................................................... 95
I. INTRODUCTION
This Article uses the day trading phenomenon as the focal point for an exploration
of the relationship between ideas of fairness and orderliness in the regulation of the
securities markets. Although day traders have historically been professional traders,1 the
term day trader now often refers to nonprofessional securities traders whose patterns of
securities trading are different from those of ordinary investors.2
Day traders may be characterized in one of two contrasting ways. On the one hand,
they are investors who are empowered by technological developments to take charge of
their own financial affairs; on the other they are vulnerable gamblers who are easy prey
for unscrupulous broker-dealers. They are an example of the American Dream at work, or
they are a terrible threat to the institution of American capitalism. In both stories they
operate to some extent outside the established framework of the securities markets. Day
traders do not fit our usual model of what a securities market professional looks like, nor
* Professor of Law, University of Miami School of Law. An earlier version of this article was presented
at the Law and Society Conference in Chicago in May 1999. I would like to acknowledge the University of
Miami School of Law's support for the writing of this article, and to thank the participants in a Colloquium at
the University of Washington School of Law, and in a Legal Theory Workshop at the University of Miami
School of Law, for their helpful comments. Thanks, as always, to Michael Froomkin. Thanks also to Angie
Padin for research assistance. © Caroline Bradley 2000. All rights reserved.
1. See, e.g., OFFICE OF COMPLIANCE INSPECTIONS AND EXAMINATIONS, SEC, REPORT OF
EXAMINATIONS OF DAY-TRADING BROKER-DEALERS, § III.A (2000), available at http://www.sec.gov/news/
studies/daytrep.htm (commenting that day trading as a strategy employed by retail investors is a fairly recent
phenomenon).
2. The New York Stock Exchange (NYSE) has suggested that the term day trading should be
understood to refer to the purchase and sale of the same security in the same day in a margin account. See
Press Release, NYSE, NYSE and NASD Propose Higher Level of Margin Requirements for Day Trading
(December 10, 1999), at http://www.nyse.com/press/press.html.

What Is HeinOnline?

With comprehensive coverage of government documents and more than 2,400 journals from inception on hundreds of subjects such as political science, criminal justice, and human rights, HeinOnline is an affordable option for colleges and universities. Documents have the authority of print combined with the accessibility of a user-friendly and powerful database.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline with pricing starting as low as $29.95

Already a HeinOnline Subscriber?