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50 Bus. Law. 413 (1994-1995)
Hegemony of Deference: U.S. Disclosure Requirements in the International Capital Markets

handle is hein.journals/busl50 and id is 437 raw text is: Hegemony or Deference: U.S. Disclosure
Requirements in the International Capital
By Edward F. Greene, Daniel A. Braverman and Sebastian R. Sperber*
The past decade has witnessed a significant increase in the internation-
alization of the world's capital markets. Companies have become increas-
ingly more willing to raise money outside their domestic markets, and
investors have become increasingly more willing to purchase shares of
issuers that are foreign to their home markets.' At the same time, the
level of secondary market trading in all markets and across markets has
substantially increased, dwarfing the amounts raised in primary offerings.2
As an illustration of these developments, consider that U.S. investors
*Edward F. Greene and Daniel A. Braverman are partners, and Sebastian R. Sperber is an
associate, at Cleary, Gottlieb, Steen & Hamilton. All three are based in the firm's London
office. The authors would like to express their appreciation to Manley 0. Hudson, Jr., a
partner in that office, for his constructive suggestions.
1. Investors purchase foreign shares both in primary distributions and in the secondary
market. The dramatic increase over the last decade in the number of global offerings of
shares in enterprises that are being privatized has played an important role in the process
of internationalization. It is worth bearing in mind that the internationalization process has
not resulted in the creation of a genuinely global capital market. Rather, the world's most
important domestic markets increasingly have become interconnected through the capital
raising activities of companies and the purchasing activities of investors, which are mainly
large institutions. These activities have highlighted the differences in regulatory approaches
taken by regulators in the major domestic markets. Furthermore, these activities have required
that adjustments be made, more often on an ad hoc than on a systematic basis, in order to
permit the smooth flow of capital from one market to another. This Article argues that the
adjustments made by the U.S. regulators should be looked at with fresh eyes, and that a new,
more systematic approach-and one more consistent with the theoretical underpinnings of
the U.S. regulatory system as a whole-should be considered.
2. For example, the Bank of New York estimated the annual dollar volume of depositary
shares representing non-U.S. equity securities traded on the New York Stock Exchange
(NYSE), the American Stock Exchange (AMEX), and NASDAQ to be approximately $200
billion in 1993. The Bank of New York, Depositary Receipts (ADRs and GDRs) (Jan. 1,
1994-June 30, 1994) (hereinafter the Bank of New York]. By contrast, the total capital
raised in public offerings of depositary shares representing non-U.S. equity securities was
estimated to be approximately $9.6 billion in 1993. Id.

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