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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.

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