Tianjiao Lyu studied international business law at Beijing Foreign Studies University. She plans to work at the Clifford Chance Beijing office after graduating from Washington and Lee. In this episode of Classroom Insiders, Lyu talks about insider trading between the 1960s and the 1980s.



Between 1941 and 1971, the disclose or abstain rule implemented by the SEC had become so expensive that it discouraged the development of the securities market, Lyu states. As a rule, it was not very pro-business. During that time, the SEC was very aggressive in their enforcement of insider trading regulation, and won every case they brought to court about insider trading. This changed, however, when Justice Powell joined the Supreme Court.


“Justice Powell’s close interactions with businessmen while lawyering led him to trust in their characters,” Lyu says. “That kind of trust made him hostile to what he saw as excessive regulation, which infringe on free enterprise.” He questioned the SEC’s use of Section 25 and their attempt to expand their reach. It was Powell’s view that the SEC’s rules were unrealistically intended to guarantee investors profit in their investments.



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