No Cigar, John
Prof. Craig Pirrong commenting on efforts by Congress and the CFTC to deal with the problem of manipulation, states that "[t]he problem is that instead of taking a new, economics-based approach to the problem, Congress keeps returning to the vapory SEC 10(b)-5 "manipulative contrivance or device" standard, like a dog returning to its own vomit." He criticizes the CFTC position limit proposal because it (a) identified a way in which large positions could cause unwarranted fluctuations, and (b) imposed limits that were completely unnecessary to address the very problem the CFTC identified.
Arguing that "data and evidence should be decisive" to dealing with the problem of speculative distortions, Pirrong states that the best approach is one that "integrates statistics, econometrics, qualitative comparisons and rigorous economic reasoning."
Publication
Streetwise Professor
Date
January 28, 2011
Cross References
Dodd-Frank Act, Title VII, Sec. 737