Underwriters, auditors, and other usual suspects: elements of third party enforcement in US and European securities law

The financial scandals of the last decade have called into question the effectiveness of the system of securities regulation in many countries. Articles that have examined the origins of the regulatory crisis have concluded that the classical tools of corporate governance for the supervision of management have lost their force as a result of new incentive structures in the financial markets. They see as the solution to the regulatory lacunae the utilisation of financial intermediaries as gatekeepers, i. e. as agents that ensure compliance of the primary market actor (the issuer) with applicable rules by reviewing its disclosures and withholding their participation in transactions if violations occur. This essay analyses the most important liability provisions of US and European securities regulation in light of the gatekeeper theory. It identifies deficiencies in the current regulatory regime, suggests that some aspects of US securities regulation may serve as an example for a development of the European system, and highlights the dangers that a lack of legislative attention and a reorientation of the judiciary towards general principles of tort law create. It concludes by advancing a tentative explanation of certain trends of convergence between US and European regulatory mechanisms that can be observed