Securities Laws as Foreign Policy

The SEC was founded in 1934 and bestowed by Congress with a three-pronged mission: (a) protecting investors; (b) maintaining fair, orderly, and efficient markets; and (c) facilitating capital formation. Markedly absent from this congressional mandate is any administrative authority or charge to engage in international, diplomatic, or human rights-oriented goals. Instead, the focus of the mandate is the creation and preservation of market integrity to assure investors that their investments are safe. Despite this clear, financial-based mission of the SEC, Congress has co-opted the agency and its regulatory resources to achieve decidedly non-financial, extraterritorial goals related to foreign policy. This article analyzes three statutory provisions that represent congressional misappropriation of the SEC's resources and expertise: (1) the Foreign Corrupt Practices Act; (2) the conflict minerals disclosure requirement of Dodd-Frank; and (3) the extractive industries payment disclosure requirement of Dodd-Frank. Using the economic theory of opportunity cost, this article explores the inherent risks in an agency operating outside of its mission and expertise, arguing that the risks depend on the amount of authority granted to the agency and the tasks involved in enforcement