Introduction

As complexity increases, the disclosure paradigm of securities law has been diminishing in effectiveness. This article suggests possible responses. For example, investor~ could require originators to take a reasonable first-loss position, although this backfired in the subprime mortgage crisis due to information failure by originators. Institutional investors should also try to reduce agency costs stemming from the conflict between the interests of individuals and the institutions for which they work.66 Rating agen~ies should also try, as they now appear to be doing, to increase the quality of their "private certification" via ratings of securities.