Abstract: In the late seventeenth and early eighteenth centuries, stockbrokers, speculators, and stockjobbers were often accused of fraud and price manipulation. Seven key regulatory acts were passed into law in England from 1697 to 1737. Evidence suggests that well into the nineteenth century, virtually none of these laws were adhered to or seriously enforced. An apparent gap existed between the legislation and judicial enforcement of regulations. However, the emerging London stock exchange operated within a private and self-regulating alternative legal system. In the few cases that did come before the English common law courts from 1697 to 1845, justices, many of whom were themselves active traders and investors, predominantly avoided enforcing stock market regulations and upheld private contracts between individuals. In this manner, members of the judiciary demonstrated that they were acting as an integral part of the private, self-regulating stock exchange. The legal decisions that upheld private stock-transfer contracts in the eighteenth century have important implications for our understanding of the development of judicial interpretation of commercial contract law.
Keywords: Speculation, financial regulation, English courts, common law, economic history
JEL Codes: G28, N23, O16