(Rv. Firn, 2001, NSWCCA 191; Mannolini, 1996, p. 151). Yet, empirical eviden ce is
unavailable to suggest that endorsing either one or the other will advance the regulatory
goal. Instead, academic research conﬁdently demonstrate that efﬁciency cannot be
generated in and of itself but rather is best achieved through the promotion of a
transparent securities market that stimulates and sustains some core notions of fairness,
such as the equality of access to information, the creation and maintenance of an
informed market, and improved investor conﬁdence (North, 2009, pp. 249-253).
By adhering to the perceived spirit of the merged concepts as entrenched in the
regulatory reforms in Australia, this paper argues that an appropriate interaction
between “fairness” and “efﬁciency” is not only desirable but also inevitable to facilitate
the goal of IT legislation, and that the regulatory objectives can be best ensured in an
increasingly technologically advanced securities market through the combination of the
core values of the two instead of trying to separate one from the other. In an attempt to
substantiate this argument, the study develops a hypothetical scenario (where each –
“fairness” then “efﬁciency” – is held up as a separate approach) based on available
primary and secondary sources. It critically examines the appropriateness and
effectiveness of the blend by placing a special focus on the way policy makers and the
judiciary have striven to accomplish the two fundamental objectives – market fairness
and market efﬁciency – in terms of both their extent and degree of sophistication,
despite the absence of a convincing past record of successful IT law enforcement in
Australia (at least until very recently).
Drawing upon the ﬁndings from an application of the above hypothesis, the paper
concludes that fairness and efﬁciency are complementary in the Australian context
where the blend has been endorsed on the basis of the need to promote investor
conﬁdence in the fairness and integrity of the market, rather than to espouse either of
the two contrasting goals separately.
The following section begins with a brief exploration of the “fairness” and
“efﬁciency” rationales in dealing with IT and highlights only a few contrasting aspects
of these two approaches relevant to the main argument of the paper. Section 3
examines the background of IT regulation in Australia with special reference to the
fundamental policy justiﬁcations that have been drawn from a merger of the two
rationales. Section 4 analyses how the policy maker and courts have endeavoured to
achieve the regulatory goals by striking a balance between the two rationales . Section 5
provides a conclusion.
2. Fairness and efﬁciency as competing approaches
The long standing legal controversy over the feasibility and desirability of regulating
IT remains unresolved in many jurisdictions, including the USA (Beny, 2007, p. 238).
The “fairness approach” – supporting the need for regulation – claims that IT generates
an unethical corporate culture by resisting a transparent and informed market, noting
that such a corporate culture inevitably promotes unfair disadvantages of the ignorant
market participants to evaluate all relevant information for investment de cision-making
(Carlton and Fischel, 1983, p. 873). This ultimately leads to illiquidity, disinvestment,
and an erosion of investor conﬁdence in the securities market. This fairness rationale
aims to ensure that the market operates freely and fairly with all participants having
equal access and opportunity to relevant information (Grifﬁth Report, 1989, 3.3.6;
Rubenstein, 2002, p. 93).