ABSTRACT
If asset price bubbles and prolonged market booms skew the calculus of market participants against compliance with financial laws, they also increase incentives to skirt legal rules in lawful ways. When legal rules hamper market participants from enjoying the immense profits available in booming asset markets, those parties will seek loopholes in those rules. The prospect of law or regulation shutting these parties out of lucrative investment opportunities sharpens their legal creativity and whets their appetite for legal risk. The greater the potential profits in booming asset classes that are foreclosed by regulation, the greater the incentives to game legal rules (if not break them altogether).
