We examine the costs of trading restrictions by exploiting an SEC rule change eliminating an approximately 80-day restriction period in private placements for small issuers. Using a difference-in-differences specification, we find that the restriction is binding, as dollar volume increases 19 percentage points vis-à-vis proceeds, and costly, as offering discounts fall by 8 percentage points. Discounts fall more for issuers with higher information asymmetry or longer restriction periods. We account for endogenous responses to the rule change. Overall, our findings suggest that trading restrictions are costly and have large effects on firms’ cost of capital.

Permissive laws deputize financial professionals to screen for misbehavior without providing explicit incentives. These are very common in financial markets. To evaluate their effectiveness, we exploit the staggered adoption of the 2016 Model Act provisions intended to curb elder abuse. We find a drop in reports of abuse by financial professionals to the Department of Treasury and, separately, in financial crimes against the elderly as monitored by the FBI . The effect is stronger where the elderly are more isolated. Our results highlight the role financial professionals play in combating social problems and the impact of permissive policies.