In the light of realities of emotional regulating, the SEC in general and its compulsory disclosure regime is particular might perform more harm than good and yet stay because of the emotional appeal rationales and considerations. (Parisi; Smith, 2005)
The history of U.S. federal securities regulation from the very beginning following the Great Depression to the most recent Sarbanes-Oxley Act of 2002 in the wake of Enron, Arthur Anderson, Riet Aid, Worldcom, Tyco, Merk and Global Crossing is that of neglect of Securities Market interrupted by legislation in response to political and public pressure arising from highly primitive and public episodes of banking, corporate or securities fraud and scandals. Mandatory disclosures might be at best an impotent and at worst a socially harmful regulatory policy if the majority of investors experience cognitive biases and apply heuristics in the processing of information and feel irrational exuberance and anxiety before and during their investing process. But the SEC's obsession with mandatory...
(Parisi; Smith, 2005)
References
N.A. (n. d.) "United States Securities and Exchange Commission Strategic Plan 2004-09:
Government Actions" Retrieved 30 March, 2009 from http://www.sec.gov/about/secstratplan0409.pdf
Parisi, Francesco; Smith, Vernon L. (2005) "The law and the economics of irrational behavior" Stanford University Press.
Securities and Exchange Commission, United States Securities and Exchange Commission,
Office of Public Affairs -- United States. (1986) "What Every Investor Should Know: A Handbook from the U.S. Securities and Exchange Commission" the Supt. Of Docs., U.S.G.P.O.
Teslik, Lee Hudson. (2008) "The U.S. Financial Regulatory System"
Retrieved 30 March, 2009 from http://www.cfr.org/publication/17417/us_financial_regulatory_system.html
