Introduction: Promoting Information

Abstract

After every ‘boom’ and ‘bust’, legislators around the world pass new disclosure legislation, often in a heated environment fuelled by politics and the media with little regard for existing regulation or for prior experience. This results in continuing amounts of duplicating and overlapping disclosure laws in securities (financial services) regulation. This book calls for assessment of disclosure laws, their administration and their enforcement. To earn investor confidence, financial markets depend on cultures of disclosure and compliance with the law. Disclosure is important because, as is often said, financial markets are markets for information. There are issues with disclosure, including the problems of cost of disclosure, conflicts of interest between the different needs of management and users in what to disclose and how to disclose it. The result is disparate and piecemeal disclosure laws with no common foundation, unfairly leaving stakeholders not fully informed. We argue that the solution is a short principles-based plain-English safety-net amendment to statutory laws like ‘you must keep the financial market fully informed’ to support effective mandatory continuous disclosure of information to financial markets, under the effective cooperation coregulation of both commission and by stock exchange.