Tuesday, March 21, 2006
Securities Regulation: Too Much, Too Little, or Just Right?
In a speech before the International Foundations for Sound Finance Conference in Prague last month, Ethiopis Tafara, Director of the Office of International Affairs at the U.S. Securities and Exchange Commission spoke on "How Much Regulation is Just Enough?"
After referencing the story of Goldilock, Tafara noted that scandals have given birth to regulatory reform in the U.S. and in Europe and that Japan is following suit. Tafara noted that one approach to regulation is risk-based regulation in which risks in the capital markets are analyzed and regulatory resources are targeted to the areas of greatest risk. Our regulatory system should provide effective investor protection, while ensuring that the system is efficient. Tafaris described SOX as a law dealing with the concept of "accountability."