Is it Time to Wind Up the Securities Act of 1933?

Abstract

The Securities Act of 1933 was once considered a great benefit for investors because of the strict liability it places on firms to truthfully disclose information to investors. But the strict liability provisions are now dissuading firms from communicating useful information for fear that it may inadvertently contain errors or inaccuracies. The resulting silence is no benefit to investors. Strict liability simply makes no sense in today's sophisticated and deep capital markets.

Keywords: securities act, mandatory disclosure rules, hidden costs, SEC, securities and exchange commission, liability, equity-based compensation, performance-based compensation, shareholders, public firms, investors, capital markets, james spindler

JEL Classification: D40, D78, E62, G15, G18, G24, G28,