Instead of spending billions to regulate and losing billions in return because of our inability to compete with other economies, why not realize that some people will make stupid mistakes and speculate by putting all their eggs in one basket? Perhaps we can help them if they are hurt from an unforseen event or act, but why sacrifice literally thousands of jobs and billions of dollars to prevent this? As to punishing those that commit fraud, we have plenty of state and federal laws to deter most people. Some will get around the laws, but that is life.
At some point, it is actually more efficient for the gov’t to step in and forbid certain behavior. For example, the government does not allow people to buy addictive recreational drugs because too many people will make stupid mistakes and society at large will have to pay for those mistakes.
As another example, the government does not allow people to build unsafe bridges/highways/roads. By your logic, if the people who used those bridges/highways/roads did proper “due diligence,” there would be no need for government intervention!!! People would simply figure out which bridges/highways/roads were the safest, and only use those!!!
Much of Sarbox is an attempt to increase the number of things that the CEO and Board have to say about a company. It makes due diligence easier. If those statements are false and/or misleading, the CEO and Board can be punished using the existing state and federal laws that you hold so dear.
Before Sarbox, the CEO and Board could simply refrain from saying those things and not commit fraud by virtue of their silence… Investors were stuck reading through the voluminous footnotes, and we all know how successful most investors were in discovering the Enron and its ilk.
