Regulatory transparency and the alignment of private and public enforcement: Evidence from the public disclosure of SEC comment letters
66 Pages Posted: 3 Sep 2020 Last revised: 20 Jul 2021
Date Written: June 17, 2021
Does enhanced regulatory transparency facilitate alignment of private and public enforcement? Utilizing the SEC’s 2004 decision to disclose its comment letters publicly, we explore the actions of the SEC and shareholder litigants. We find the two parties converge more on enforcement targets after the public disclosure. The increased alignment is attributable to public scrutiny of SEC oversight enhancing regulator incentives and reducing regulatory capture, and to shareholder plaintiffs gaining information previously accessible only by regulators, enabling litigants to identify cases with “merit.” These findings suggest regulatory transparency enhances the complementarity of public and private enforcement, potentially improving enforcement outcomes.
Keywords: Regulation, SEC, securities litigation, class action lawsuit, regulatory transparency
JEL Classification: G18, G38, K41, K42, L51, M40, M41, M48
Suggested Citation: Suggested Citation