It may be the most quoted statement in compliance literature: Supreme Court Justice Louis Brandeis' famous dictum, “Sunshine is the best disinfectant,” has been used to justify virtually every disclosure regulation on the books. Ironically, it may be one of the least examined, as the illuminating aspect of all that sunshine is rarely applied to disclosure itself.
We are disclosure advocates, but some recent events force us to examine Judge Brandeis' truism. While we continue to support broad disclosure on the belief that market participants respond to available information, we did find three systemic issues languishing in the shadows. Let's ...