Mandatory Disclosure : A comparison between European and American securities markets regulation regarding mandatory disclosure of non-periodic events

Capital markets are effective allocators of resources and are thus vital to a society’s economic growth. Capital markets in the European Union and the United States are widely regarded as efficient. This means that whenever information about an issuer is made public, the price of the securities associated with the issuer adjusts to reflect this new information. Market efficiency is a core tenet in securities markets regulation that justifies mandatory disclosure regimes. In the European Union, issuers are prompted to disclose inside information as soon as it arises. However, whether inside information is at hand is in some sense a subjective assessment, which is why the European disclosure model is regarded as continuous – issuers at all times have to determine whether inside information is at hand. Meanwhile, the American system requires disclosure to be made on an ad hoc basis – the duty to disclose information arises when predetermined events materialise. As opposed to quarterly or yearly reports, these events are non-periodic. The respective disclosure philosophies have implications for issuer costs as well as investors in terms of market efficiency. Given that both the European and American capital markets function well, at least prima facie, what are the practical advantages and disadvantages of the respective philosophies? This thesis lays out the legal pretext for both perspectives, the current regulations in place, and then compares them. The aim is to understand what the two legal systems have in common, what they do differently, and subsequently to analyse what this means in a bigger context, compared with the stated aims of the respective legislations