The collapse of energy giant Enron and telecommunications group WorldCom not only angered those who were heavily invested in those companies, but it also accelerated the flight of capital from equities markets which were already badly hammered by the burst of the high-tech bubble.

For policy-makers, the key concern has been to restore public confidence in stock market investments, namely by bolstering corporate transparency and encouraging investors to put their money in the markets once again. With the SEC as the lead government agency, lawmakers have pressed through a number of legislative measures to bolster transparency, namely through the Sarbanes-Oxley Act which was passed last year.

For instance, it was the Sarbanes-Oxley Act that has forced CEOs of the country's top 900 listed companies to sign off and certify the accuracy of their company's financial reports, making them ultimately responsible for any deliberate misreporting of numbers.

Yet that particular legislation nor any other can actually ensure that there will be no future cases of corporate malfeasance nor can it prevent investors completely from fraudulent activities, cautioned SEC Commissioner Cynthia Glassman.

"We can never eliminate fraud ... there will always be some companies that go bad ... or fail," Glassman told economists in a luncheon speech. She pointed out that while the SEC and other government entities could try to encourage good corporate governance practices on the one hand and punish bad behavior on the other, there was no way to legislate an ethical corporate culture.

Instead, Glassman said that investors should always be aware of the downside risks of investing, and know that even the best of government regulations cannot protect them from losses in the future.

Indeed, the SEC commissioner stressed the importance of investors ultimately being responsible for their own financial decisions. As such, she said that while industry analysts at various Wall Street investment groups often hyped up their earnings projections for stocks as a means to bolster their own financial standing, Glassman pointed out that individual investors were ultimately responsible for their decisions about their own portfolios. In fact, some big-name analysts from top investment banks have been criminally charged for telling individual investors to buy into certain companies, whilst privately recommending shareholders to sell off those same stocks.

"Analysts in general provide only one component of the information" that is available, Glassman said. Investors "should not rely solely on any one source," she added.

But she also said that there appear to be more "sell" recommendations by analysts these days than prior to the implementation of the Sarbanes-Oxley Act. Before March 2000, the vast majority of analysts' recommendations for individual stocks was either "buy" or "hold," with recommendations to "sell" being few and far between. But even though that situation has improved, Glassman urged investors to be ultimately responsible for their own financial decision, rather than relying on the advice or information from a single source.

-- Shihoko Goto, UPI Senior Business Correspondent