In the United States, governance is regulated by legal statute and mandatory rules, which are inherently inflexible. Litigation levels are high. Directors face legal penalties for noncompliance. The 2002 Sarbanes-Oxley Act strengthened this emphasis on governance under penalty of law, with disclosure requirements that proved more expensive and burdensome than expected. The role of the regulators is to ensure is to ensure that the rules are being obeyed. The American financial markets are the largest and most liquid in the world, but their lead, particularly in initial public offering (IPOs), has been eroded.