The subject of play-acting has come to the fore this week after West Ham striker Andy Carroll was sent off for sending a flailing arm in the direction of Swansea's Chico Flores.
While the Hammers' fight against Carroll's three-match ban has made most of the headlines, the Spanish defender has not avoided scrutiny for going down clutching his face despite being caught on the top of the head.
Sherwood believes such incidents need to be stamped out of the game and has called for players caught play-acting to be banned retrospectively.
"I think it makes it clear that Andy Carroll is vitally important to West Ham's future," Sherwood, who successfully appealed Danny Rose's red card last week, said.
"They don't want to lose him for this period of time, but I think you've had to take every incident in isolation.
"West Ham feel aggrieved that it hasn't been overturned. We made an appeal with Danny Rose and we got that one overturned and I think that was unanimous.
"One thing I would say, not just on that incident but about what we have been seeing recently, is the feigning of injury from players, which is something we want to keep out of the game.
"Retrospectively I would go back and punish the player who is diving around more than the player causing the offence.
"I think that is the only way you are going to ever cut it out, to go back and give them a higher punishment."
Sherwood thinks the FA should set up a panel to clamp down on cases of play-acting, with the guilty parties getting lengthy bans.
"It's not good," the Spurs head coach said. "I played against players, rather than played with them, who did it.
"If you are winning something, like a penalty, then you can suffer it. That's the bottom line. It probably won't be stamped out.
"It can only be stamped out by the authorities and not by the management and football clubs, unfortunately.
"But it will be if you are going to miss a player for four or five games and you will tell them not to do it as you will sorely miss them players.
"You have got to realise the little one in the face, if you haven't made contact, you shouldn't be holding your face rolling around the pitch.
"Years ago you used to jump up and say 'he did not hurt me'. Now it's different. They have a look and see if a card has come out and jump back up. Rubbish."