8.4 Need of Securities Regulation

The market's problems (the regulation's rationale — the exam's list): (1) the information asymmetry (the issuer's knowledge vs the investor's ignorance — the disclosure's cure); (2) the fraud-and-manipulation (the false markets, the insider abuse, the pump-and-dump faces — the anti-fraud's cure); (3) the dispersed investors' collective-action problem (the small savers' protection — the trustee-and-the-regulator's cure); (4) the systemic faces (the market's integrity — the settlement-and-clearing's safety, the confidence's maintenance (the market's existence depends on the trust)); (5) the fairness (the level field — the equal access, the fair allotment (the Nepal-era issues' lessons — the oversubscription scandals' history)). The securities regulation as the investor-protection-and-market-integrity law: the disclosure philosophy (the sunlight's cure), the conduct regulation (the intermediaries' discipline), the enforcement (the regulator's powers).