Sample Essay on Securities Regulation

Security is any investment that has monetary value. To ensure smooth running, the government has to install securities regulations. Security regulation protects investors from losses due to bias or false information from the promoter. The promoter, if of primary market, may charge security expensively, thus benefiting from the investors. The issuer may also disclose false details regarding the security. The issuer of securities may not disclose information like losses and liabilities. The government should come up with laws that state that all companies should periodically disclose their information to the public. This law helps investors to choose the best company to invest in.

The government should impose security regulation that is in line with business ethics and observes the law. The promoters should not be allowed to issue securities to the public before submitting prospectus to investors first.  An example of the impact of omitting the necessary information is that in Dutch, Co-op AG company drafted a prospectus issued to the public in accordance to Amsterdam Stock Exchange. Later after issuing, the newspaper read that Co-op AG did not disclose all the necessary information. The investors incurred loss and the case was brought to theDutch court. The court of Dutch ruled out that the mistake was made by the distributors and not the promoter.

A security supervisor should control the issue of security to the public. A security supervisor should be given authority to crosscheck documents from issuers, distributors, and accountants. The supervisor will ensure public enforcement and the promoters do not cheat the investors.

Public enforcement is only applicable in big stock exchange markets. The authority of supervisors may not be efficient to all investors. The security regulation should be imposed since investors cannot operate without it. The only way to ensure investor protection is to observe strictly the law, which states that all private litigation and promoters adhere to market discipline. All issuers should disclose financial position and liability of the security before issuing it to the public.