It is somewhat amusing that societies had to set up agencies to protect citizens from brokers, markets and corporate issuers for decades (and even centuries in the UK and Blue Sky law in the US). No such ubiquitous agency exists to protect us from shady builders, jewellers or used-car-salespersons, who are more likely to have a greater influence on our lives—going by the concentration of Indian household assets in real estate and gold. Less than 5% of Indian households have demat accounts but a much higher percentage own real estate and jewellery, and more than 5% own cars. And significantly, the median household owns these assets in much greater proportion than it does financial assets.
Be that as it may, we have to bear the cross for the sins we have committed for generations. And it is understandable—financial markets and securities can be complicated and the asymmetry of information between issuers and investors can be overwhelming (although doesn’t that also apply for flats and diamonds, and especially used cars?). Some issuers take advantage of this asymmetry and dupe investors. Some brokers can be misleading. And some traders can manipulate prices to sucker in unsuspecting investors with misleading price action and then dump on them.
