The Duty Of Securities Regulation: A Legal And Financial Perspective

It is very difficult to establish a good market order, which would take theregulationand the authorities decades or centuries efforts, together with someluck: a long-lasting stable political and legal environment. Once the orderestablished, the moral level of the participants raises gradually, precipitatingthe commercial morality and order. However, all these above could besmashed overnight by a case of fraud or manipulation, or even insider trading,making everyone begins to speculate in the market with legal or illegalmanners.It is widely believed that the legislative reason of restriction on fraud andmanipulation and is justice, rather than efficiency, implying the underlyingassumption: there is always a tradeoff between justice and efficiency.Whereas as this thesis has revealed, even for the reason to reach the optimalefficiency, the laws concerning securities regulation are necessary, such as therestriction on fraud and manipulation, the duty of disclosure, and the ban oninsider trading.This thesis might shed some light on the legislation of the new SecuritiesLaw of China, as China is going to revise ti by the end of this year and beginto apply “registered system” in IPO process.