Ethics and regulation
Who is allowed to advise you, what do they owe you, and what is simply not allowed?
10 of 10 chapters published
Chapters
Beginner
- Why finance is regulatedNot because financiers are worse people. Because the product is a promise, the buyer cannot inspect it, and the seller knows more — three conditions that make ordinary market discipline fail.
- Who regulates what in IndiaFour regulators divided by product rather than by purpose, which means the same household need can be met by instruments supervised to different standards — and the gaps between them are where trouble collects.
- Conflicts of interestMost financial misconduct is not fraud. It is an ordinary person following an incentive that points away from you — which is why the serious regulatory answers remove the incentive rather than disclose it.
- Advice, research and a trading callThree things people lump together and Indian law separates. Which one you are receiving determines who owes you a duty, whether anyone assessed your suitability, and what recourse you have.
Intermediate
- What an investment adviser owes youA registered investment adviser in India owes you a fiduciary duty, a documented suitability assessment, and — the structural part — may not be paid by anyone except you for the products they recommend.
- Research analysts and the incentives behind a ratingA research report is an opinion produced by someone whose employer may want the company's business. The rules work by restricting when the analyst may trade and how they may be paid — not by asking them to be impartial.
- Insider tradingThe law does not ask whether you used the information. It asks whether you had it — and if you traded while in possession, the motive is presumed and the burden of proving innocence shifts to you.
- Manipulation and false informationA long and specific list of prohibited practices, from circular trading to front-running to planting news. Reading the list teaches you what the market's recurring abuses actually are.
Advanced
- Mis-sellingIndian law defines mis-selling to include selling something unsuitable without taking reasonable care — so it can be committed without a single false statement, which is how most of it is committed.
- Your own conductThe last chapter of the subject, and the one that turns outward. What you owe other people if you ever advise them, what to do when an incentive points the wrong way, and why compliance is a floor rather than a standard.