Not by government.
Regulation should be undertaken by whoever stands to lose the most money when things go wrong. This would usually be insurance companies.
Say an investment company steals customer funds to cover its liabilities. (Sound familiar?) The company’s liability insurer, after a substantial deductible, would come up with the money.
But with its money on the line, the insurance company would impose regulations and unpredictable audits in an effort to prevent the theft from occurring in the first place.
Would those regulations and audits be better than those being done now by the government?
Why of course they would. Because the insurance company, as mentioned, would stand to lose its own money. Government (and government workers) stand to lose no money of their own. They lose only other peoples’ money.
And if the investment company, prior to the theft, chooses not to acquire liability insurance?
It would have precious few customers, certainly not wealthy ones. Most investment-company clients would insist that the company carry liability insurance.
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