Tuesday, February 16, 2010

Toxic products and traffic control

Someone told me an interesting analogy.

The Authority allowed the toxic products to be sold but require the issuer to put into a statement into the prospectus, "This product carries risk. You may lose some or all of your money".

It is similar to making a statement, "If you are on the road, you may be knocked down by a vehicle". After making this statement, the Authority does not need to control the behavior of the drivers and the vehicles on the road, i.e no need for traffic controls, rules or their enforcement. After all, the Authority has discharged its responsibility by giving the warning.

Tan Kin Lian