> Investors wan to invest in regulated markets because regulators work for them.

no, that's not true. Regulators ensure transparency and correctness of information. It works to everybody's advantage, not just investors.

Investors are free to choose bad investments, provided that the investments are made with full and transparent information. Regulators aren't supposed to be there to "protect" investors from making bad choices (what is a bad choice? Who gets to decide that?).