Getting better sperm donors

The British newspapers have been reporting on a bizarre story about a Dutch sperm donor who hid a history of mental problems from recipients. I didn't pay much attention to it because of the British tabloid media's tendency to sensationalize. But Radio Netherlands also reported the outlines of the story, and there seems to be validity to the broad facts at hand. A Dutch man with a history of mental illness did father many children by offering his services online, and hiding various conditions from potential mothers. Now several of the children have developed the same problems (e.g., autism). But the specific case here highlights some constraints on sperm donation which seem to have resulted in a "gray market" which allowed this man to "slip through" the safeguards. And yet I wonder why there is so much regulation of sperm banks in the first place? It reminds me of a story from a few years back about panic in Turkey over the importation of "foreign sperm." Is there is a strong public policy reason why we should have a sperm donor shortage? In an ideal world children should know their parents, but there are far greater social ills than anonymous sperm donors. Rather than regulations which distort the behavior of individuals (both single women and infertile couples) there should be encouragement of a robust market, which will allow for better vetting and cataloging as the supply increases.