Who is watching the Hong Kong’s Securities and Futures Commission and Asia’s Regulatory Authorities?


Who is watching the Securities and Futures Commission?

Wednesday, 25 March, 2015, 11:13pm

The Securities and Futures Commission needs to take a long hard look at itself following the recent conclusion of the Andy Mantel fiasco which we wrote about on Tuesday. Its behaviour and the manner of its investigation were nothing short of disgraceful and its bully-boy approach to dealing with minor issues needs to be rectified.Our article recounted the SFC’s efforts to nail Mantel, the founder and chief executive of Sun Pacific Advisors for advertising a fund which did not expressly state it was for professional investors only.

The SFC’s case was thrown out by the magistrate’s court. The SFC then hired one of Hong Kong’s best senior counsel in Gary Plowman, and probably one of the most expensive, to appeal the case in the High Court and won.

Mantel, showing considerable testicular fortitude, went to the Court of Final Appeal and won. All this took about three-and-a-half years.

The SFC – as is its usual practice – took away documents and computers, and just about trashed Mantel’s business as it followed up clients on his email list. This sort of thing has happened too often before. Most people would not have taken this to the Court of Final Appeal.

There are other examples where the SFC investigates someone, and it drags on for years, ruining the individual’s business and blighting his life. But there is never any recourse for innocent individuals for the damage done to their business.

The SFC and its highly paid staff have deep pockets for this sort of thing but appear to be accountable to no one. However, when there’s a “real” issue and “real” complaints from the public about some of the wealth management scams that proliferate in Hong Kong, the complaints disappear into a black hole in the SFC and nothing more is heard.

If, for example, the SFC had been on its toes and shut down LM Investment Management some years ago when it illegally operated an office in Hong Kong, held illegal sales pitches and seminars, and illegally sold unauthorised funds, it could possibly have saved hundreds of investors from financial ruin.

Hong Kong mining blockage

Five years ago, Robert Friedland, the chairman of Ivanhoe Mines, famously declared that Hong Kong would become the mining finance capital of the world. This observation was lapped up by the government and the stock exchange, but even those who desperately wanted this admit it clearly did not happen.

Last year, when Lai See asked Friedland about his prediction, he qualified it, saying: “Yes, but I didn’t say when.”

The topic was the subject of a panel discussion yesterday at the Mines & Money conference.

Rebecca Brosnan, the managing director, head of Asia commodities with Hong Kong Exchanges and Clearing, observed, with possibly more than a hint of understatement: “I detect there a slight frustration with Hong Kong, and people are disappointed or sceptical with the way its developed since Friedland’s comments.”

She added that Hong Kong’s investors which she said were predominantly retail, were not as sophisticated in analysing mining companies compared with investors in Australia and Canada.

“So anything the exchange does has to consider its investor base,” she said.

As a result, Hong Kong does not allow junior or exploration miners to list on the exchange.

Gary Stein of Mineral Bull said the local market did not understand mining. There was a dearth of experienced mining analysts in Hong Kong and a lack of knowledge within the stock exchange which relied too much on outside consultants.

“I still think Hong Kong has the potential to develop as a mining finance centre, but it has to get over a bad case of constipation first,” Stein said.


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