Stock-market manipulators who think they can exploit gaps in cross-border regulation will find there is “no place to hide”, the outgoing enforcement chief of the Securities and Futures Commission has warned

http://www.scmp.com/print/business/markets/article/1851316/rogue-stock-investors-have-no-place-hide-says-hong-kongs-market

Rogue stock investors have no place to hide, says Hong Kong’s market regulator Mark Steward

PUBLISHED : Friday, 21 August, 2015, 1:20am

Cliff Buddle cliff.buddle@scmp.com

Cross-border cooperation to catch wrongdoers having an effect, outgoing SFC enforcer says

Stock-market manipulators who think they can exploit gaps in cross-border regulation will find there is “no place to hide”, the outgoing enforcement chief of the Securities and Futures Commission has warned.Mark Steward, who steps down next month after leading the SFC’s enforcement division for nine years, said closer cooperation between regulators on each side of the border would prevent miscreants taking refuge.

His comments yesterday come at a time of heightened concern about extreme market fluctuations and unusual trading patterns in Hong Kong-listed companies that have major shareholders from the mainland.

Steward, 52, said significant progress had been made in the collaboration between the SFC and its mainland counterpart, the China Securities Regulatory Commission.

“Anyone who thinks the mainland provides some sort of refuge for wrongdoing in Hong Kong has not looked carefully at the results … we have achieved with the CSRC. The border … is no safe place and our record demonstrates that,” he said.

“The real point to the way in which our collaboration has developed is that both sides recognise it is necessary and important. We both want to send the message to wrongdoers that they can’t assume we are dislocated or that there is some arbitrage that can be exploited so that wrongdoing does not get detected or picked up. The message is: no place to hide.”

Earlier this year, the two regulators signed a memorandum of understanding to strengthen cooperation following the launch of a stock connect scheme linking the Hong Kong and Shanghai markets in April.

“It’s providing the trigger for far more sophisticated discussions and conversations for us at operational level on enforcement matters,” Steward said.

“Our interaction and personal relationships with key senior people in the CSRC now and their interactions with us are generationally different to what existed nine years ago.”

Steps needed to be taken to improve cross-border enforcement in certain difficult areas, such as securing the attendance of mainland witnesses in Hong Kong proceedings and vice versa, and putting in place a rendition agreement for the transfer of suspects, he said.

“These are practical issues which need to be overcome and they will be in time. But I don’t see them as being barriers or impediments to further cooperation,” the enforcement chief added.

During his time as the SFC’s executive director of enforcement, Steward has earned a reputation for aggressively pursuing market offenders and using every legal means possible to compensate victims.

His approach has sometimes drawn criticism – and rumours that he may be forced out when his contract is due for renewal.

But Steward, who leaves to become enforcement director at Britain’s Financial Conduct Authority, said it was his decision to move at the end of his current contract, partly for family reasons.

“No one is pushing me and, in fact, it is really hard to leave,” he said, adding that his departure would not undermine efforts to bring offenders to justice.

The SFC is conducting a global search for a successor.

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