After months of basking in approval for its vigorous prosecution of insider dealers, the Securities and Futures Commission has been accused of backsliding in other areas of regulatory oversight.
Shareholders in listed companies are required to disclose their interests when their holdings exceed 5 per cent of a listed company's equity. If they do not, they are prosecuted by the SFC and their names published.
However, David Webb, the editor of Webb-site.com, a shareholder activist site, has noticed that the SFC, in what he calls a 'backward move', has stopped publishing the names of offenders. The last time a name was published for breaches of the securities disclosure of interests provisions of the Securities and Futures Ordinance was in July 2007.
Since then, only summary statistics of the number of cases and fines levied have been disclosed in the quarterly Enforcement Reporter.
Webb observes that while a single prosecution may not be big news, it is relevant to future investors when deciding whether, and at what price, to invest in a company in which a past offender is involved.
'For example, without the past disclosure, you wouldn't have known that new Birmingham City Football controller Carson Yeung Ka-sing once pleaded guilty to failing to disclose a 25 per cent stake in another listed company,' says Webb.
He maintains that disclosure is important because, if the offender is a listed company, it indicates a failure of compliance and internal controls.
Secondly, if the offender is a director or controlling shareholder, it is a warning to shareholders that the offender is either carelessly or intentionally non-compliant with disclosure obligations.
Thirdly, it is an indication that the company or offending director is likely to treat other corporate governance issues in a similar manner.
A spokesman for the SFC said it published forthcoming prosecutions on its website and published summary results in its quarterly enforcement magazine.