Word on the dealing desks has it that there is a copy of last week's cover of The Economist running off fax machines all over town. The original cover pictures three major national leaders, two of them Asian. Their pictures come under a headline: 'Fit to rule?'. The corrupted version of the cover going round has replaced one of the leader's heads with the visage of Jardine Fleming chairman Alan Smith. Whether or not this edited version of the weekly magazine cover does exist, the question still hangs. In the wake of last week's disclosures of fund management malpractice at Jardine Fleming Investment Management, speculation about Mr Smith's tenure has become heated. Last week parent Robert Fleming and Jardine Fleming Asset Management figured at the centre of a regulatory investigation which resulted in a GBP700,000 (about HK$8.4 million) fine and the payment of US$19.3 million in compensation to investors affected by malpractice. The malpractice centred on Jardine Fleming director and chief investment officer Colin Armstrong. It is alleged he disadvantaged customers and personally profited from the late booking of deals to his own accounts. Industry practitioners feel that despite the removal of Mr Armstrong's registration with the regulators, and the matter of fines and compensation, there remains some unfinished business. Robert Thomas, a director of Jardine Fleming Investment Management, also saw his career come to an end in this tacky affair. There is a feeling that Mr Thomas resigned because he took responsibility for what happened. It is not alleged he participated in the Armstrong scam. The feeling is Mr Thomas, who appears to remain well respected in town, took it on the chin for the company he had served loyally for so long. Questions remain about the longevity of Mr Smith's chairmanship of the group. The judgment from the regulators was that Japanese exchange traded options were subject to late bookings. It is not being suggested for a moment that the chairman in any way aided, participated in or abetted any such malpractice. The regulators said extensive audit work found the malpractice in question only involving the three affected funds. There is a question as to whether a conflict of interest might have arisen between seeing good investment performance and ensuring a stricter compliance regime was in place. In fact, Mr Smith said as much himself last week. In the wake of the scandal surrounding malpractice at Jardine Fleming between 1993 and 1995, he said: 'Our focus during that time was too much upon investment performance and not enough upon compliance.' The charge for performance at Jardine Fleming in a period when the corporate culture was gung-ho and the business was expanding probably meant compliance and back-office administration failed to keep pace with change. The regulators' judgments handed out last week reported a lack of compliance systems at Jardine Fleming. There was slow investigative action concerning problems, and inadequate remedial action was taken at critical periods. 'The Lex' column in the Financial Times had this to say about the JF malpractices scandal: 'Investors meanwhile should take comfort. Yesterday's [Thursday, August 29] news, says more about Hong Kong's past than its future.' It said regulation of the securities industry in the territory was on a par with recognised international standards. However, there is a feeling Jardine Fleming at this particular low ebb in its history needs a chairman whose reputation is more closely associated with what JF can do in the future than any taint it might have from its past.