The former enforcement head of the United States Securities and Exchange Commission (SEC) has stepped into an intensifying debate over reform of Hong Kong's securities laws. Gary Lynch rejected claims that the US placed the burden of proof on defendants in market manipulation cases and said public debate appeared to reflect a misinterpretation of how the US system worked. As the SEC's enforcement chief in the late 1980s, Mr Lynch was responsible for a string of landmark investigations that brought down arbitrageur Ivan Boesky and junk bond king Michael Milken, among others. His intervention comes as the Hong Kong Government has been accused of watering down its proposed composite Securities and Futures Bill in response to pressure from international securities firms. The Legislative Council's bills committee is due to debate the bill again on Saturday. A group of 10 investment banks, including Goldman Sachs, Merrill Lynch and Morgan Stanley objected strenuously to the bill when it was published last April, describing it as 'oppressive' and warning of a 'chilling' effect on Hong Kong's development as an international financial centre. The bill was subsequently amended. Mr Lynch, a partner at law firm Davis Polk & Wardwell, is advising the group. In a three-page summary aimed at 'providing some clarity', he outlined how US securities laws dealt with burden of proof and intent - key points of contention in the Securities and Futures Bill. 'Under the provisions of the 1934 [Securities Exchange] Act regulating specific types of manipulative conduct, the prosecution must prove intent to establish a violation,' he wrote. Some offences did not require proof of intent to establish a violation but these were not considered market manipulation violations and could not be prosecuted by the government or SEC. 'Finally, in a civil or administrative case brought by the SEC, or in a criminal action brought by the [Department of Justice], to punish or remedy a market manipulation violation, the burden of proof is on the prosecution,' Mr Lynch wrote. In a second submission on the revised bill made this week, the 10 investment banks wrote: 'Press coverage has stated that the US places the burden of proof in respect of market misconduct on the defendant. As a general proposition, this is simply not correct.' Larry Lang, chair professor of finance at Chinese University of Hong Kong, who has criticised the revised bill, said intent was almost always unprovable in cases of market misconduct. Britain had eliminated the need for prosecutors to prove intent in market misconduct cases, and Singapore proposed to do so, he said. Meanwhile, in another submission to Legco, Charles Schwab, the world's largest online broker, said the bill appeared to encourage a continuing monopoly for Hong Kong Exchanges and Clearing. Although the bill provided flexibility for other potential recognised exchange companies to operate a stock market in Hong Kong, 'we are concerned that, as a practical matter, the exchange may continue to enjoy its monopoly'. The firm urged that the bill make explicit reference to the value of competition in the clauses introducing the regulation of exchange companies.