Some may argue that the crackdown on research and sales practices at brokerages in South Korea is a bit much but at least the investing public there has a sense that their regulators are doing something.
Certainly is a contrast with Hong Kong.
Korean regulators have blitzed the investment banking community in the past several weeks in a campaign that seemed to kick off with a high-profile audit of UBS Warburg after it downgraded Samsung Electronics. The financial authorities are investigating whether the brokerage leaked the downgrade before it was officially published.
They have been storming around town, checking e-mails and performing audits to ensure 'firewalls' divide research and trade operations.
Meanwhile, the Korea Securities Dealers Association penalised 26 brokers for overestimating earnings estimates of newly listed companies. They make that Spitzer guy in New York look a little lily-livered, in fact.
Has there ever been a case where brokerages in Hong Kong were held accountable for their research? For violating fair disclosure standards? We couldn't recall any, nor could anyone we contacted at the Securities and Futures Commission (SFC), although we gave them short notice.
