WE HAVE REACHED a new low in securities regulation. The game is no longer to bring offenders to justice but to confront suspects with the prospect of wasting so much time and money that they will pay the Securities and Futures Commission to go away.
I make no comment on the merits of the evidence that the SFC may have had against Raphael Blot, the head of equity derivatives sales at SG Securities. He has agreed to pay $750,000 without admitting liability in return for the SFC dropping all disciplinary measures relating to a market manipulation case dating back to 1998.
But I do hope this is not a scalp that the people at the SFC will nail to their walls as a record of their successes. They did not get him. Whether he was guilty or not, all they can truthfully claim is that they wore him down.
This is not difficult when they have steady jobs and salaries to do it and when their quarry must pay his own huge legal bills as well as, very likely, find himself out of a job for years upon years because he is not a good employment prospect with such misery hanging over his head.
I cannot say whether it was so in Mr Blot's case but I do know people who have been dragged through the dirt like this. Given the large number of instances in which they are subsequently cleared, they have good reason to feel hugely offended at such cavalier treatment.
This is one practice we do not want to import from the United States. As a way of maintaining justice it is distinctly unjust. It constitutes conviction of the exhausted, not of the guilty. It is a corruption of the rule of law. Effective punishment comes before verdict and even verdict may never be delivered. Sentenced because charged is the new legal principle at which we have arrived.
I actually once heard a senior representative of the SFC being almost that blunt about it. 'Don't worry, we know when they're guilty,' he said or words to that effect. It was at a group lunch in the SFC's offices and I did not have notebook or tape recorder on the table at the time or I would now give you his name. Well, if it is indeed true then why not dispense with courts of law? They have no useful purpose if the SFC's enforcement division can be so sure of its prey. In fact, it would be fairer to all in that case if the SFC went straight from investigation to levying a big fine.