The Securities and Futures Commission has recorded a first-quarter surplus of $44.16 million, after earlier projecting a surplus of $3.93 million for the entire year, it said yesterday. The securities watchdog had projected a deficit of $1.4 million for the three months to June after a loss of $7.38 million in the same period last year. Turnover for the three months was up 55 per cent year on year to $145.1 million, but despite the sharp increase the regulator kept its expenses for the quarter flat at $101 million. The SFC had previously estimated full-year revenue at $447.3 million. The better-than-expected surplus was due to increased market turnover, it said. The regulator generates about 94 per cent of its revenue from levies and fees on market activities. At the end of June, the SFC's reserves were $735.2 million, or 1.7 times its approved annual operating expenses. Meanwhile, with the increase in stock market scandals, the SFC said that in June it had begun inspections on the business conduct of investment advisers to review their compliance with the law, rules and codes. During the quarter, the SFC prosecuted 26 people and companies. Eighteen of these prosecutions were successful, it said. Charges ranged from market manipulation to breaches of disclosure rules and other violations. In the 12 months to March 31 last year, 60 prosecutions were conducted. The SFC also intends to finalise and implement guidelines for addressing analysts' conflicts of interest before the end of the year.