'I have recently received complaints that some securities analysts have published articles in newspapers mentioning their personal investment decisions and actions, which may mislead the small investors in the stock market. In this connection, will the government inform this council ...' Mandy Tam Heung-man, Legislative Council question, April 25 And the relevant civil servant then replied that the Securities and Futures Commission is looking into the matter and analysts had better watch themselves and, if the public wants to know more, it can look up a series of articles on 'Considering Analysts' Advice', which are to be found on the SFC's website. So I looked them up. They are not articles. They are video and audio clips and the video clip gave me a few pointers on how to break the law by scorning seatbelts and talking to the driver while riding a minibus. Don't ask me for the connection to investment. I naturally assume that minibuses are less of a mystery to the SFC. I broke my own link to the SFC years ago, when I had to turn in my dealer's and investors' representative's licences on leaving the investment industry and joining this newspaper. They can't get me any longer, nyaah-nyaah-na-nyaah-nyaah. Go ahead, fellas, try to pull my dealer's licence. Oops, gone already. Well, imagine that. But I think they would indeed love to regulate investment commentary in the media as much as they do that stream of dull reports produced by securities companies. The biggest single reason it is so dull, by the way, is that they regulate it. Trying to turn fiction into non-fiction has never worked well. They don't dare interfere with the press, however. That would induce a howl of protest about infringement of freedom of the press, which would go to the top, right to the level of a certain bow-tie, and a few people at the SFC might then suddenly have a shaky hold on their jobs. All they can really do is insist that analysts who offer opinions quoted in the press must provide their names, their licence status (ever seen or heard that done?) and must say whether they hold any of the stock that they are talking up. But if I, as a journalist, don't feel like identifying the people to whom I talk, or telling you what sort of SFC tickets they have or asking them whether they are talking their own book, then I won't, and let's see the SFC make me. Come on, fellas, threaten me a three-month suspension of my investors' rep's licence. Be tough. I agree with Mandy Tam, however, that published articles in newspapers can mislead small investors in the stock market. This is most obviously so with the sorts of articles that rely uncritically on pre-deal publicity by investment bankers for stocks they are bringing to the market. I don't entirely blame the journalists for this. They have nothing else to go on. New issues are marketed long before the prospectuses are out these days. No journalist, no investment analyst, no client, has any figure or statement to which the issuer legally commits himself with a signature throughout this process and by the time the signature finally goes down on paper, it is too late. The issue has already been sold. The market has moved on to the next one. No one is interested any longer. But if smaller investors are so often misinformed, it is largely because these days they are not worth the bother of the SFC regulatory burden that must be carried when dealing with small investors. The big boys with money are told. There are always ways to tell them. But the small investor is kept in the dark and the SFC actually connives at tardy publication of prospectuses, the practice most obviously to blame for keeping them in the dark. All that talk of creating a level playing field has only resulted in a playing field that is even more tilted than before. So why bother with imposing ever more restrictions on what can be said in the investment arena? Lift those restrictions. Bring on the rumour, the gossip and the full flow of talk. The wheat can never be separated from the chaff here anyway. No regulatory agency will ever filter the truth from the lie. Thus, let it all out, in the securities industry as well as the media. To make companies and issuers responsible for what they say, we need do little more than we do at the moment. We already have laws against fraud and theft. We already require legally binding signatures in prospectuses and annual reports. All we need do more than that is adopt a fine American legal reform - class action lawsuits. Put that together with contingency fees for the lawyers who handle the class actions and we could abolish the SFC tomorrow and still have a much cleaner market.
