At first glance, last Thursday's decision by the stock exchange listing committee to water down its proposed ban on directors' share dealings ahead of their companies' results announcements looks like a shameful betrayal of ordinary investors' interests. Instead of confirming an outright prohibition on dealings by directors in the interval between the end of a company's financial period and the release of its results, the listing committee merely lengthened the existing one-month ban. To ordinary investors the climbdown looked like a shameful retreat in the face of pressure from Hong Kong's powerful business elite. Instead of standing up for minority shareholders, the regulators cravenly backed down, effectively giving a green light to the city's tycoons to trade on inside information ahead of their own companies' earnings announcements. Yet while the decision is certainly a disgrace, the implications may not be as bad as they seem at first. Although the committee's members failed in their duty to protect minority shareholders, they did give ordinary investors the tools they need to punish backsliders for themselves. If the frontline regulators won't discipline the market, investors will just have to take matters into their own hands. Rather than prohibiting all trading by directors between the end of a company's financial year (or half) and the announcement of its final (or interim) earnings, Thursday's decision imposed a blackout period that bans dealing in the two months before final results are declared, and for one month before the interim results. As the rules stand, a listed company has up to four months from the end of its financial year to announce its final earnings, and three months from the end of the half to come out with its interim profit figures. As a result, Thursday's ruling still leaves plenty of time for directors to make illicit adjustments to their holdings in response to advance inside information about company earnings. But from now on, a nasty odour of suspicion will inevitably attach itself to any company that takes longer than 60 days to come out with its final results, or more than 30 days to announce its interim earnings. After all the controversy of the last six weeks, investors are bound to wonder if late reporters are delaying their earnings' announcements precisely in order to allow directors, their families and friends to trade illegally on inside knowledge. That's partly because the objections raised by Hong Kong's tycoons against the proposed restrictions on directors' dealings were so transparently false. In an open letter published in Hong Kong's newspapers on December 29, just two days before the proposed ban was originally due to come into force, more than 200 listed companies, including 13 members of the benchmark Hang Seng Index, levelled a series of complaints against the ruling. Among other things, the signatories objected that the consultation process was 'hasty', that the ban would 'undermine the legitimate rights ... of directors as investors', and that the prohibition would deter companies from listing on Hong Kong's market. These objections are laughable. The consultation paper containing the proposed rule changes was published on January 11 last year, 111/2 months before the ban was due to come into force. Anyone who truly believes 111/2 months to be hasty can hardly complain about a blackout period lasting at most four months. The other complaints also fail to stand up. Company directors have an overriding duty to protect the rights of all shareholders, not just to uphold their own narrow self-interest as investors. Similarly, companies choose to list in Hong Kong primarily because of the depth of its investor base, and investors in their turn are attracted by credible regulation. As a result, reputable companies are much more likely to be encouraged to list here by tighter rules on investors' dealing than to be deterred. The hollowness of these objections is sure to raise questions about company directors' real reasons for opposing the extended blackout period. As a result, any companies that under the new rules take longer than two months to announce their final earnings or more than one month to come out with their interim results are bound to arouse investors' suspicions. If a company as vast and as complex as HSBC can publish its audited annual results on March 2, just 61 days after the end of its financial year, there is no credible reason why other Hong Kong-listed companies should take any longer. Yet many of them take much, much longer. The bar charts below show how long after the end of their financial periods it took the 13 Hang Seng Index members that openly opposed the extended blackout period to announce their most recent results. The picture is not encouraging. Last year, only Bank of East Asia and Hang Lung Properties announced their final results within the new 60 day boundary of suspicion. None managed to release their interim results in time, with Henderson Land taking a glacially slow 87 days to publish its half-year results. No doubt Hong Kong companies would protest vigorously, arguing that they cannot produce reliable accounts any faster. However, their auditors disagree, saying it is only the caginess of Hong Kong boards that prevents company results coming out sooner. Investors should persuade them to change. From now on, minority shareholders should punish companies that take longer than two months to release final earnings, or more than one month to publish their interim results, by selling down their shares. If Hong Kong's regulators won't discipline listed companies, investors will just have to do it for themselves.