St. Brian Gaynor on the regulators, we couldn’t agree more

MAM

Sanctimonious hypocrite St. Brian Gaynor had this to say back in 2008.

The recent criticism of the Securities Commission, particularly in relation to the finance company collapses, is justified. The commission has disappointed investors in several areas as it has a tendency to promise too much and deliver too little.

The organisation?s primary purpose is ?to strengthen investor confidence and foster capital investment in New Zealand by promoting the efficiency, the integrity and cost effective regulation of securities markets?.

It aims to achieve this through enforcement, recommending law changes, issuing rule exemptions, authorising and approving market participants, co-operating with international agencies and promoting public understanding of markets.

He goes on:

Most of these new regulations are 25 years too late. But the interesting point is who is going to enforce the new rules as New Zealand doesn?t have a regulator with strong enforcement powers? The answer is the Securities Commission. The commission will be given ?extensive public enforcement provisions?, yet when one reads through these powers it is very difficult to see the organisation becoming a top class enforcement agency.

The organisation?s attitude is best summed up in a piece on finance company collapses in its January 2008 Bulletin. According to the commission, investors have to sue for compensation for loss caused by the misleading statements in, or omissions from, the prospectus. However, under law changes that came into force in October 2006 the commission can take action regarding prospectuses issued after that if it ?concludes that this would be in the public interest and in the interests of investors?.

If the commission is serious about its enforcement role why doesn?t it start with Capital+Merchant Finance or one of the other recent finance company collapses?

He was of course talking about the Securities Commission and because of his lobbying and shrill insistence on tough laws and government the Financial Markets Authority was established.

Presumably Brian Gaynor will still be insisting the regulators get tough on organisations and people in charge of organisations who break trading rules and securities legislation.

One would hope that the FMA is of a like mind.

 

– Milford Asset Managment

 

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