Published On: Fri, Jul 29th, 2011

HK To Name Lawyer Ashley Alder As New Head Of Securities Regulator

Ashley AdlerThe Hong Kong government plans to name lawyer Ashley Alder as the new head of the city’s securities watchdog, a person familiar with the situation said Friday, filling a position critical for the regulation of China’s capital markets.

Mr. Alder, currently head of Asia corporate at U.K. law firm Herbert Smith in Hong Kong, will take up the top job at the Securities and Futures Commission as scrutiny of accounting practices and allegations of fraud at some overseas-listed Chinese businesses rise with trading of several U.S.-, Hong Kong- and Toronto-listed Chinese companies suspended amid claims of improprieties.

Questions about accounting and corporate governance at Chinese-listed companies are crucial in Hong Kong, where China-related securities account for more than 70% of the trading volume on the Hong Kong exchange.

Mr. Alder is set to replace Martin Wheatley, who left as chief executive of the SFC in June after six years to take up another regulatory job in his native U.K. On his last day at the regulator, Mr. Wheatley warned investors against rushing headlong to buy shares in Chinese companies, calling China “the new dot-com” of the investment world. His comments were perceived as bold and indicative of the challenges that lie ahead of his successor.

During his time in Hong Kong, Mr. Wheatley, a former deputy chief executive of London Stock Exchange Group PLC, earned a reputation as a proactive enforcer, combating insider trading and other market misconduct, as well as boosting the commission’s standing in Hong Kong and abroad.

In 2009, the SFC under his direction upset the business dealings of Richard Li, the son of Li Ka-shing, one of Asia’s wealthiest businessmen, alleging that a shareholder vote to approve a buyout deal had been rigged. An appeals court ruled in favor of the SFC, scuttling the transaction.

Market participants had wondered if the next appointee would be someone likely to perpetuate Mr. Wheatley’s enforcement style, which was more aggressive than his predecessors’—or move in another direction.

Some praised Mr. Alder’s qualifications for the role, including a previous three-year appointment as executive director of corporate finance at the SFC and his capital markets work at Herbert Smith including involvement in many Chinese listings.

Mr. Alder, who received his law education at the University of Cambridge, didn’t return requests for comment.
The SFC declined to comment.

Hong Kong shareholder activist David Webb called Mr. Alder an “excellent choice” for the job. “He’s an independent person and won’t be afraid to stand up to the pressures of government and tycoons,” said Mr. Webb, a member of the SFC’s Takeovers and Mergers Panel since 2001 who worked with Alder during his stint at the organization.

John Kuzmik, a partner at Baker Botts LLP, said he has known Mr. Alder for several years and cited his “solid credentials, international perspective, and deep local experience.”

Like other high-profile government positions in Hong Kong, the head of the SFC has been well-compensated by international standards. Mr. Wheatley earned 9.09 million Hong Kong dollars (US$1.17 million) in 2010 according to the SFC’s annual report.

Fai Hung Cheung, a partner at Allen & Overy, said: “The appointment of an international lawyer is an important development given the rapidly increasing complexity of the financial sector and the cross border regulatory issues to which this gives rise.”

Mr. Alder’s planned appointment was first reported by The Financial Times earlier Friday.

By CHESTER YUNG And KATE O’KEEFFE Dow Jones Newswire

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