Published On: Thu, Dec 9th, 2010

Hong Kong SFC Chief Executive To Leave Post In June Before Contract Ends

Hong Kong Securities and Futures Commission Chief Executive Martin Wheatley said he will be leaving his post six months from Wednesday and returning to the U.K. in a decision that was “entirely a personal one”.

Wheatley’s planned departure in June when he will have served six years at the regulator will precede the expiration of his contract on Sept. 30, 2011, but the executive said there was “no pressure at all” for him to leave his post.

“I’ve decided that after six years at the SFC, it’s time for me to return to the U.K.,” said Wheatley, who was formerly the deputy chief executive of the London Stock Exchange. “My main priority is to have a holiday.”

Wheatley will be leaving an organization that has taken on an increasingly pro-active regulatory role combating insider trading and protecting retail investors, ever since the collapse of Lehman Brothers in late 2008 and the ensuing protests from investors left with nearly worthless Lehman mini-bonds.

The SFC and HKMA had been accused by legislators and the public of insufficiently regulating banks on the sale of the complex structured products, but in July last year, the regulators announced some reparations for investors. They said 16 banks would pay 29,000 eligible minibond holders 60% of their original investment, while investors over 65 years of age would be repaid 70% of the principal amount.

Still, some investors are not satisfied. Protesters have gathered for the past few weeks outside the SFC’s office to burn Wheatley’s pictures and blare music typically heard at Chinese funerals.

“Undoubtedly the most difficult time (of my tenure) has been…the collapse of Lehman Brothers, the near collapse of AIG, the potential for many, many investment banks in the U.S. to collapse and then the shocks to the system that every market around the world has felt,” said Wheatley.

But the SFC has consistently defended its efforts, pointing out that Hong Kong’s had to go through far less regulatory upheaval in response to the financial crisis than its counterparts in the U.S. and Europe, where regulations were more lax.

“The Hong Kong system and the regulatory structure has stood up better than any other system around the world,” Wheatley said, adding that he doesn’t expect his departure to affect the SFC’s proactive enforcement policies. “I don’t think they’re (the policies) about individuals, they’re about the organization.”

The SFC has been increasingly cracking down on misconduct in the market, most notably in securing a number of insider-dealing convictions in the last two years.

It has also stepped up efforts to protect small investors, with one recent example being the regulator’s decision to set a minimum entry level for investors buying into Russian aluminum company United Co. Rusal Ltd.’s US$2.55 billion IPO in January, in a bid to deter retail investors from participating due to the many complexities of the deal.

The move was controversial, drawing criticism from some market participants.

Shareholder activist David Webb at the time described the SFC’s unprecedented move as “bizarre,” noting that retail investors could buy shares in the secondary market, so excluding them from the primary offering would do “nothing to protect them.”

Wheatley joined the SFC in June 2005 and was appointed the organization’s first chief executive in 2006.

By Kate O’Keeffe, Dow Jones Newswires

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