![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
Carry On Campos
Mar. 9th, 2007 01:13 pmWell, if you are going to give Roel Campos, one of five commisioners at the US Securities & Exchange Commission, any kind of credit, it's that he kind of knew that it was time to stop digging.
First, some background. The US, and the New York Stock Exchange in particular, is somewhat irritated that the insane regulatory rules imposed by the Sarbanes-Oxley laws have not been followed slavishly by the rest of the world. In particular, they haven't been followed by the London Stock Exchange. And, more in particular, they very much haven't been followed by the Alternative Investment Market (AIM).
So, at the SEC Conference on regulation outside the US, Campos was only saying on the sidelines what quite a few regulators probably say every day in private.
"I'm concerned that 30 percent of issuers that list on AIM are gone in a year," Campos said. "That feels like a casino to me, and I believe that investors will treat it as such."
Now, Campos is not alone in being concerned at the lightness of the "light touch" when it comes to regulation on AIM. Personally I think that any investor in AIM stocks should have to go through a severe "caveat emptor" warning page.
About 60 US companies decided to list on AIM, rather than go through the tortuous procedures in the US. New York is distinctly unhappy about the amount of business (and money) that is coming to London rather than New York. Bonuses are now at a level where no longer do people working in investment banking over here want to get "over there", "because that's where the big money is".
However, saying something to stock exchanges in private and saying it in public are two different things. particularly if you get your facts wrong. As the London Stock Exchange pointed out within hours, the failure rate on AIM is about 3%, not 30%.
Needless to say, journalists were not slow to pounce on Campos's remarks. And when he was asked if he felt that London's AIM was like a casino, Campos said "Absolutely not".
Backtracking faster than a champion backwards runner, Campos added that "what I was referring to was a generalised situation".
Well, read the quote for yourself. Doesn't sound particularly generalised, does it? And it's hard to see what context the quote could be taken out of that would make the meaning any different.
But there are other forces that might be at work here. Don't forget that Neteller was AIM listed. SportingBet was, I think, AIM listed. PartyGaming was a FTSE 250 company. There's 888 as well. It wasn't just Sarbanes Oxley that was sending these companies (and all the concomitant fees) to list in London. It was a realization that listing in the US brought up considerably more problems than listing in the UK in legal, compliance and moral terms. Basically, the UK is a lot more laissez-faire.
The main question Campos should be raising is, is this a good thing? But it's a hard line for the US to take, that more regulation is good. In a sense, the UK tends to trust the investor to have some kind of head on his (or her) shoulders, and to take responsibility for his actions. The excuse "but they lied to me!" doesn't cut much ice. The response is "it's business, what did you expect?" In the US, the response is a lawsuit.
And the weird thing about it all is that I doubt that Sarbanes-Oxley will have the required impact. It will make life a lot worse for honest companies, but it won't make it impossible for the crooks. And, when it comes to gigantic fraud, it should be remembered that Enron was not, so far as I recall, listed on the London stock exchange.
First, some background. The US, and the New York Stock Exchange in particular, is somewhat irritated that the insane regulatory rules imposed by the Sarbanes-Oxley laws have not been followed slavishly by the rest of the world. In particular, they haven't been followed by the London Stock Exchange. And, more in particular, they very much haven't been followed by the Alternative Investment Market (AIM).
So, at the SEC Conference on regulation outside the US, Campos was only saying on the sidelines what quite a few regulators probably say every day in private.
"I'm concerned that 30 percent of issuers that list on AIM are gone in a year," Campos said. "That feels like a casino to me, and I believe that investors will treat it as such."
Now, Campos is not alone in being concerned at the lightness of the "light touch" when it comes to regulation on AIM. Personally I think that any investor in AIM stocks should have to go through a severe "caveat emptor" warning page.
About 60 US companies decided to list on AIM, rather than go through the tortuous procedures in the US. New York is distinctly unhappy about the amount of business (and money) that is coming to London rather than New York. Bonuses are now at a level where no longer do people working in investment banking over here want to get "over there", "because that's where the big money is".
However, saying something to stock exchanges in private and saying it in public are two different things. particularly if you get your facts wrong. As the London Stock Exchange pointed out within hours, the failure rate on AIM is about 3%, not 30%.
Needless to say, journalists were not slow to pounce on Campos's remarks. And when he was asked if he felt that London's AIM was like a casino, Campos said "Absolutely not".
Backtracking faster than a champion backwards runner, Campos added that "what I was referring to was a generalised situation".
Well, read the quote for yourself. Doesn't sound particularly generalised, does it? And it's hard to see what context the quote could be taken out of that would make the meaning any different.
But there are other forces that might be at work here. Don't forget that Neteller was AIM listed. SportingBet was, I think, AIM listed. PartyGaming was a FTSE 250 company. There's 888 as well. It wasn't just Sarbanes Oxley that was sending these companies (and all the concomitant fees) to list in London. It was a realization that listing in the US brought up considerably more problems than listing in the UK in legal, compliance and moral terms. Basically, the UK is a lot more laissez-faire.
The main question Campos should be raising is, is this a good thing? But it's a hard line for the US to take, that more regulation is good. In a sense, the UK tends to trust the investor to have some kind of head on his (or her) shoulders, and to take responsibility for his actions. The excuse "but they lied to me!" doesn't cut much ice. The response is "it's business, what did you expect?" In the US, the response is a lawsuit.
And the weird thing about it all is that I doubt that Sarbanes-Oxley will have the required impact. It will make life a lot worse for honest companies, but it won't make it impossible for the crooks. And, when it comes to gigantic fraud, it should be remembered that Enron was not, so far as I recall, listed on the London stock exchange.
