Thursday, April 15, 2010

Securities Commission needs a clean out

The resignation of Securities Commission director David Jackson over the non disclosure of the breaking of banking covenants by Nuplex Ltd [NPX.NZ] highlights what conflicts of interest other Securities Commission Directors might have.

I agree with Mark Weldon, NZX CEO, that directors on the commission need to be full time and independent. Currently they are neither. A bit rich coming from Mark though when his own NZX Ltd [NZX.NZ] has a number of conflicts of interest in the day to day running of the exchange.

The SEC commissioners (see below) hold a number of positions on NZX listed companies that put them in direct conflict with their positions on the commission.

Simon Botherway has a directorship on Fisher & Paykel Appliances [FPA.NZ]. Annabel Cotton has interests in listed funds manager Fisher Funds and Mark Verbiest is on the Freightways Ltd [FRE.NZ] board.

Unacceptable to the average investor like myself because as a person with a financial interest in a company you can hardly be expected to regulate without bias that company as a SEC director and also do the job of director at that company with a clear conscience should anything need your regulatory hand.

Both positions are therefore compromised.

I know it is a small pool of competent individuals from which we seem to choose and we expect people with experience in the field (and that means NZX listed company investors and directors) but I think any bias needs to be a criteria that has to be exceeded and weeded out at the interview process before an SEC director is employed and that means selling those shares and resigning those directorships.

It looks likely that the SEC is going to be disbanded soon to be replaced by another market watchdog and that gives politicians the perfect opportunity for a clean out of the dross at the SEC and the appointment of a watchdog that is squeaky clean, has more clout and is able to prosecute law breakers with quick, effective and meaningful punishment.

The alternative is more of the same insider stuff that pervades stockmarket investing in New Zealand, the continued compromise of investors and the stockmarket in general and a lack of confidence in a market by current investors and more importantly those new investors who would like to buy shares but see stockmarket investing as the wild west or old boys club.

The current Members of the Commission are

Ms  Jane Diplock AO - Chairman.
Jane Diplock AO BA (Hons), LL B, DipEd (Sydney), Dip Int Law (ANU), FIPAA, FNZIM
Chairman of the Commission since September 2001.
Professional: Barrister and Solicitor of the ACT Supreme Court and High Court of Australia, Barrister of the New South Wales Supreme Court; Fellow of the Institute of Public Administration of Australia;
Chevening Fellow at London School of Economics; Chairman of the Executive Committee of IOSCO;
Member of the Financial Crisis Advisory Group; Fellow of the New Zealand Institute of Management.
David  Mayhew.
David Mayhew BA LLB Hons
Commissioner for Financial Advisers.
Professional: Professional: Barrister and Solicitor of High Court of NZ, Solicitor of Supreme Court England and Wales .
Simon Botherway.
Simon Botherway CFA, B Comm
Professional investor.
Directorship: Fisher and Paykel Appliances Holdings Limited.
Shelley  Cave.
Shelley CaveLLB
Solicitor, Auckland
Professional: Partner of Simpson Grierson specialising in corporate and securities law.
Ms  Annabel M. Cotton.
Annabel M. Cotton BMS (Accounting and Finance), ACA, CSAP
Business Consultant, Hamilton.
Professional: Consultant to companies listed in New Zealand and overseas.
Directorships: Genesis Power Limited, Kingfish Limited, Barramundi Limited, Marlin Global Limited and a number of private companies.
Ms  Keitha Dunstan.

Keitha Dunstan PhD (QLD), M Bus (QUT), Grad Dip Mgt (UCQ), B Com (QLD), CA, FCPA
Professor, Australia.
Professional: Head of School of Business, Bond University Australia.

Elizabeth Hickey.
Elizabeth Hickey M Com(Hons), FCA, MInstD
Professional: Chartered Accountant, Auckland.
Directorships: New Zealand Institute of Chartered Accountants.
John  Holland.
John Holland B Com, LL B
Solicitor, Christchurch.
Professional: Partner of Chapman Tripp specialising in securities and competition law and mergers and acquisitions.
Directorships: Board member of Chapman Tripp.
Mr  Neville O. Todd.
Neville O. Todd B Com
Company Director, Wellington.
Directorships: Kinloch Funds Management Limited and its subsidiaries. Formerly a director of Milford Asset Management and Salomon, Smith Barney New Zealand Limited, and a member of the New Zealand Stock Exchange.
Mark Verbiest.
Mark Verbiest LLB
Company Director, Wellington.
Professional: Consultant Simpson Grierson
Directorships: AMP Haumi Management Limited (manager of AMP NZ Office Trust); Freightways Limited, Government Superannuation Fund Authority, Southern Cross Medical Care Society, Health Trust and related entities, Aptimize Limited (Chairman).
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Securities Commission

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