26-12-2011, 04:09 PM
(25-12-2011, 08:10 PM)d.o.g. Wrote: Sad to say, very few independent directors want to be so hands-on that they are in charge of releasing cash. These directors are "non-executive" directors for a reason - usually they are just there to collect their fees. It is a quid pro quo - they sit on their friend's board and say that everything is fine, and in return they get some pocket money and their picture in the annual report.
That said, disbursement can be controlled by passing the money through an escrow account held by a law firm in Singapore. That way the law firm is liable if they release the money improperly. Of course, this will raise costs tremendously since the law firm must do its checks before releasing the money.
Basically, this type of escrow requirement will mean that NOBODY will list on SGX.
Qiaofeng Wrote:3) Extradition - the status quo is that the perpetrators of fraud gets away scot free.
But this cannot be said to be an acceptable norm of biz mode or the "rule of law" type of exchange that SGX aspires to be. Surely, it is not sustainable!
Is there no incentive for SGX to lobby for changes to protect investors (aka customers) who uses the exchange platform from whom SGX derives revenues and incomes ?
A) Financial fraudsters getting away scot free is the norm everywhere in the world. Even in the case of Enron nobody went to jail. Welcome to the world of finance. Invest at your own peril.
The SGX is paid directly by listed companies (listing fees) and the stockbrokers (clearing fees). To increase revenue, it can:
1. Increase the number of listings.
We see this with the introduction of ADRs as well as the proliferation of S-chips.
2. Encourage trading.
We see this in the $300m invested to accomodate high-frequency trading, plus the introduction of covered warrants and extended settlement contracts. All these are clearly to encourage trading.
Notice that "protecting investors" does not produce any visible short-term benefit to revenues. In fact it reduces the number of listings (and thus listing fees) since the dubious companies are prevented from listing. Therefore SGX has no incentive to protect investors, but it has millions of incentives to increase the number of listings and to promote churning.
B) Anyone who imagines that SGX will adequately protect investors, when doing so will hurt their profits, is being naive. Think about SMRT/SBS/Comfort - if they truly put customer service first, their profits will be hurt. Any monopoly will seek first to maximize profits. Service is delivered only to meet regulatory requirements.
As usual, YMMV.
For A) Enron Case
Jeffrey Skilling did serve prison terms. Originally sentenced to 24 years and 4 months and fined $45 million USD. The appeal pending re-sentencing is more to do with the justice system than the fact whether "rule of law" applies.
Andrew Fastow also served six years, followed by two years of probation. He was released pre-Christmas, 2011.
Kenneth Lay- was indicted. He is presumably dead---- unless U believe the Bush-related conspiracy theories.
So the fraudsters were punished.
For B) , SGX.....
U take a very pessimistic and cynical view of their regulatory efforts. But, remember they have NOT only a profit objective but also a regulatory and fiduciary duty housed within the same entity.
In other words, they are duty bound by their constitution/set-up to protect investors.
A more mercantile-type biz view, would be that anything that is short term and not sustainable in the long term would be detrimental to SGX own long term survival. Encouraging trading and more listings is in SGX long term interests. Indiscriminate promotion of listing of "rogue" companies will ruin SGX long term interests, since good companies would not want to be lumped together and bad corporate governance would scare away intelligent and discriminating investors. So there is alignment of interests which incentivices SGX to do something to clean up the mess.
Investment approach
Our views may differ.
U may have stated the facts (Enron) wrongly.
But, I respect the approach, U adopt to investing------ It is a dog-eat-dog world (No punt intended). Nobody owes U a free meal.
Assume the worst, most cynical case.
My1cG (My 1c Gibberish)
DYOR (Do Your Own Research)
DNAITB (Definitely Not An Invitation To Buy)
http://qiaofengsmusings.blogspot.com/
DYOR (Do Your Own Research)
DNAITB (Definitely Not An Invitation To Buy)
http://qiaofengsmusings.blogspot.com/