The regulators need regulating
Friday, 5 September 2008
By Colin Benjamin
To Superannuation Minister Nick Sherry:
Dear Nick,
The recent cases of raids on Andrew Forrest’s Fortescue Metals shares (See How Australia’s richest man won a victory against the short sellers: Kohler) and the long-delayed reporting to the regulators by Gunns and ABC Learning Centres are examples of failures in the ASX capacity to be both game warden and poacher at the same time, again suggest that it is time for a little more action and less equivocation.
At a time when even the most famous market manipulators are desperately looking round for ways to justify their exorbitant lifestyles of the rich and infamous, isn’t this a good time to introduce a bit of truth, trust and transparency regulation? How about asking Wayne to ensure that his taxation review looks at ways to encourage a secure source of tax credits for investors prepared to build a pool of venture capital funds for SMEs that are willing to expand our exports and grow their businesses.
When can we expect action based upon your long delayed consultations with the self-managing regulations on financial services and credit reform? We are well aware that it is your view that the ASIC, ASX and APRA have done a solid job in difficult circumstances.
When you look at what's happening internationally it is clear that the hedge funds have made bank robbers look benign. They are reported to have lost half of their funds and yet there has been no reduction in the above market fees they charge their clients for offering them a declining rate of return.
You claim that all regulators have been grappling with a series of very unpredictable consequences as a result of what was a unique set of circumstances with US sub-prime, yet a year ago it was clear that the train wreck of short selling, margin lending and market manipulation was going ahead full speed.
We already are seeing the reality that the speculators and hedge fund managers have been able to play havoc with the funds of small investors who believed that the regulators are there to protect them and small business is suffering from a credit crunch we didn’t have to have while banks only lower their home mortgage rates to keep Kevin10 at bay.
When are we likely to see the legislation that will put legs on your Green Paper that is supposed to call these smarties to account? Can we dare to hope that you are going to use this session of Parliament to table real measures to force the people who make money out of the losses on OPS (other people’s shares) to have to pay taxes on their unproductive market manipulations and get brokers to check with clients whether they are shorting a stock and, hopefully, also to force disclosure of stock loans?
Can we hope that you will push to remove payroll taxes and other barriers to growth of smart companies that are actually productive rather than just smart operators who make money out of other people’s misery? It’s time that the regulators got Nicked.
Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton.
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Comments
Kelly Magowan writes: Thank you for your refreshing article, and the many valid points you made which are not discussed enough. Unfortunately as you have indicated until the regulators "...introduce a bit of truth, trust and transparency regulation" the current practices will be the norm.
It would be nice to think in years to come there will be a focus on doing ethical business and nurturing and growing innovative and progressive businesses that add real value to our economy and our country. Rather than supporting those who borrow, move and make money out of others money in not so transparent fashion!
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