Our own Eliot

Insider trading and market manipulation in Hong Kong has been a continuing problem for as long as the stock market there has been in existence.  Up until recently there had never been a successful criminal prosecution for insider dealing.  All of that is now changing and Hong Kong appears to have its own Eliot Ness of the securities industry.

Mark Steward joined the SFC from the Australian Securities and Investment Commission a few years back and has now racked up 9 criminal prosecutions.  In a speech to the Hong Kong Securities Institute a few days ago he set out some of his philosphy in addressing insider dealing and other critical regulatory issues in Hong Kong.

While reading the speech it reminded me of the work of Eliot Ness in bringing down Al Capone and disrupting the illegal liquor industry in Chicago.  While Mr Steward is not facing violent thugs, he is trying to change a mindset by going after high profile issues using a variety of legal tools.

The cases prosecuted so far make it clear that if you are a financial intermediary and you use your position to gain an unfair market advantage then Mr Steward may well go after you.  When he does he is likely to look for a custodial sentence.  The PCCW takeover case and the recent settlement involving many banks and the Lehman mini bonds also makes it clear that the SFC will go after big issues with political implications without fear.  Mr Ness would be pleased.