Tuesday 17th April 2018

Dear Reader,

Carrie Lam's latest assault on free markets
The Government is threatening to broaden rather than repeal a restriction on the resale of event tickets in HK, a restriction which is probably unconstitutional anyway. This runs against the interests of event organisers and performers who benefit from the secondary market as we explain. It also runs against the broader public interest in consumer choice. Let the market function, and repeal section 6 of the POPE Ordinance. What next - a restriction on reselling wine or IPO shares for a profit? (17-Apr-2018)

Exclusive: HK Government to launch "Christian Bonds"
Webb-site has learned of secret plans to turn Hong Kong into a Christian Finance hub, and of course, they are launching it on Easter Sunday. (1-Apr-2018)

Solving the MPF-LSP offset problem, again
The HK Government fails to identify the obvious solution and instead pursues a doomed approach of perpetuating MPF plus LSP. That will either result in taxpayers fully funding a windfall to existing employees or the Government losing a judicial review for overriding the implied terms of existing employment contracts and violating employers' legitimate expectation of not having to pay twice. (30-Mar-2018)

Censure of G.A. (8126) and ex-directors
SEHK, 13-Apr-2018
The Exchange says the responsibilities of GEM Compliance Officers "must be taken seriously". A series of connected transactions went undetected for 8 years despite "purported" internal controls. We note that Mr Loh Nee Peng has been in trouble before, criticised by the Listing Committee in 2006.

Nomura subsidiary Instinet Pacific Ltd is fined HK$17.3m for algo and ALP failures
SFC, 13-Apr-2018
In one case, flawed software and a fat-finger 10x pricing error caused the algorithm to keep out-bidding itself by 20 ticks, affecting the pre-market price. In another case, the software allowed a human trader to override the safety limit 3 times, which "completely defeated its purpose" and caused a 31% price increase in 36 seconds. In the final case, the safety limit didn't function because the software did not allow for the absence of an opening price, knocking a price down by 14%. Lucky buyers!

Webb and Roger Ver debate Bitcoin and other crypto-tokens
Bloomberg, 12-Apr-2018

SFC commences MMT proceedings against Fujikon (0927), Chairman and ED
SFC, 10-Apr-2018

SFC seeks disqualification of ex-Far East (0036) senior execs
SFC, 10-Apr-2018
The SFC is pursuing Duncan and Derek Chiu, sons of the late Chairman Deacon Chiu, and the former company secretary Michael Lui Hung Kwong. This follows the 2012 acquittal of Duncan Chiu, Mr Lui and the late Chairman's personal assistant, Wendy Yung Kim Bing, on fraud and theft charges. The judge in that case was minded to refer the matter to "the appropriate authority or SFC".

HKICPA fines RSM HK and Stephen Wong Tak Man
HKICPA, 9-Apr-2018
At last, the decision in this 2015 case regarding a 2009 audit is published.

Censure of Mr Fu Jiwen, absent former ED of Huarong Int Fin (0993)
SEHK, 3-Apr-2018
He was an ED until 2-Sep-2015. Subsequently, he failed to respond to investigation enquiries by the Listing Department of the Stock Exchange. It's another demonstration that the Exchange is an ineffective regulator - it is a for-profit company without statutory investigative powers. The listing regulatory function should be moved to the SFC, which could then at least seek co-operation from its mainland counterpart.

And much more besides...
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David M. Webb
Editor, Webb-site.com