SEC-Goldman case

IN the US, the Securities and ExchangeCommission (SEC) has charged Goldman SachsGroup Inc and Fabrice Tourre (one of its vicepresidents) with fraud in a civil lawsuit. The USlaw-enforcement agency has taken action against thebiggest investment bank in the world. The outcome ofthe litigation would very much matter to both. Since thefinancial tsunami devastated the world, governmentshave tended to try harder to regulate financialinstitutions. The outcome of the case would haveprofound repercussions in the financial world. Nospectacle like the SEC-Goldman case has happenedhere. However, it should inspire Hong Kong to improveits financial infrastructure by having more effectiveregulation.

Goldman is the biggest investment bank in theworld. Would it rashly come to heel? The litigation willculminate in a trial of the century. The investmentbank will certainly fight for all it is worth to safeguardits reputation. The SEC-Goldman chess game has yetto unfold. However, the Pandora's box having beenopened, the case may affect other investment banks.

Goldman may just be a point at which BarackObama and his administration intend to make abreakthrough in stepping up regulation and bringinginvestment banks (each of which may control as muchwealth as a government does) under control. The SECintends to consecrate its colours with Goldman'sblood. It does not matter whether the SEC has tried tosuit its actions to the Obama administration's schedule.

No sooner had it taken action against the investmentbank than Obama and the Democrats seize theopportunity to call for passing financial reform laws forregulating financial derivatives. Therefore, Goldmanwill fight the legal battle to save not only its reputationbut also investment banks' future.

It remains to be seen whether the SEC orGoldman will win and whether Obama, who haspushed the health insurance law through, will winanother battle. Obama is aware that he has to dealwith the problem of inadequate regulation the financialtsunami exposed. If financial regulation remains as it isdespite the disaster, another disaster will lie in store.That is why there is a growing trend towards closersupervision of financial markets. Hong Kong has nopower to influence the rest of the world. However, it isnecessary for the SAR government to do everything inits power to make regulation more effective.

In recent years, there have been cases of issuersfalsifying financial reports. Most such cases involveaccountants. In Hong Kong, accountants policethemselves. The Hong Kong Institute of CertifiedPublic Accountants (HKICPA) has always been slow ininvestigating such cases. People therefore suspect it istoo partial towards its members to supervise themeffectively. About seven years ago, the governmentproposed that a statutory body replace it as thewatchdog of accountants. The proposal was shelvedamid strong opposition. Recently, the government hasagain suggested that there should be an independentwatchdog of the profession. The HKICPA has raisedobjections as it did.

In all leading financial markets in the world,independent bodies supervise professionalaccountants. The mainland, Japan, Singapore andMalaysia are pursing reform in this direction. HongKong now lacks an independent regulator that canreach mutual recognition agreements with its overseascounterparts. That does not conduce to our financialmarket's development. Mutual recognition agreementsmay bring down listed companies' accounting costs, fora company that will be listed in two places will onlyhave to prepare one financial report if there is a mutualrecognition agreement between them. There is now atrend towards simultaneous initial public offerings.More overseas companies may consider getting listedhere if Hong Kong has mutual recognition agreementswith other places.

If an independent body regulates the accountingprofession, Hong Kong will have sounder financialinfrastructure, and more companies will get listed in theterritory. That would benefit the accounting profession.In our view, the accounting profession should go alongwith the trend towards stricter regulation of all facets ofthe financial sector, say goodbye to "self-policing" andsubject itself to an independent body's regulation sothat the international financial centre will have astronger "constitution".

明報英語網「雙語社評」

english.mingpao.com/critic.htm

明報社評 2010.04.21

美國證交會拿高盛祭旗香港會計界應接受監管

美國證券交易委員會（簡稱證交會）起訴高盛集團（Goldman Sachs Group Inc.） 及其副總裁之一圖爾（Fabrice Tourre）民事欺詐，這場官司，是美國執法部門對付全球最大的投資銀行，輸贏對雙方都至關重要；另外，金融海嘯之後，全球傾向加強監管金融機構聲中，這宗官司的結果對金融世界有深遠影響。香港沒有類如證交會控告高盛的大場面，但是在加強監管以健全金融基建方面，從中應該可以得到啟迪。

高盛是全球最大的投資銀行，哪會輕易屈服，這宗官司將會是世紀大審訊，高盛肯定傾力抗辯，為商譽而戰。此案尚待證交會和高盛博弈，但是已經打開了「潘朶拉的盒子」，可能波及其他投資銀行。

由此看來，證交會對付高盛，掀起全面翻舊帳的風暴，高盛可能只是奧巴馬和美國政府加強監管、制服富可敵國投資銀行的突破口。事實上，無論美國證交會有否配合奧巴馬的時間表，總之，證交會拿高盛祭旗的同時，奧巴馬與民主黨人以此為借口，要求通過金融改革法例，加強監管金融衍生產品。因此，高盛此番司法之戰，不但捍衛商譽，還是為了投資銀行日後的營運而戰。

證交會與高盛誰勝誰負，奧巴馬能否繼醫保法例之後，再下一城，且看後續發展，不過，金融海嘯所暴露監管不足問題，奧巴馬知道一定要處理，若經此大禍之後，金融監管依然故我，另一個災難就在前面等着。所以，加強監管金融市場是大勢所趨，香港雖然沒有牽動世界之力，但是在力所能及範圍內，尋求更有效監管，還是有必要的。

這些年來，本港一些新股上市涉及「造假」之事，多與會計師有關。會計業實行「自我監管」制度，過去遇到事故，會計師公會的調查工作一向緩慢，被外界質疑偏幫自己人，未能有效監管會計師。約7 年前，政府原擬由獨立法定機構，取代香港會計師公會監管會計界，但是因為遭到激烈反對，未能成事。近期政府重提建議，要會計界朝獨立監管模式發展，正如過往一樣，會計師公會已經表明反對。

目前世界各個主要先進金融市場，都是由獨立機構監管會計專業，中國大陸、日本、新加坡及馬來西亞，也正朝着這個方向改革；若本港沒有獨立監管單位，將難與海外監管機構互認，不利於本港金融市場的發展。互認審計制度可減低上市公司的審計成本，若公司在兩地上市，也只需準備一份財務報表，環球企業到世界各國多邊上市已成趨勢，本港若能與其他地區互認，有助吸引海外企業來港上市。

由獨立機構監管會計界，可加強金融基建和吸引更多企業來港上市，會計界本身也可以從中得益，所以，我們認為會計界應該服膺加強監管各個金融環節的大趨勢，告別「自我監管」，接受由獨立機構監管，以更強化國際金融中心的體質。

每周一音標

《明報英語網》逢星期二推出「每周一音標」，以視像短片模式教授國際音標，真人發音，歡迎瀏覽網址：english.mingpao.com

G lossary

culminate /'k .lmIneIt/end (with a particular result).

for all it is worth

with great energy, effort and determination.

colours

a flag, badge etc that represents a team or acountry.