Wheatley: Was It His Choice?

By Peter Stein

"Did he jump, or was he pushed? Martin Wheatley’s departure as chief executive of Hong Kong’s Securities and Futures Commission is bound to prompt the question, given the feathers he’s ruffled in his tenure.

Bloomberg News
Martin Wheatley speaks at a conference in September 2009 Mr. Wheatley, who first joined the market regulator in 2005 and took over as its head in 2006, was unequivocal in his comments Wednesday. No, he wasn’t pushed, he said. He was leaving for personal reasons. Six years was enough, and it was time to return to the U.K.

Probably not all will be sad to see him leave. Mr. Wheatley took on some big fish during his time. In 2009, Richard Li, son of Hong Kong multibillionaire Li Ka-shing, for instance, saw his plan to privatize his telecommunications company PCCW Ltd. dashed when the SFC alleged that a shareholder vote approving the deal was rigged. An appeals court found in the SFC’s favor.

The SFC took an aggressive stance against insider trading and other securities violations. Earlier this year, the SFC scored a big notch in its belt when a court sentenced former Morgan Stanley banker Du Jun to seven years in prison and fined him 23.3 million Hong Kong dollars (about US$3 million) for insider dealings during his time with the Wall Street bank.

Some holders of so-called Lehman minibonds had a much less favorable view of Mr. Wheatley. Many small investors lost money when the complex derivatives issued by Lehman Brothers and sold by banks locally collapsed in value. A settlement with banks brokered by the SFC ended up returning a portion of money lost to the securities holders, but institutional and sophisticated investors were excluded.

Since then, many individuals who weren’t included in the settlement have waged noisy protests outside the offices of banks in Hong Kong in an effort to force them to return some of their lost money. They’ve also protested in recent days outside the SFC’s offices in Hong Kong’s central district, holding signs with a circle around Mr. Wheatley’s face and a line drawn through it.

There’s been speculation in the past that Mr. Wheatley’s tenure might be cut short. His contract was last renewed in September 2008, but only just before its expiration – a reminder that he held his job only at the government’s pleasure.

That said, Mr. Wheatley, a former deputy chief executive of the London Stock Exchange who’s been involved in setting international regulatory standards for the securities industry, has privately let it be known in the past that six years at the SFC was likely going to be enough for him. While he’s become an important fixture of the Hong Kong financial scene, he was no lifer. It’s more likely he’d decided to move on by himself, without any new clashes or incidents precipitating the decision.

The big question really will be: who takes his place? Based on past practice, a panel of advisers would recommend a successor to the government. For Hong Kong to maintain the confidence of global investors, it will need to find a new regulator of comparable stature, but one with a thick enough skin to take on the rich and powerful when it’s called for. Now that Mr. Wheatley has given everyone a six months’ heads up, the government will do well to use the time to conduct a thorough search."

Legco member Ms Ip had commented that Mr. Wheatley is the only reliable and trustworthy person left in HK govenment. It is well known to HK people that others HK high level officials were power corrupt (and now simply corrupt) and privately covering up misconduct deals of government secret acts with the bankers. Ex-SFC official Ko's view is that Martin must have great disagreement with the government over how to handle our case and had to throw up his job at the end. I would say such as Tsang brothers and others with relatives in banking industries (Morgan Stanley) to help out in cover up of HK banks misselling frauds.