Untitled Document

Lack of transparency at SEC
The veil of secrecy that has been thrown over the unprecedented investigation by the Securities and Exchange Commission into alleged insider dealing by its own chairman, Michael Mack, certainly does not inspire confidence in the market or the regulators who are supposed to protect the interests of the investing public who are being asked to take the risk of investing their hard-earned money in stocks. It also goes against the very mission of the SEC itself, which is "to promote, develop and maintain a securities market that is fair, efficient, orderly, and transparent."

The lack of transparency on the part of the SEC in this investigation is definitely not helpful. For an organisation that promotes disclosure-based regulation of the financial markets, the SEC has been somewhat reticent in disclosing to the investing public information about such an unusual investigation. Not only is the investigation itself unusual, but the manner in which it has been conducted and the strange twists and turns that it has taken are also extraordinary.

Where else in the world has a markets watchdog investigated its own chairman and the chairman of the stock exchange, at the same time, in the same case? How can the SEC expect to win the public's confidence with such unusual and secretive procedures and moves? This investigation has been dragging on for weeks and the unusual nature of its developments have given rise to all sorts of rumours.The affair leaves many questions unanswered and investors puzzled and disappointed.

The SEC has still not officially explained why a second opinion was sought on the advice given by the Attorney General's Department. Nor has it explained who decided on a second opinion? Who selected the two-man panel of experts to review the AG's advice? Why was Michael Mack given this privilege and not others who were accused of the same crime - and let us not forget that insider dealing is a criminal offence.

This leaves open the possibility that others investigated for the same crime would also demand a "second opinion". Why didn't the SEC make an announcement about its decision to go for a second opinion before the press broke the story? Why the secrecy about the identity of the two-member panel which reviewed the AG's advice? Why was there no SEC announcement about Mack withdrawing from SEC deliberations about his case before the media raised the issue?

Why is there no official announcement about the findings of the two-member panel?
It is in the interest of the accused, Mack and the other former directors of Aitken Spence and their family members, to clear their names in as transparent, fair and regular manner as possible. As we have said before these gentlemen are deemed innocent until proved guilty by a court of law. However, any hint of special treatment or favouritism in the course of this investigation would only tarnish their names and that of the organisations they represent.

There is no doubt that the gentlemen concerned have impeccable credentials and have had unblemished corporate careers. They are regarded as highly successful in their chosen field. But it is also true that we are living in a time when other "men of standing" or corporate leaders in more mature and sophisticated markets, figures who had achieved near cult status, millionaires many times over, have been found to be wanting and not as clean as they were thought to be, as the corporate scandals unfolding in places like America indicate. This is all the more reason why investors have doubts and for the accused in this case to ensure that justice is not only done but is also seen to be done.

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