Bloomberg News

Hong Kong’s SFC to Appoint Herbert Smith’s Alder as Chief

July 29, 2011

(Updates with law firm’s comment in third paragraph.)

July 29 (Bloomberg) -- Hong Kong’s Securities and Futures Commission will appoint Ashley Alder, the Asia head of law firm Herbert Smith LLP, as its new chief executive officer.

Alder, an executive director of corporate finance at the regulator from 2001 to 2004, will return to lead the SFC in October, according to a person familiar with the decision who declined to be identified because it isn’t public.

Andrew Tortoishell, Herbert Smith’s Greater China managing partner, confirmed the move and said that Alder’s successor will be finalized “very shortly.”

Patrick Wong, a spokesman for Hong Kong Financial Secretary and chairman of the selection panel, John Tsang, declined to confirm Alder’s appointment. Wong said the government would be making an announcement “quite soon.” The Financial Times earlier reported the appointment.

Alder, 52, will be responsible for maintaining Hong Kong’s regulatory reputation as the city attracts more initial public offerings from overseas, at a time when corporate governance in Chinese companies is being scrutinized by short sellers and regulators in the U.S. and Canada. The position has been vacant since June 8, when Martin Wheatley left to take over the U.K.’s new Consumer Protection and Markets Authority.

“He needs to both ensure more consistent standards of oversight of listed companies and resist pressure to over- regulate and hinder growth,” said James Wadham, a Hong Kong- based partner at law firm Clifford Chance LLP.

Cnooc, Prada

Alder advised the Hong Kong Futures Exchange on its merger with the city’s stock exchange in 1999, according to the SFC’s announcement of his previous appointment. He received a Master of Law with first class honors from Cambridge University in 1983, it said.

At London-based Herbert Smith, he advised on the 2005 initial share sale of Dongfeng Motor Group Co., Cnooc Ltd.’s 2005 attempt to buy Unocal Corp. and the China Petroleum & Chemical Corp.’s privatization of a Hong Kong-listed unit.

So far this year, the Hong Kong market has attracted $15.3 billion in initial share offerings, including those of Milan- based Prada SpA, Mansfield, Massachusetts-based Samsonite International SA, and Baar, Switzerland-based Glencore International Plc.

In March, the commission identified due diligence lapses in applications from investment banks for IPOs. Chinese companies accounted for 45 percent of the HK$21.9 trillion ($2.8 trillion) capitalization of the stock exchange’s main board as of the end of April.

Insider Trading

Wheatley’s SFC secured Hong Kong’s first jail sentence for insider trading and he said on his last day in office that the regulator plans to make bankers legally liable for statements in prospectuses.

Hong Kong has emerged from the financial crisis as a global economic center, said Donna Wacker, another partner with the London-based Clifford Chance’s Asia regulatory group.

“Better regulatory cooperation with mainland China and other jurisdictions is important to maintain this position,” Wacker said.

While the International Monetary Fund’s Executive Board said in 2010 that said Hong Kong’s financial system was “well- regulated and supervised,” China’s reputation among investors have been strained since short sellers accused overseas-listed Chinese companies like Sino-Forest Corp. and Longtop Financial Technologies Ltd. of exaggerating operations.

Foreign Nationals

Alder is the fifth foreign national out of six appointed to lead the Hong Kong agency since its creation in 1989. The only Chinese national and permanent resident of Hong Kong to have led the SFC was Anthony Neoh, its chairman from 1995 to 1998.

Profit-per-equity partner at Herbert Smith rose 4.4 percent to 900,000 pounds ($1.47 million) in the year ended April, the firm said this month. The SFC’s chief executive officer earned HK$9.09 million last year, the commission said in its 2010 annual report .

Herbert Smith’s revenue in Asia jumped by 27.6 percent in the period to 83.2 million pounds, while London turnover fell by 2 percent to 304.9 million pounds.

--Editors: Douglas Wong, Hwee Ann Tan

To contact the reporter on this story: Debra Mao in Hong Kong at dmao5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net


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