The rich rallying against the new black out rule
There were front page advertisements on major newspapers yesterday by a group consisting of 236 HK-listed companies, 6 professional groups (which include prominent figures such as David Li, Bank of East Asia Chairman) protesting against the new extended blackout period on directors’ dealings in their companies’ securities. The amendment will be effective starting 1 Jan 2009 and from 2009 onwards, directors can not deal with their companies’ securities from the end of financial period to the announcement of the relevant results. Currently the blackout only exists in the month before the announcement of results.
Why do they protest only 3 days before the change will be implemented? The proposed changes have been consulted properly (there is a consultation paper on this matter, published back in January 2008) and most listed company directors should know about this proposed change since it has been discussed in the media and there is even a Webb report on this matter back in April 2008 (http://www.webb-site.com/articles/blackout.htm). Somehow they just realized right before the change is implemented that it is against their interests. What are they doing now? They have money, so they spend money to buy front page advertisements on most newspapers to try to badmouth the Hong Kong Exchange, saying that the changes will be “detrimental to Hong Kong’s position as international financial centre”, in the hope that the SFC or the government will stop this new rule. Will the government succumb to these rich people’s demands? I definitely don’t think so and with the government approval rating at its lowest, agreeing to stopping this black out rule change will just further undermine the credibility of the Hong Kong government, in the mind of the general population. I definitely believe that what these listed company directors are doing is just plain stupid.
As to whether their claims have merits or not, I will discuss it tomorrow. Stay tuned!
