Sadness as the sheriff heads across the ditch

HEADING OFF: FMA's foundation chief executive, Sean Hughes.
HEADING OFF: FMA's foundation chief executive, Sean Hughes.

Sean Hughes, the Financial Markets Authority boss, leaves the role in two weeks and, in my view, it's a shame he's going. He brought passion to the inaugural role and was also refreshingly frank and open with the media -neither of which is the norm for a bureaucrat.

A shareholder feedback report conducted by consultancy Oliver Wyman evaluated the FMA's progress since forming in May 2011.

It said there was a stakeholder view of the market watchdog as a sheriff riding in to clean up the wild West. So I hope under the man who will next wear the shiny badge - former Merrill Lynch legal executive Rob Everett - that the cowboys don't draw their guns from their holsters and start shooting up the town again.

Hughes was last week honoured with the New Zealand Shareholders' Association annual Beacon Award for outstanding leadership, receiving both the beacon and a cartoon (see above) depicting his time with the regulator. In his citation, association chairman John Hawkins said it was testament to Hughes' abilities that in only two and a half years he had built a regulator that was seen as highly credible by all participants in the capital markets. "Of note, is Sean's insistence that retail investors be included as one of those key participants,." Hawkins said.

"Being a regulator means not only setting the ground rules, but also enforcing them when required. It is an astonishing statistic that during his tenure as CEO, the FMA has won every single prosecution it has brought," Hawkins said. The Wyman report also said the FMA had issued more guidance in the space of two years than the Securities Commission (its predecessor) had during its 33-year existence.

Hughes has previously said he was stung over criticism the FMA and he faced following the failure of Ross Asset Management. But he did admit at a function last week to falling down in one area during his tenure - which the Wyman report also noted - on supporting investor education. He alluded to it as the most significant failing of his time as CEO.

Hughes will take a long summer break with his family in Melbourne but told me he was hopeful of obtaining a corporate transTasman role next year.

Last year's Beacon award winner John Parker praised the work of the Shareholders' Association in pushing the cause of retail investors' but he also said it needed to grow and lift its profile.

Association membership has remained relatively steady in recent years at just over the 1,000 mark and Parker said he thought it should seek more corporate funding to grow stronger. The 12-year-old association is run by amateurs who freely give of their time. The bulk of its funding comes from membership fees, supplemented by around $40,000 a year from corporate sponsors including the likes of Telecom and Vector. This money is accepted on a "no strings" basis and Hawkins said the association's track record shows very clearly that it "buys no favours".

Parker thought the association needs to avoid being seen to be in the pockets of any companies it critiques but that it could ask for sponsorship for specific projects including investor education.

The association is already active in this area, including its annual investor conference but Hawkins says it is also exploring a "potential new approach" to investor education that he wouldn't elaborate on.

In the past the association has put substantial member funds into one investor education initiative that had good results and feedback but failed to fly when the ongoing delivery had to be funded by others.

Maybe the FMA's new sheriff needs to ride to the rescue.

Sunday Star Times