Mummy recently attended a class titled “Overview of Legal & Regulatory Framework for Securities and Futures Industry.” It was a bit like Mrs Jane’s Big Boy Class you are currently so proudly attending (“with no Mummy, no Jie-jie,” in your own words), in that there were also rectangles and squares (in something called diagrams) and stories and jokes. Only Mummy’s teacher Mr Eugene used fewer big actions and didn’t do any singing.
Among other things, Mummy’s class was about how a group of people called the SFC’s job is to administer laws about securities and futures. They have to make sure the market in Hong Kong develops well and does not become a zoo (where you have to lock the animals up in case they hurt other people.) If they let the animals hurt people, no one will want to go to the zoo.
So the SFC throws the book at naughty people through fines and jail sentences. But at the same time, they have to make sure they aim right (which they try to do with Defences and Exceptions). If good people got hit with the books the SFC was throwing, they would not want to visit the zoo.
Yes, Rockstar. But even naughtier than that.
Or That (pushing JD's basket out of our bedroom because you two have had your umpteenth fight.) But only just.
As long as it pays more to be a crook than it does to be a regulator, you will get first-rate crooks and second-rate regulators. This is how demand and supply works. Fining naughty people is a way to discourage first rate professionals from being crooks. But Mummy thinks the Hong Kong Government could go one step further by giving the regulators a big raise, just to be doubly sure. Hong Kong market regulation is too important a job to risk attracting monkeys if peanuts are paid.
Mummy and her classmates looked at real cases about what has happened to other people who were caught doing naughty things (like Insider Dealing and Giving Misleading Information, which is roughly Cheating and Lying in the Trading Game). In the last 2 years, the SFC significantly stepped up punishments hoping fewer people would then want to cheat. Cheaters have to pay a lot of money in fines. And from last year, a lot more cheaters started getting locked up, just in case they didn’t feel the pain from the fines. Fines and time are the grownup equivalent of spanking and the SFC wants it to hurt. The maximum penalty for insider dealing currently stands at 10 years in jail and a fine of HKD 10 million, on top of giving back whatever money benefit is made from cheating.
People often tried to cheat when playing the Trading Game because they thought it was easy to make more money. Sure they knew they might get caught, but the prospect of a lot of money made them overcome their fear of going to jail. The more money people stand to make, the more people get attracted to, or start thinking of, new ways to be naughty. This is why being naughty has to be made to hurt.
Mummy thinks the Powers That Be should make sure the really important jobs like teaching, cancer research and yes, market regulation, are held by the best and the brightest of our generation by setting very high minimum salaries – that way our smartest people will focus on nurturing young minds (also curing cancer, catching crooks, creating the best market in the universe) instead of thinking of new ways to be naughty. As Mummy read case studies with tens of millions involved, Mummy couldn't help thinking how much society would have benefitted if that much brain power had been set to more productive use than cheating.
Oh, and Mummy agrees with you that all lessons should include a song. Mr Eugene could have sung your favorite Humpty Dumpty in Mummy’s class – it’s after all about bad eggs who were naughty enough to sit on walls and therefore had falls. All the kings horses and men being unable to put Humpty together again could be the SFC’s theme song for crooks.