We are delighted the Singapore Exchange is inviting comment on penalties for companies which flout exchange rules. Our own list of what actions should be classified as misdemeanours is not terribly scientific, but it is based on the common gripes retail shareholders voice about the stockmarket.

1. Perceptions of insider trading. We are not making any specific allegations, nor are we saying the SGX hasn't been doing a good enough job on enforcement. But I'm fed up to the teeth with stocks which have an out-of-the-ordinary day on the market, but the market-moving announcement doesn't come until after the market closes. And no one is held accountable for it. Fortunately, this doesn't happen often. But it happens often enough for us to roll our eyes, groan, and curse the fact that we're just retail investors who are left out in the cold.

2. Barring unforeseen circumstances… According to the template companies must complete when announcing earnings, they have to give an outlook:

A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months.

We wish fines upon companies which merely write:

Barring any unforeseen circumstances, the Directors of the Company expect the Group to be profitable for FY2008.

This may be a statement of fact and meet the requirements, but it is nowhere near sufficient to contribute meaningfully to an investment decision. It's like saying, "unless something happens to us, we expect to still be around next year".

Come on, if that's truly the depth of insight management has into the future of the company they're probably not worth investing in (from the crop of earnings stories tonight, kudos to Baker Tech, MAP Technology, Natural Cool and Showy International among others for being significantly more detailed in their statements, even if they had negative news to announce).

3. Press releases that only tell half the story. Listed companies probably know all too well that too many so-called business journalists just re-write press releases for a living. Hence, they often leave out the juicy bits from the press release and leave it to the statutory announcements, which fewer people read. We would promote a "truth-in press releases" goal. In the meantime, we would encourage shareholders to shun companies which don't have the courage to deal candidly and honestly with bad news in press releases, and we would encourage readers and viewers to shun journalists who don't read the statutory announcements and only re-write the press release.

What are your bug-bears?


Mark Laudi, who could rave all night about these issues.


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Labels: barring unforeseen circumstances, earnings statements, fines, insider trading, outlook, SGX, Singapore Exchange