Serve it Up Bruce

More in my series.....

After an onslaught of self-induced and selective good news PR the past fortnight the NZX has come out in their usual bovver boy "attack is the best form of defence" manner and fired at Bruce Sheppard.



You see, unlike NZX, Bruce Sheppard actually does a bit of work (in his own time) crunching numbers that really a Regulator should be aware of if properly overseeing the market. Only NZX as we all can see is too busy with their commercial operation to bother even knowing the definition of "conflict of interest", let alone worry about the Regulatory function. All the Regulatory staff are possibly having too much fun coming in each morning motivated by their increased share prices from the two year 80% loans they were given by the company.

Many companies do not disclose the terms of their loans, known as covenants, but Mr Sheppard warned yesterday that three weeks of research revealed nine companies were probably in breach of bank covenants in 2008 and a further 11 close to being in breach.

The bovver boys of NZX and fund industry are now coming after Sheppard.

The fact he's not willing to disclose the companies he's written to indicates they haven't done a great deal of work anyway,'' said a domestic equities manager for one of the country's leading fund managers.

"To say he's gone through 47 companies in three weeks is a huge ask because it takes a whole team of analysts around the country longer to do that. He does have a valid point, they don't disclose covenants."

Sheppard has a list of listed companies that the NZX is meant to be regulating that have breached banking covenants.

Whale Oil has looked at this issue with respect to Kordia, an SOE. They were openly breaching theirs as outlined in this blunt piece of analysis. But they were honest enough to disclose it.

The Chartered Secretaries have come out this week and added their weight behind the call to split the commercial and regulatory function of NZX.

Professional body Chartered Secretaries believes the NZX's role as both regulator and a participant in the exchange is a conflict of interest.

Chief executive Grant Diggle says the NZX has measures in place which supposedly separate its activities, but it is not enough.

"People in the market need to know for for sure that the regulator is the regulator is the regulator and that a market participant is a market participant and never the twain shall meet."

Mr Diggle says the situation is much like having a referee who is allowed to play the game.

I would go further and say the situation currently is like the NZX are refereeing, playing, managing, controlling the salary cap, the television rights and making the actual rules up.

And we know the only organisation in the world powerful enough to possibly do this is the Indian Premier League (IPL).

So Bruce..........just serve it up. Pass the information to the Regulator and make them serve it up....

When you are ready.

Update: - Seems Bruce isn't quite ready and instead serves it back to NZX

Surely earning a place on the CEO's Deadwood list.