Foreign Listings: A regulatory Black Hole

The avalanche companies from countries with were loose regulatory regimes that seek a listing in a prestigious stock market has become quite a torrent in recent years. The authorities confirm that money also talks when the design and implementation of financial regulation is concerned. In search of lucrative fees for brokers and fund managers concerns about the quality of the accounts, legal protection of shareholder rights and corporate governance are brushed aside and the motto is: 'Anything goes!'. We wonder if it would not be wiser to apply regulations with extra severity when foreign companies want to benefit from a financial tradition that has been built up over many years, centuries in some cases? The ability of the courts, investors and regulators to sanction any company in a far-away land that does not play by the rules is minimal. It should also be reviewed if fiduciary institutions (Mutual Funds, Pension Funds, Banks and Insurance Companies) should not be made subject to closer controls, possibly even prohibitions to invest in countries where fiduciary standards are not of a high-enough quality. Only large companies and only those who fulfill the extra level of safeguards that we would suggest should be allowed access to capital markets.