For too many years, the Securities Commission has been operated on the cheap. If the market watchdog has sometimes not helped itself with its lack of urgency, it has undoubtedly been hindered by inadequate resourcing. It is difficult to escape the conclusion that the use of part-time commissioners is part
of this approach.
The situation has been highlighted by the resignation of one of the commissioners, David Jackson, as the commission brought civil proceedings against Nuplex, a company in which he is a non-executive director. It alleges Nuplex has breached continuous disclosure obligations. The New Zealand stock exchange chief, Mark Weldon, says this points to the inadvisability of the commission being "governed and quasi-operated" by part-timers who include "market generalists, company directors and accountants". A point was always going to arise in which the commission investigates a company with which one of its commissioners was associated.
There is only a small skills pool from which to pull commissioners. Even so, as Mr Weldon suggests, the present set-up is a recipe for trouble. The interlocked nature of much of corporate New Zealand makes it even more problematic. Much of the difficulty relates to the number of commissioners. Even after Mr Jackson's departure, there are still 10, three of whom list themselves as company directors.
It would surely make more sense, as Mr Weldon suggests, to adopt the Australian and British model of full-time independent commissioners. The Australian Securities and Investment Commission has five commissioners. A similar arrangement here would negate the shortage of skilled candidates, while guaranteeing transparency. It should be adopted when a single market regulator is established.
