FMA's Sean Hughes quits - investor reaction

UPDATED:

The Financial Markets Authority has rubbished suggestions chief executive Sean Hughes' departure could have had something to do with the Ross Asset Management fiasco.

FMA chairman Simon Allen says the assertions being made by Ross Asset Management Investor Group are “utter nonsense”.

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EARLIER:

A group representing investors in Ross Asset Management has questioned whether RAM had something to do with Sean Hughes quitting as FMA chief executive.

Ross Asset Management Investor Group spokesman Bruce Tichbon says he wonders if Mr Hughes is a casualty of the RAM debacle.

RAM owner David Ross was recently charged by the Serious Fraud Office, which alleges he ran a $450 million ponzi scheme.

"The FMA under Mr Hughes has failed to build confidence in the NZ financial markets, or the FMA itself. The failure of the authorities to act on written warnings about RAM three years ago, and the licencing of Mr Ross by the FMA as an Authorised Financial Adviser without adequate due diligence, speak for themselves," Mr Tichbon says.  

"The FMA has failed to have proper law in place to unwind Ponzi schemes and protect the property rights of investors, despite ponzi schemes being embarrassingly common in New Zealand.

"Mr Hughes' repeated attacks on RAM investors implying it was their fault have not been appreciated. The FMA had the regulatory power to do proper due diligence on RAM, the investors did not.

Mr Hughes may have fallen on his sword. It remains incumbent on the FMA and the government to provide investors with a fair and just resolution of the RAM disaster."

11.50:

Financial Markets Authority chief executive Sean Hughes is stepping down.

The FMA announced today Mr Hughes will not seek reappointment for a second term. He will continue in his role until the end of the year.



His term has been marked by a number of finance company court cases, as well as the regulation of the financial adviser industry.

Mr Hughes says the launch and build of FMA had been an intense and satisfying period of work.

“Having delivered on my primary task to design, build and implement the strategic and operational platform for FMA, I have decided to complete my contract this year and look to identify my next challenge,” he says.



“Announcing my decision now will allow a smooth and orderly transition for the leadership of FMA’s next stage.”



FMA chairman Simon Allen says Mr Hughes has done an outstanding job leading FMA, from its establishment three years ago to building credibility and confidence in the new regulator and financial markets.



“While the board is naturally disappointed that Sean will not be continuing beyond the end of his three-year contract, we respect his decision.

"We also recognise the significant work he has put into FMA’s establishment and its positioning in both the domestic and Asia-Pacific markets,” Mr Allen says.



“Looking forward, FMA’s regulatory scope is set to further expand from next year with the introduction of the Financial Markets Conduct Act. The timing is well aligned for the next chief executive to advance this work.”



The FMA board will seek an external agency to assist with the search for a new chief executive and an appointment is expected to be made by the end of the year.



Mr Hughes was appointed FMA chief executive designate in October 2010, with FMA commencing operation from May 1, 2011.

He was recruited from the Australian Securities and Investments Commission and has held previous roles in banking and financial services, the public sector and law firms in New Zealand, Australia, Britain and Hong Kong.

nkloeten@nbr.co.nz