Irate response to AIM insult


RIP Brian
Feb 22, 2001

Tactless comment ignites anger in UK stock exchange circles and business press

A tactless remark by a senior policymaker at the US Securities and Exchange Commission this week has caused anger and embarrassment on both sides of the Atlantic...and a back-off by the official concerned.

Roel Campos, one of five commissioners at the US market regulator, sparked an irate response from the London Stock Exchange after a Dow Jones newswire report in which he reportedly said that 30 percent of companies listing on London's AIM market were "gone in a year".

"That feels like a casino to me, and I believe that investors will treat it as such," he was reported as saying.

The LSE hit back angrily, declaring Campos's reported failure rate an exaggeration by a factor of about 10 and hinting that jealousy over AIM's success in attracting US listings lay behind his comments.

Clearly trying to calm the storm, Campos subsequently said his remarks were "taken out of context" when he was approached by the UK publication The Financial Times.

Asked by the Times if he felt that AIM was a casino, he said: "Absolutely not, I don't believe it's a casino and that was not the intention."

"What I was referring to was a generalised situation in which if [regulatory] standards are ignored and you have a spiral downward you could get into a situation where an exchange could be nothing more than a casino."

The speed of the LSE's reaction - and damage-limitation efforts by Campos - reflect the intense rivalry between London and New York for listings. London has made a virtue out of being seen by potential issuers of stock as being free of the strict regulatory requirements of the 2002 Sarbanes-Oxley US compliance laws.

But some on Wall Street have been critical of foreign exchanges, including AIM, gaining what they say is an unfair advantage by lowering their regulatory standards to attract foreign listings. John Thain, chief executive of the New York Stock Exchange, said in January that AIM "did not have any standards at all and anyone could list".

Campos said: "If one essentially brags about lower [regulatory] standards and uses that as the advertising principle then over the long term capital and investors will not be as attracted to that type of market." Asked about the report which was the basis of his 30 percent figure, Campos said: " I don't even know if that study is accurate."

The LSE said that since the beginning of last year, the number of US companies on Aim had almost doubled to 60. The LSE said the failure rate of companies listing on AIM is about 3 percent, roughly in line with those listing on its main market where requirements are much tougher.

"It is therefore surprising that Mr Campos should make comments that are so entirely wrong. They do a disservice to the quality small companies choosing to join AIM," the regulator said.