Shareholder activist David Webb, who published a report highlighting vulnerabilities in some Hong Kong small-cap shares which subsequently tumbled this week, said the rout was a sign regulators had failed investors.

Webb's report, titled "The Enigma Network: 50 stocks not to own," published in mid-May, created a diagram outlining a complex web of cross-shareholdings of 50 Hong Kong-listed small-cap companies.

On Tuesday and Wednesday, many of those shares tumbled as much as 90 percent, although some posted moderate recoveries on Thursday.

Webb, a former director of Hong Kong Exchanges and clearing (HKEx), the operator of Hong Kong's stock exchange, pointed to a failure of the regulatory system in Hong Kong as a key issue, advocating separating the regulatory role from HKEx and moving it to the protectorate's Securities and Futures Commission (SFC).

http://www.cnbc.com/2017/06/28/david-webb-called-hong-kong-small-cap-rout-says-regulators-failed-investors.html