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FCB shares sell for $12M profit

ANDRE BAGOO Thursday, March 13 2014

SHARES at the heart of a controversial transaction subject to ongoing probes by the Securities Exchange Commission (SEC) and the Ministry of Finance have reportedly been sold by the purchaser at a profit of $12.7 million.

A notice was yesterday posted on the Trinidad and Tobago Stock Exchange (TTSE) website in relation to share transactions of First Citizens Bank (FCB) Limited.

The notice, dated yesterday, read: “First Citizens Bank Limited ...informed the Stock Exchange that on January 14th, 2014 a Senior Executive Officer sold 634,588...shares.” The notice did not provide further details.

However, the transaction appeared to relate to an acquisition by FCB group chief risk officer Phillip Rahaman of a reported 659,588 shares during an initial public offering last year. The figures quoted suggested some of the shares were retained. However, it is unclear to whom the shares were sold. Stock exchange rules do not require the purchaser to be disclosed.

In the Senate on Tuesday, Finance and Economy Minister, Larry Howai revealed the transaction was subject to a probe by the SEC and he had ordered an audit by PricewaterhouseCoopers.

Peter Permell, who yesterday described himself as a spokesperson for minority shareholders of FCB, yesterday estimated that the transaction resulted in a profit. He queried the apparent time lag between the transaction and its reporting on the stock exchange website.

“What this means is that at a closing price of $42.15, the sale of 634,588 shares by the Senior Executive Officer would be worth $26,747,884,” Permell said in an emailed statement. “Less transaction fees and when one takes into account the acquisition price of approximately. $14 million this results in a realised profit of approximately. $12.7 million.”

Permell continued, “this untimely disclosure now raises new and serious questions as to why it has taken almost two months to date (January 14 to March 12) for this material information to be posted on the TT Stock Exchange (TTSE) website.” He said TTSE Rule 604 expressly states that, “Every listed company shall, through its Company Secretary or other relevant company official, notify the Exchange of all trades done by directors, senior officers and connected persons, within five (5) business days of the transaction.”

Permell added, “but more importantly, it seems to me that the answer to this question in light of an expanded audit may point in directions that go way beyond the actions of the sole senior executive.”

Also in the Senate on Tuesday, Independent Senator Helen Drayton called on shareholders of FCB to demand an account of how the transaction could have taken place in the first place. She said assuming the FCB official needed financing to acquire the shares, that official would have had to inform his employer, the bank. The bank would have had to know the purpose of the financing and would have notice of it, she opined. She said there was possibly a larger question of governance that had not been addressed.

In wrapping up debate of the Securities (Amendment) Bill, Howai said any regulations found to have been violated would be enforced. “If there is any breach of any regulation” it will be “dealt with in the appropriate manner,” he said. Howai also assured that the proposed IPO for Phoenix Gas Park Processors Limited will go ahead.

Opposition Leader Dr Keith Rowley first raised the issue of the share transaction in February and at the time he questioned if the shares acquired by Rahaman were purchased at subsidised rates and if he still owned the shares or had sold it. The Stock Exchange notice is the first official confirmation that the shares were sold.

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