T&T SEC gets insider trading complaint – TCL calls for probe

(Trinidad Guardian) Claxton Bay-based cement producer, Trinidad Cement Limited (TCL), yesterday called on the local Securities and Exchange Commission (TTSEC) to undertake an investigation into whether or not a Republic Bank executive and a TCL shareholder contravened the insider trading provisions of the new Securities Act. Sections 100 and 101 of the Securities Act prohibits insiders — defined as persons connected to a reporting issuer—from disclosing or using material non-public information for their own advantage, either directly or indirectly. In a news release, headlined “TCL Shareholders’ proposal update”, the company also announced that it had lodged a complaint with the TTSEC against Republic Bank, Ian De Souza and Wilfred Espinet relating to section 92 (b) of the Securities Act, which deals with price-rigging.

20130807TCLThe Securities Act at 92 (b) states: “No person shall enter into or carry out, directly or indirectly, any fictitious or artificial transaction or device, with the intention that, or being reckless as to whether, such transaction has, or is likely to have, the effect of maintaining, increasing, reducing, stabilising or causing fluctuations in the price of securities traded on a securities market.”

TCL further disclosed it had lodged a complaint with the local Central Bank. The Securities Act, which replaces the previous Securities Industry Act, is new legislation, as it was assented to by Parliament on December 24, 2012, proclaimed by the President on December 28 and came into effect on December 31. The act is meant to provide protection to investors from unfair, improper or fraudulent practices, foster fair and efficient securities markets in T&T, as well as reduce systemic risk.

The request by TCL for action by the regulators is the latest twist in the attempt by 11 TCL shareholders, holding 5.68 per cent of the company, to nominate five new people to serve as directors on the company’s board. The TCL shareholders applied for and were granted an injunction by High Court judge David Harris on July 12 preventing TCL from holding its annual general meeting. The 11 shareholders had complained to the court that the cement company was blocking their right to put forward nominees for election as TCL directors. TCL immediately appealed the decision by Justice Harris to grant the injunction. The appeal has been fixed for hearing on September 30 while the substantive matter of the granting of the injunction is due to be heard on October 4. In its statement yesterday, TCL said it took the action against the shareholder, the bank and the bank executive, “based on facts that have come to light in this matter, including the statements and admission made by Wilfred Espinet in his affidavit filed in court and having regard to the circumstances surrounding the involvement of Republic Bank, Ian De Souza and Wilfred Espinet in the orchestration of the shareholders’ proposal.”

Responding to the TCL release by e-mail yesterday, Espinet said: “There is simply no merit in their claims, as there was no merit in their original decision to disallow our request for the nomination of directors. The noose is tightening. Panic has replaced rational thought.” The TCL shareholder also said that the company’s chairman and its chief executive were “making these decisions to the detriment of shareholders’ interest.” Republic Bank managing director, David Dulal-Whiteway, speaking through an executive of the bank yesterday, said: “This matter is being looked at by our legal advisers and the bank is not in a position to comment at this point.” Calls to Republic Bank in Barbados went to voicemail and De Souza did not respond to an e-mail sent to him.

On Saturday, TCL reported that it had made an unaudited, after-tax profit of TT$70.4 million for the first six months of 2013, compared with a loss of TT$172.4 million in the comparable period in 2012. The cement company also reported a 26 per cent increase in its revenue as a result of higher average cement prices, a 17 per cent increase in cement volumes, especially in the T&T market, and a 48 per cent in export volumes. In the notes to their June 30 accounts, it is stated: “Notwithstanding the improvement in operating performance and financial position over the past six months, the directors have concluded that the challenging demand environment and the still-existing weakened financial position of the TCL group and its main subsidiaries, CCCL and ACCL, continue to represent a material uncertainty that may impact the ability of the group to continue as a going concern.”

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