Last update: 23-Jul-2014 12:45 am
Wednesday, July 23, 2014
Trinidad & Tobago Guardian Online
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Should we lose confidence in the local stock market?
The controversy over the purchase by Phillip Rahaman, the dismissed First Citizens senior executive, of 659,588 shares at the majority state-owned bank’s initial public offering (IPO) last year has reignited concerns among the wider population that the local stock market does not provide them with a fair and equitable opportunity to increase their wealth over the long term.
The reason that many people are furious with Phillip Rahaman, his cousin Imtiaz and their broker, Subhas Ramkhelawan, is that there is a perception that these three gentlemen “gamed” the IPO for their financial benefit.
There is a perception, as well, that Rahaman/Ramkhelawan benefited at the expense of thousands of people who would have applied for less than 5,000 shares in the IPO, only to have their applications pro-rated downwards because the offer was over-subscribed by more than three times.
These perceptions have led some contributors to the nation’s blogs to conclude that the three gentlemen are guilty of a wide range of securities sins, although T&T is a country in which there is still a presumption of innocence up to, and until, someone is found guilty.
There have been several calls for the chairman of the T&T Stock Exchange (TTSE), who is none other than Subhas Ramkhelawan, to resign and there has even been a call for investors to boycott the TTSE until the chair steps down.
Another, more serious, impact of the Rahaman imbroglio is that, as a result of the hostility of the public perceptions, Minister of Finance Larry Howai has said publicly that the Phoenix Park Gas Processors IPO will not proceed until all of the reports into the Rahaman issue have been submitted and dealt with.
As this process of investigation and reporting may drag on for many months, there is a distinct possibility that the Phoenix Park IPO may be delayed from it proposed date in June.
This would be most regrettable and is something that Mr Howai should address in terms of setting a deadline for the completion of the Rahaman issue.
That’s because there are thousands of people in this country who are anxiously waiting for the Government to bring the Phoenix Park IPO as they have worked out that divestment of profitable state companies can be a means of increasing the wealth of the middle class.
This is a point, of course, that has been argued in this space for years. This space has been used consistently to call on the Government to divest some of its more profitable state-owned companies as a means of distributing the wealth of the nation to the country’s investing individuals and institutions.