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The T&T Transparency Institute (Transparency) yesterday expressed disappointment at the reported actions of First Citizens in the sale of shares through its initial public offering (IPO) in July 2013. It also criticised the bank’s chair, Nyere Alfonso, for comments she made in relation to the now controversial share purchase made by the bank’s former chief risk officer Phillip Rahaman.
“We regret the tarnishing of the bank’s reputation now, given that, for 20 years, First Citizens has generally exhibited good governance, fiscal husbandry, exemplary leadership and has garnered many international awards based on that track record,” the group said in an official statement.
“We consider unfortunate the initial response of the chairman of First Citizens Bank that ‘you cannot use morals and ethics because everyone’s are different … No regulatory rule was broken.’ Despite this assertion, the former chief risk officer of First Citizens, Hassan Phillip Rahaman, was fired two months after his sale of 659,588 shares in the IPO.” Transparency said the firing of Rahaman in no way mitigated the need for answers from First Citizens, Finance Minister Larry Howai and the T&T Securities and Exchange Commission.
The group is now seeking answers to the following:
• Why was there no cap on the quantity of shares which individual First Citizens staff and executives could purchase? This would seem to be a basic omission given that the proportion of shares for approximately 1,700 staff far outweighed the allocation for many thousands of citizens.
• Was there a suggested cap on the number of shares that employees of First Citizens could purchase? If so, why was this recommendation ignored?
• Did any other staff/executives purchase any significant number of shares in the offering?
• Was the source of such funds for these purchases traceable to longstanding personal assets?
• Major sales of shares by directors or senior executives of publicly traded entities should trigger an alert at the Securities and Exchange Commission (SEC), as well at the entity itself: what actions were taken on this occasion?
The statement ended: “Transparency anticipates that the results of the Ministry of Finance’s investigation will be made public promptly. We also urge the minister and the SEC to indicate what steps will be taken to preserve the integrity of the stock market and future IPOs in T&T.”