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Tuesday, July 8, 2025

SEC: We were not asleep

by

20110701

In its first pub­lic state­ment about Cli­co, al­most 29 months since the col­lapse of the Lawrence Duprey-con­trolled in­sur­ance com­pa­ny threat­ened T&T's fi­nan­cial sys­tem, the Se­cu­ri­ties and Ex­changes Com­mis­sion (SEC) said it was not asleep at the wheel but was re­strict­ed by out­dat­ed leg­is­la­tion.

The SEC point­ed out that two prod­ucts wild­ly mar­ket­ed by Cli­co In­vest­ment Bank and Cli­co, the INC and the EF­PA were not ap­proved by the SEC, but no rea­son was giv­en why that in­for­ma­tion was not in the pub­lic do­main for un­sus­pect­ing in­vestors. In­stead, SEC's at­tor­ney Gilbert Pe­tersen SC, pref­aced his re­marks by list­ing the SEC's re­spon­si­bil­i­ties and the "oner­ous" na­ture of its line of busi­ness.

"It is a his­tor­i­cal fact that the cap­i­tal and fi­nan­cial mar­kets of T&T over the last 14, 15, 20 years, this mar­ket has evolved and ex­pand­ed con­sid­er­ably there­by plac­ing a fur­ther bur­den on the SEC in par­tic­u­lar and I am sure, the oth­er reg­u­la­tors," he told the COE. The SEC is one of the reg­u­la­to­ry bod­ies which has been crit­i­cized for the col­lapse to Cli­co, which has left pol­i­cy­hold­ers at the mer­cy of politi­cians and the coun­try's purse. Nonethe­less, Pe­ter­son com­mend­ed the "vig­i­lance of the SEC" in writ­ing to Cli­co on No­vem­ber 4, 2008 claim­ing it had "mis-rep­re­sent­ed" in­for­ma­tion on a pro­mo­tion­al fly­er which sug­gest­ed that the EF­PA was ap­proved by the SEC. He told the Com­mis­sion of En­quiry that the SEC did "not sit back" and again wrote to Cli­co on No­vem­ber 13, 2008 "to go to the pub­lic and cor­rect the er­ro­neous in­for­ma­tion."

He ob­served that the SEC op­er­at­ed in a re­strict­ed frame­work with a top fine for breach­es of $50,000.

This, he con­clud­ed, made breach­es "af­ford­able" cou­pled with a rep­ri­mand from the SEC. Pe­ter­son's ex­pressed hope that Col­man's rec­om­men­da­tions would in­clude en­hance­ment of leg­is­la­tion for the SEC to give it greater "teeth." De­spite his de­fense, he not­ed that the SEC had with­in its re­mit the abil­i­ty to ini­ti­ate in­ves­ti­ga­tions in­to se­cu­ri­ties. Se­ri­ous con­sid­er­a­tion, said Pe­ter­son, must be giv­en to how an un­reg­u­lat­ed par­ent com­pa­ny is al­lowed to par­tic­i­pate in­to the func­tions of reg­is­tered sub­sidiary com­pa­nies. That is­sue was touched up­on by Rus­sell Mar­tineau SC, as he gave open­ing re­marks on be­half of his client, Price­Wa­ter­house­C­oop­ers- the au­di­tors of par­ent com­pa­ny, CL Fi­nan­cial as well as sub­sidiaries, Cli­co, CIB and British Amer­i­can.

Mar­tineau ob­served that de­spite be­ing "ex­ces­sive­ly skep­ti­cal" au­di­tors were re­quired to work with the fi­nan­cial state­ments pre­sent­ed to them. Au­di­tors, he said, had to ob­tain "rea­son­able" rather than "ab­solute" as­sur­ance that the fi­nan­cial state­ments were un­en­cum­bered. In this re­gard, it was up to CLF's man­age­ment to pro­vide all the in­for­ma­tion to con­duct the au­dit. PWC al­so came in for its fair share of crit­i­cism from coun­sel to the Com­mis­sion, Pe­ter Carter. Mar­tineau, whose lengthy open­ing in­clud­ed the cre­den­tials of PWC's present ex­ec­u­tives, ex­plained that it was not the role of the au­di­tor to pass judg­ment on a client.

It was Fareid Scoon, lawyer for HCU's pres­i­dent Har­ry Harnar­ine, who mount­ed a de­fence in his open­ing state­ment blam­ing "laps­es" of the Com­mis­sion­er of Co-Op­er­a­tives for al­low­ing HCU to move from a mere cred­it union to a na­tion­al cred­it union. He cred­it­ed Harnar­ine with be­ing able to iden­ti­fy "gaps" that were not filled by the Gov­ern­ment and cap­i­talise on an ob­vi­ous win-win sit­u­a­tion: "In­di­ans (Harnar­ine's mem­bers) hav­ing mon­ey and Africans need­ing mon­ey." This, said Scoon, al­lowed HCU to reach ex­po­nen­tial growth.

Carter had been crit­i­cal of Harnar­ine's spend­ing, at the ex­pense of his mem­bers, which he said was "com­mer­cial van­i­ty." Oth­er par­ties to the Com­mis­sion-the HCU mem­bers group, the In­sti­tute of Char­tered Ac­coun­tants, First Cit­i­zens, Pro­man Hold­ings, Joseph Cas­sidy and for­mer Fi­nance Min­is­ter, Karen Nunez-Tesheira did not give open­ing state­ments. First ev­i­den­tial hear­ings be­gin on Mon­day.


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