The anxiously awaited Securities and Exchange Commission (SEC) investigation into the Initial Public Offering of shares by majority state-owned First Citizens has been completed, a source close to probe disclosed yesterday.The source, who has first-hand knowledge of the investigation, said there are some procedural requirements that the Commission must follow to ensure that those against whom adverse findings have been made are given the opportunity to respond.
The need to comply with the procedural requirements is an apparent reference to section 150 (7) of the Securities Act, which states: "The Commission may publish a report or other information concerning an investigation under this section, but if it intends to do so, it shall–(a) provide a person against whom an adverse finding is to be made with fourteen days notice of the finding and an opportunity to be heard in person or by counsel."
The need for the section 150 (7) natural justice protection suggests that the investigation has concluded that adverse findings can be made against one or more persons. It also suggests that the SEC may publish the report, although the official said that publication of the report is not imminent.The investigation centres around the purchase of 659,588 shares worth $14.5 million by the bank's former chief risk officer, Phillip Rahaman in the IPO in July 2013.
Rahaman lodged his share application with Bourse Securities, although First Citizens has a subsidiary with a brokerage licence. Bourse Securities chairman Subhas Ramkhelawan resigned as chairman of the T&T Stock Exchange on April 10, saying that he was "fully confident that Bourse Securities will be fully vindicated when the facts are cleared up by the regulator."
Rahaman sold some 634,588 shares on January 14–which amounted to 96 per cent of the shares he had purchased–at about $42.15 a share, which would have led to a profit of over $12 million in six months.He would also have collected $718,950 in dividends as the bank distributed $1.09 a share to shareholders as at December31, 2013.
Rahaman was fired by the bank's board on March 25 following what was described as "an extensive internal investigation with the board reaching a "determination that they have lost confidence in its Chief Risk Officer's ability to carry out his duties."The board that took action against Rahaman was chaired by Port-of-Spain attorney Nyree Alfonso, who was forced by the bank's majority shareholder, the Corporation Sole, to resign from the post at the First Citizens annual meeting on May 12.