Finance Minister Larry Howai “is aware of the allegations made against him on national radio yesterday and is looking at the records from 12 years ago in order to properly address the allegations,” a Ministry of Finance spokesperson said last night.
The minister’s response came hours after radio talk-show host Tony Lee read out excerpts of a document purportedly written by an eminent Barbadian Queen’s Counsel, whose advice was sought by the T&T Securities and Exchange Commission (SEC) in March 2007 in relation to suspected cases of insider trading in shares of Trinidad Cement Ltd (TCL) between January 21 and June 24, 2002.
The QC was asked to provide legal advice on a report by the SEC’s Division of Market Regulation and Surveillance
The allegations hinge around meetings that Mexican cement giant Cemex held with representatives of a group of large shareholders of TCL both before and after making public its bid on February 6, 2002, to launch a takeover attempt of TCL. Cemex, which acquired a 20 per cent stake in TCL from Government in 1998, ultimately failed in its attempt to takeover TCL
It is alleged that three executive directors of local commercial banks which owned shares in TCL and a non-executive director of a local commercial bank held meetings with Cemex, where price-sensitive information was discussed. On January 28, 2002, a meeting took place between Cemex officials and the former chairman and CEO of TCL, Andy Bhajan and Rollin Bertrand, where the Mexican cement company disclosed its intention to make an offer for the 80 per cent of TCL it did not own.
After that meeting with the TCL directors, Cemex held meetings with directors of its significant institutional shareholders. It is alleged that one of the directors met with TCL on January 29 and at 4 pm that same day placed an order with a local brokerage firm to purchase 10,000 TCL shares. Another of the directors signed a Notice of Price Sensitive Information (NOPSI) on January 28, 2002. In that document, the director acknowledged that:
• the information he was to discuss with Cemex was price sensitive;
• that his knowledge of the information would deem him an insider;
• he had an obligation to treat the information in a confidential manner;
• he had an obligation not to trade any securities that were affected by the information;
• that a breach of the obligations imposed on an insider constitute an offence.
It is alleged that that director met with Cemex on January 29 and 30, May 7 and 24 and June 4 in 2002 and that although he had signed the NOPSI, placed an order to buy 40,000 TCL shares on May 7 and 60,000 shares of the cement company on May 10. Those orders were satisfied during the blackout period. The QC’s advice was considered by the SEC.
On November 20, 2008, former executive chairman of the SEC, Osborne Nurse, signed a public notice in which he said that while the SEC’s “investigation found considerable evidence of unacceptable market conduct, the evidence was insufficient to meet the requirement of the law to prove intent, or to overcome defences provided in the law. “As a result, the Commission has accepted the advice and recommendations of its legal counsel and has decided to close the matter.”
According to Nurse, the advice from senior counsel in Barbados and Canada was that the act “requires the commission to prove intent which thereby established a higher standard of proof than is usually required for administrative proceedings and that the evidence in the matter did not support the required standard of proof.