Thursday, November 20, 2008

Insider trading found...But TCL's hands tied

Published: Thursday November 20, 2008

A three-year investigation into allegations of insider trading of Trinidad Cement Ltd shares has found evidence of improper stock market behaviour.

But a legal shortcoming and insufficient proof will prevent the alleged perpetrators from being brought to justice.

The Trinidad and Tobago Securities and Exchange Commission in Port of Spain said it concluded its investigation into insider trading allegations of TCL stock in 2002.

On July 5 that year, the SEC said it received a complaint from the Claxton Bay-based cement producer alleging insider trading in relation to two attempted takeovers of TCL by Mexican cement giant Cemex in February and June.

TCL alleged that insiders illegally used price sensitive information about the takeovers to trade in TCL shares.

A team from the SEC launched an investigation in February 2005, the first of its kind under the existing Securities Industry Act, 1995 and submitted its report to the SEC in March 2006.

The SEC also sought external legal advice from Senior Counsel in Barbados and Canada.

In a statement signed by chairman Osborne Nurse, the SEC said yesterday that the investigation found "considerable evidence of unacceptable market conduct" in the two trades of TCL shares six years ago.

But legal advice from the Senior Counsel indicated that the current Securities Act required the SEC to prove intent.

This established a higher standard of proof than is usually required for administrative proceedings and that the evidence in the matter and the evidence in the matter did not support the required standard of proof.

The SEC stated that the evidence was also insufficient to overcome defences provided in the law and that the probability of success in prosecuting these matters was extremely low.

"As a result, the Commission has accepted the advice and recommendations of its legal counsel and has decided to close the matter," the SEC said.

While evidence "clearly demonstrated behaviours that were unacceptable and violated the intent of the law", the SEC said it was not enough to meet the test of the Act.

The SEC has recommended that the law be revised to ensure that insider trading is not provided with any defences within the securities regulation.

TCL Group chief executive Dr Rollin Bertrand could not be immediately reached for comment yesterday.

Source: Trinidad Express Newspapers

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