SEC makes new claims against GHL

A public Securities and Exchange Commission (SEC) hearing yesterday should have been a formality to wrap up concerns of Jamaican conglomerate National Commercial Bank Jamaica Ltd’s (NCBJ) takeover bid for local insurance giant Guardian Holdings Ltd (GHL).

Instead, the SEC’s lawyers raised concerns of the key shareholders’ possible “contravention” of Section 95 of the Securities Act, which says: “A person shall not, directly or indirectly, in connection with a trade in securities— (a) employ any device, scheme or artifice with the intent to defraud or deceive; (b) engage in any act, practice or course of business which is fraudulent or deceptive, or would operate as a fraud or deception; or (c) make any untrue statement of a material fact or omit to state a material fact with the intention to mislead.”

Despite the section’s reference to fraud or intent to defraud, the SEC’s lawyers, when asked after to clarify their claim, said they did not specifically mean fraud.

Whether or not there is in fact a “matter” against the key shareholder (Guardian Holdings Ltd) is “hotly contested,” said chairman of the SEC’s sub-committee Douglas Mendes SC to investigate if there was indeed any wrongdoing in the takeover bid.

There was also a question of if this sub-committee had to authority to make the determination if there was indeed a claim, and if they could rule on the claim made.

The issue, Mendes said, was whether the SEC’s staff could air their concerns before the panel. It was resolved at the hearing yesterday that the SEC’s lawyers would submit documentation to support their new claim by November 30. If necessary, they would have to also make oral submissions to aid the panel’s decision. Lawyers for the key shareholders were not impressed.

The hearing then adjourned until “a date to be determined.”

Regardless, at the last hearing in May, the SEC and the key shareholders had reached a settlement, including a new offer to minority shareholders, higher than the original.

Mendes advised that the details of the settlement agreement, the outline of which had previously been disseminated via a press release, would be available on the SEC’s website from tomorrow.

In a statement last Thursday, the SEC advised that NCB Global Holdings Ltd (NCBGH)–the parent company of NCBJ–had raised its offer for GHL to US$2.65 (TT$17.90) per share from US$2.35 (TT$15.88).

The SEC said it had reached a settlement on the conditions of the bid noting that it had to review the final commercial terms and the timing of the offer to shareholders. The commission said then the settlement would preserve the public interest and maintain market stability.

Minority shareholders had questioned the circumstances of the offer in relation to shares held by business magnate Arthur Lok Jack (a former GHL chairman) and the Ahamad family, owners of leading car dealership Southern Sales & Service Co Ltd. CEO Imtiaz Ahamad is a GHL director.