The FCB IPO matter

THE EDITOR: How I winced at the 2014 FCB IPO imbroglio in the media recently with the announcement of three settlement agreements of December 20, 2019, between the TTSEC (TT Securities and Exchange Commission) and the four parties under investigation. Those agreements required the parties to pay fines totalling $2.8 million, about 22 per cent of the total profit of about $12.7 million created by the various manoeuvres.

Those settlement agreements and Bourse’s statement of February 3 confirmed no admission of wrongdoing, guilt or liability, so one is considering only alleged breaches. Of course we have no idea as to the costs incurred by TTSEC in pursuing this matter over those six years and how those compare to the agreed fines.

The managing director of Bourse is Subhas Ramkhelewan, who was serving as former chairman of the TT Stock Exchange and an Independent senator at the time these allegations arose. The chairman of the Bourse group is Ingrid Lashley, who is also the chairman of National Enterprises Ltd. Both Subhas and Ingrid have been my good friends over an extended period, not at all limited to our professional lives.

In an ideal world, the entire profit would have been disgorged together with the dividends earned during the period, before any penalties or regulator’s costs were applied, but that is not the situation at all.

I have three concerns:

* TTSEC’s no lessons learned? It is disappointing to note that these settlements with agreed payments, no admissions and no remedial action seem to leave the investing public no better protected.

Just imagine the police stopping a motorist with defective headlights one night and issuing a standard ticket after engaging with the driver who really did not realise the problem with the vehicle.

So far so good, you might say, but what would you think if the police allowed that polite motorist to continue driving on the road with no headlights? The lack of any prescribed remedial action is intolerable in this situation.

* So why was a fine paid? It is only barely possible to sustain the line set out in the settlements with no admissions of wrongdoing or any finding of truth of the allegations, but the thorny question remains.

The payment of a traffic ticket by an errant motorist is tantamount to an admission that some rule was broken which makes it necessary to pay that fine. It does not rise to the level of an actual conviction in law as recorded by the courts, but the fact is that the driver pays the fine is a tangible admission of wrongdoing.

So are we being asked to believe that Bourse was just giving something back?

* Has Bourse learnt anything? Most striking for me is the penultimate sentence of the Bourse statement: “...This agreement allows us to put this matter behind us and to focus, even more so, on adding value to our clients and other stakeholders...”

Polite disdain is no road to progress. The opportunity was not taken to examine internal practices to prevent a recurrence of those concerns from our regulator or to commit to staff training in the areas identified during our meetings with the regulator. So will any of Bourse’s conduct or procedures be revised?

These three, taken together, taste terrible. Serious challenges require mature leadership which is willing to change course or seek advice as new perspectives and facts emerge. That is the behaviour of thinking, conscientious leaders.

AFRA RAYMOND

afraraymond.net