Noble: SEC CEO’s response to FCB IPO scandal shameless

This Carnival, I felt like Black Stalin with his refusal to sing about ‘Dorothy’ while grave social injustices exist. The breathtaking interview and official announcement by the CEO of the Securities Exchange Commission (SEC), Haydn Gittens, in the FCB IPO scandal are shameful.

The SEC exists to ensure the soundness of the securities system, protecting us from unscrupulous operators. Its key foci are transparency and surveillance to ensure market efficiency.

Photo: Haydn Gittens, CEO of the Securities Exchange Commission (via

Its competitive advantage is enforcement. Its power to levy remedies is of paramount importance since financial products and services, like insurance products and stocks, are forms of ‘credence good’, meaning their values are difficult to discern by untrained consumers.

Unequal access to information can affect demand and supply. Unscrupulous actors can have an upper hand and an incentive to cheat.

For example, think about carrying your car to a mechanic, who is an expert in areas you do not really know. He can charge you more than is necessary by changing parts that are not bad or not fixing it well, which you only find out after paying the whopping bill.

Only an independent referee, with the ability to enforce remedies, can help keep everybody honest. Your ignorance and his secrecy are the ingredients for the dishonest act.

With his confident report of DPP Roger Gaspard’s assessment, Mr Gittens reminds me of AG William Barr’s treatment of the Mueller Report. He needed to be more forthcoming as to the reason(s) why Gaspard so ruled based on the evidence put forward.

Was the evidence inadmissible or unreliable or inaccurate? Did he need more evidence? Were the witnesses without integrity? What were the possible defence positions considered?? As the Regulator, he needed to demonstrate greater transparency.

Photo: Trinidad and Tobago DPP Roger Gaspard

It is this casual approach that allows attorney Nyree Alfonso to now attempt a whitewash. The FCB board, on 14 January 2014, breached TTSE Rule 604, which deals with the sale of shares, but was not penalised. She was at the time busily defending ‘the employee’s private business’ and affirming that, ‘the governance system is effective’, as though we had forgotten the 2011 $60m NEC wire fraud.

She completely ignored pages 96 and 97 of the Prospectus that state: “… the issuer reserves the full and unconditional right to accept or reject any application or accept any application in part only” and “if the offer is oversubscribed, consistent with the government’s policy of promoting the widest possible participation in share ownership, priority to receive the allocation shall be given as follows …”

Did she and/or the board members at the time not see the distribution before approval? How could the then board chair claim to be the whistleblower when the first query from the Express was in February and she belatedly acted in March?

She may have been the first responder, as indeed she should have been. It was her defending the indefensible that prompted the then AG to characterise her remarks as ‘clearly injudicious, premature, somewhat prejudicial’.

Mr Gittens does not address that breach of the TTSE rules nor the applicability of section 100 of the SEC Act re the use of material non-public information about the unused employee bucket. How did Messrs. Hassan Philip Rahaman and Subhas Ramkhelawan know of the size of the vacuum?

Why did the SEC send the DPP’s advice for further scrutiny by a foremost corporate lawyer? Mr Gittens does not disclose what were the three grounds that constituted a possible breach nor why having received that advice, the SEC did not return to the DPP?

Photo: Nyree Alfonso

Mr Gittens was quick to quote statistics about settlement practices, which were not in question, to ‘prove’ that the SEC acted properly. But he did not cite that best practice suggests that there is a joint investigation between the SEC and the DPP with the decision as to whether it is a civil or criminal case after the conclusion of the investigation.

Why were there the huge lapses in action by the SEC? Nine months from receipt of Mr Benjamin’s advice for the respondents to be advised and a further six months to have the first hearing? The case handling process appears more constipated than at our overburdened Magistrates’ Courts.

Timeliness is a key measure of the efficiency and effectiveness of dispute resolution for the SEC. Delays affect confidence and potentially the ability to achieve just rewards.

Brazenly, Mr Gittens cited the absence of complainants as a justifying reason for the lack of seriousness of the breach. Is this truly ‘victimless crime’? What of those who did not get their full requested allocation? Were they not ‘victims’?

Does he mean that the FCB board did not complain? Interesting. The TTPS should not pursue prostitution, using his rationale. People can be victimised, without knowing it, and much of the absence of complainants is due to the secretive nature of these ‘credence good’ crimes.

Mr Gittens admitted that there was considerable public comment once the facts emerged. Did he not connect the dots? Then minister of works, Stacy Roopnarine, at the same time in parliament, said that the country needed 62 bridges, but the country had budgetary constraints. Yet the employee’s dividend was the cost equivalent of 10 such bridges. Still no victims?

Photo: Downtown Port of Spain, Trinidad.

This action is like having a dinner to which all are invited but only certain people eat until they are overfull, while others still wait to eat. Unmitigated greediness. We, the hungry bellies, then get reprimanded for not complaining to the SEC. It is not fair! We refuse to be invisible, Mr Gittens!

Smug Mr Gittens had no advice as to how we can and should improve our rules to avoid a repeat. No remorse. He neither identifies barriers to self-directed participation nor processes in need of improving the resolution process.

There is no discussion about possible indexing the compensation to suit the gravity of the crime. Is this the regulator we need? Or does this moment mark the unleashing of a golden age of impunity?

Maybe we need to explore the possibility of a class-action suit against the SEC.

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About Noble Philip

Noble Philip
Noble Philip, a retired business executive, is trying to interpret Jesus’ relationships with the poor and rich among us. A Seeker, not a Saint.

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  1. Unfortunately Mr Noble, your words are whistles in the wind. Not a damn thing will be done. The matter is already over with, like water passing under a bridge, ne’er to return.

  2. Thanks, Noble, for this pointed commentary…the low point for me as the TTSEC’s rendering the Public Interest invisible by resorting to claiming no one made a complaint…well I tell you! One could scarcely imagine a conscientious police officer witnessing a vicious rape or robbery, standing by and then seeking to justify brazen inaction by claiming no police report was filed, of course not! But that is the double-standard applied to white collar crime and the brazen nature of these acts…

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