Ray Sumairsingh

Ray Sumairsingh

FOR the second time since the First Citizens initial public offering (IPO) scandal, managing director of Bourse Securities Ltd Subhas Ramkhelawan has stepped down from the Trinidad and Tobago Stock Exchange (TTSE).

One week after he reached a $1.3 million settlement with the Securities and Exchange Commission (SEC), Ramkhelawan has tendered his resignation from the board of the TTSE.

He submitted his resignation to TTSE chairman Ray Sumairsingh on Friday.

In April 2014, he resigned from his positions as an Independent Senator and as chairman of the TTSE, following investigations by the Sunday Express on the IPO issue.

But he remained a director on the TTSE board for the last six years.

In 2014, he had said as the most senior of the Independent Senators, he did not want his senatorial position to become enmeshed in any legal action which he might have to take on behalf of himself or his company.

Sumairsingh yesterday confirmed that Ramkhelawan had resigned.

“The situation presented in the media was a discovery for us. We are happy that he has resigned. It was the honourable thing to do,” he told the Sunday Express.

Ramkhelawan was still listed as a director on the TTSE’s website yesterday.

Last Monday, six years after it happened, the SEC published notices that it had reached settlements on the matter with four actors in the IPO scandal — Hassan Philip Rahaman (former chief risk officer at First Citizens), Imtiaz Rahaman (his cousin and then-chairman of Bourse Securities), Ramkhelawan (the broker and then-chairman of the TTSE) and Bourse to the tune of $2.8 million.

Both Rahamans would pay $750,000 each “without any admission of liability”, while Ramkhelawan and Bourse would pay $1.3 million to the SEC “without admission of wrongdoing or guilt or liability”.

Ramkhelawan, then the chairman of the TTSE and his company Bourse, the broker for the transaction, were involved in the purchase by Hassan Philip Rahaman of 659,588 First Citizens shares and the disposal of 634,588 of those shares four months later.

While the IPO was over-subscribed by nine times, Rahaman had purchased 659,588 First Citizens shares in August 2013 from the bank’s under-subscribed employee bucket and then sold 634,588 of those shares to his cousin Imtiaz Rahaman (the then-chairman of Bourse Securities), his aunt Alia and five Rahaman-controlled businesses on January 14, 2014.

Rahaman, who had paid $14.5 million for the shares, sold the 634,588 shares for $26.7 million, making a profit of approximately $12.2 million.

In addition, he also collected $718,950.92 in dividends from the bank in December 2013.

He made $13 million on a four-month-old investment.

All four actors entered into settlement talks with the SEC on December 20, 2019.

Contacted yesterday on his settlement, Imtiaz Rahaman, CEO of the RAMCO Group of Companies said: “I don’t have any comment to make.”

Calls to Ramkhelawan’s cell phone yesterday were not answered.

Bourse the broker

In April 2014, the Sunday Express reported that Rahaman had paid for his shares with two Republic Bank cheques through his broker Bourse Brokers Ltd.

And it was Bourse Securities, through its Savinvest Structured Investment Fund, which funded part of his investment.

Investigations by the Sunday Express into the share transaction confirmed that Rahaman used Bourse as his broker for the $14.5 million transaction.

In his application form for the shares, Rahaman declared that it was a non-cash transaction in the amount of $14,499,936.

Two cheques, which the Express obtained, were issued by Bourse on August 12, 2013 to First Citizens Brokerage and Advisory Services (FCIS).

The first was for $13,999,942 and the second was for $499,994.

Rahaman had declared in his form that the funds were “a combination of savings and bank debt”.

In an audit conducted by the bank and dated March 24, 2014 it noted that: “To date, there was no evidence to support whether the required declaration as it relates to external financing has been made by Mr Rahaman. Checks on his employee file as well as with his direct line of reporting the bank CEO Mr Nath (former chief executive Larry Nath), has not unearthed the required declaration to support the Bank Debt referred to in his source of funds declaration to support his subscription of shares.”

Rahaman was fired from the bank on March 25, 2014 following the audit.

He had sold the 634,588 shares for $26.7 million, making a profit of approximately $12.2 million having already collected $718,950.92 in dividends from the bank in December.

Rahaman, as a bank officer, was obligated to sell his shares on the open market.

On January 14, when the shares were sold at $42.15 a share, it was priced well above the market price which had averaged about $35, which enabled a specific buyer to acquire it.

The Sunday Express reported that the shares were sold to Rahaman’s cousin Imtiaz Rahaman, Imtiaz’s mother Alia Rita Rahaman and five companies owned by the Rahaman family-controlled Rahamut Group.

Investigations by the Sunday Express found that the profit was a paper profit as no cash was exchanged in the transaction.

The Sunday Express had reported that cash was not passed during the transaction even though it caused the market to peak on that day and the transaction was a simple share swap to his family.

The share swap, the Sunday Express had reported, would have to be done with the knowledge of the broker of the transaction.

Both Imtiaz and Hassan Rahaman had used Bourse for the transaction.

An April 2014 audit by PriceWaterhouseCoopers (PWC) stated that the purchase of 659,588 shares by Rahaman during the IPO in 2013 and the subsequent sale of 634,588 shares in 2014 “raise a suspicion that the dominant purpose of the transaction outlined herein may have been to provide a benefit” to related individuals and entities.

PWC noted that the sale of the share block at $42.15 would have been $26,747,884 when Rahaman only paid $13,950,338 therefore netting a profit of $12,797,546.

“Since Bourse executed both the sale and purchase orders for the sale of the shares previously held by Mr Rahaman, the settlement reports provided by CBTT and the TTSE indicated that the net bank settlement for this transaction for Bourse was zero. Bourse would therefore have been able to settle the transaction between their clients internally without the TTSE having to submit a file for the debiting or crediting of any Bourse bank accounts for settlement,” the report said.

No admission of wrongdoing

Ramkhelawan had steadily maintained innocence.

In a TV interview in April 2014, said the “angst” in the public’s mind over the First Citizens IPO was because of misinformation and misreporting.

He maintained that there was no wrongdoing on the part of Bourse.

With regard to the quantum of shares purchased by Rahaman, he said that information would have resided with First Citizens Investment Services.

In a statement last Wednesday after the settlement, Ramkhelawan maintained that they broke no law, regulation or practice.

Bourse Brokers is a wholly owned subsidiary of Bourse Securities.

“BBL maintains, as it has from the outset, that it has not contravened any regulation, law or practice and we remain steadfast in our position. Accordingly, the Settlement Agreement has been arrived at without any admission of wrongdoing, guilt or liability, whether civil, criminal or otherwise, on the part of BBL and/or its managing director,” a release from BBL stated on its $1.3 million settlement.

The release said that a settlement was reached between BBL and its managing director Ramkhelawan and the SEC because the matter was dragging on too long with attendant costs.

The Bourse statement said: “The protracted delays in the conclusion of this matter and the possibility of even further extended delays without settlement, together with the burden of the attendant costs and other resources, have caused us to join in the aforementioned Settlement Agreement. 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.”

The statement noted since the start of the matter the company “has always co-operated fully and in a timely manner with the TTSEC, our regulator”.

The $2.8 million settlement in the IPO scandal is the costliest the SEC has settled to date. Ramkhelawan and Bourse’s combined $1.3 million settlement is the heftiest of the four settlements.