Jul 2009 Financial News

New Securities Bill to empower SEC

Jul 16, 2009

The Securities Exchange Commission (SEC) is one step closer to getting improved rules to carry out its function more efficiently as parliamentarians passed the Securities Bill 2009 in the Lower House last Friday. When it becomes law, the Securities Bill 2009 will repeal the Securities Industry Act of 1995. The new bill, which consists of more than 150 clauses, seeks to confer more legal weight to the SEC’s ability to monitor publicly-traded companies.

Key aspects:
• insider trading laws tightened
• places obligations on new directors
• appointment of an audit committee
• provides for self-regulation and public disclosures

Wain Iton, general manager, T&T Stock Exchange, is supporting the changes to the bill.

Iton said the increased power by the directors speaks of penalties.

“A lot of it has to do with increased or enhanced disclosure regime for the people who are licenced to or licenced by and registered by the SEC. I think that enhanced power for the SEC speaks to the penalties under the law that have been increased fairly substantially.” He said the clauses in the new bill are simpler and easily understandable. On the subject of penalties, Iton said a person who is convicted can be fined up to $2 million and can be imprisoned for up to two years. “It’s a much clearer case to prosecute. The new act will certainly be an improvement on the old act.”

Regarding investors in the former BWIA, Iton said the new act would not have any implications for them, and the investors in Valpark would also not be affected. “Investors in Valpark would have no direct sort of consequences immediately.” He said the bill includes provisions for reporting quarterly annual audit and reporting by insiders of the company. He said these methods are good and would enhance transparency. “The more information is available, the better the market functions. All over the world, it’s best practice to do quarterly reporting. Barbados and Jamaica do it.” Commenting on the timeliness of the bill going to the Parliament, Iton said it has been pending for months and he does not believe that it was rushed to facilitate the Government’s bailout of CL Financial.

“It’s been on the books for a while. There has been a draft Securities Act dating back to 2007. There have been public hearings on the act.” Peter Permell, a financial consultant and advocate for minority shareholders, said he supports the changes to the bill, but has one reservation. “What is required is the will to implement the changes in the act,” he said. Iton also said the SEC is the watchdog for the investors on the stock market and what is required is a high level of transparency and accountability. “The more frequent they publish these financial statements is the more informed the investors would be about the financial state of the company. In Jamaica and Barbados, those financial statements have to be published quarterly,” Permell said.

He said the investing public should be informed about any information likely to affect a company’s share price. “If there’s a takeover of the company, or if there’s large investment in any endeavour or if there’s something likely to impact the company in terms of losses, the investor has a right to know,” Permell said. He said if the new provisions in the bill is enacted, this means that T&T is well on its way to having an efficient and effective securities market. Permell also supports penalties being increased as this would send a message to those who deliberately break the law.

Article by: Nadaleen Singh
Source: Trinidad Guardian
http://guardian.co.tt/printmail/business/business-guardian/2009/07/16/new-securities-bill-empower-sec

Date: 16-07-09