Sep 2007 Financial News

DB&G not yet cleared of 'front running' allegations

Sep 26, 2007

Dehring, Bunting and Golding (DB&G) was not able to dismiss claims that it was involved in front running - a contravention of Jamaica Stock Exchange (JSE) rules - in July and will have to face the JSE Disciplinary Committee in one month's time to go over evidence on the matter, according to Business Observer sources.

Steven Bruce-Miller, a client of the brokerage firm, had made a claim to the stock exchange that DB&G had traded ahead of his order in July last year, to which the JSE's Conduct Review Committee had set up a disciplinary committee, headed by Hillary Phillips, QC, to hear the matter.

Front running, as it is called, is a noted offence in the JSE rule book, which defines the action as occurring whenever a JSE member trades ahead of a client order in the same or related market for the purpose of profiting from, or otherwise taking advantage of knowledge of undisclosed material information concerning an imminent transaction.

Bruce-Miller's claim was that DB&G purchased 542,000 units of Jamaica Money Market Brokers (JMMB) shares, on a day that 605,000 units were traded, before purchasing 50,000 shares of his 200,000-share order on
the day.

"They bought 50,000 units for me at $12 at the highest price in the market after they had gobbled up all the shares that were available at lower prices for their
own portfolio," said Bruce-Miller.

However, towards the end of July, DB&G's chief operating officer, Gary Sinclair, had told the Caribbean Business Report "unequivocally that there is no foundation to his (Bruce Miller's) claim".

But during the last hearing, held on July 20, 2007, the disciplinary committee determined that John Vassell's, QC representing DB&G, arguments in his application on a preliminary issue were not sufficient to have the committee dismiss the offence of front running as part of the proceedings against the firm.

"The ruling of the panel in relation to the application is that we are not prepared to dismiss from the complaint at this time any allegation", was what Phillips said during the hearing, according to a source. "So, we will continue as how we are comprised. Mr Senior-Smith that would bring us then to the evidence."

Oswest Senior-Smith had appeared on behalf of Bruce-Miller to respond to submissions made on June 11, 2007 by Vassell, who had asked the panel to rule that the material that was sent by the JSE did not disclose any offence of front running.

JSE general manager Marlene Street-Forrest told the Business Observer that she would not discuss the matter currently before the disciplinary committee, and in keeping with the JSE rules the matter would continue to be heard in private with documents and statements barred from public dissemination.

"The committee will notify the public of any decision taken," was all that she would offer on the matter.
"we will be having another hearing on the matter in October."
The next hearing date is scheduled for October 24, 2007.


Source:
The Jamaica Observer
Wednesday, September 26, 2007

http://www.jamaicaobserver.com/magazines/Business/html/20070925T220000-0500_127732_OBS_DB_G_NOT_YET_CLEARED_OF__FRONT_RUNNING__ALLEGATIONS.asp