Former chief risk officer of First Citizens Philip Rahaman, whose purchase of 659,588 shares from the bank during its Initial Public Offering (IPO) has triggered several investigations, paid for his shares with two Republic Bank cheques through his broker Bourse Securities.
And Bourse Securities, through its Savinvest Structured Investment Fund, funded part of his investment.
Managing director of Bourse Subhas Ramkhelawan, who is also chairman of the Trinidad and Tobago Stock Exchange (TTSE), has maintained he cannot “divulge whether an individual or group is a client” or whether he was part of the transaction but has maintained there was no wrong-doing on the part of Bourse.
Continuing investigations by the Express into the share transaction confirm Rahaman used Bourse as his broker for the $14.5 million transaction.
In his application form for the shares, Rahaman declared it was a non-cash transaction in the amount of $14,499,936.
Two cheques, which the Express has copies of, 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, it noted: “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, 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.”
The Express understands Rahaman’s external financing was sourced from Bourse, from its Savinvest Structured Investment Fund, through a margin facility.
The fund is an open-ended fund and was valued at $93,439,147 as at February 28, 2014.
Rahaman was fired from the bank on March 25 following the audit. He had sold the 634,588 shares for $26.7 million, making a profit of approximately $12.2 million having already pocketed $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 volume of shares was 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 the shares were sold to Rahaman’s cousin, Imtiaz Rahaman (the chairman of Bourse Securities), Imtiaz’s mother Alia Rita Rahaman and five companies owned by the Rahaman family-controlled Rahamut Group.
Investigations by the Sunday Express have revealed the profit was simply a paper profit as no cash was exchanged in the transaction.
Under the SEC, Rahaman is a registered broker of Government bonds and has been registered since March 18, 2011 under his legal name Hassan Philip Rahaman.
The Express understands that under the SEC regulations, he was expected to inform them of his share transaction.
On January 16, Rahaman wrote to the director the SEC’s Market Regulation and Surveillance Division to inform them of his transaction on January 14. (See letter).
On February 7, Bourse Securities wrote to First Citizens Investment Services Ltd general manager Jason Julien to confirm that Rahaman had declared his source of funds.
“We acknowledge receipt of your letter dated 24th January 2014 with respect to Mr Hassan Philip Rahaman. As you are aware client confidentiality prohibits us from providing information except in the case of a legal mandate to do so,” a letter signed by Ramkhelawan stated.
On February 19, the TTSE wrote to First Citizens to question with regard to Rule 604, why the trades of its former chief risk officer Philip Rahaman were not reported.
Rahaman’s trade was conducted on January 14 and was reported to chief executive Larry Nath.
On February 14, shareholder activist Peter Permell issued a release questioning how Rahaman was allowed to purchase the volume of shares, which he did.
Five days later, the TTSE wrote to the bank’s corporate secretary Sharon Christopher on why the trades were not reported under Rule 604.
In response, Christopher responded on February 20: “We are aware of the requirement of Rule 604 of the TTSE. Indeed the activities to be undertaken in accordance with this rule are part of our written procedures. Notwithstanding, through inadvertence, the reporting to TTSE was not adhered to in this instance. We apologise for this and assure you that more stringent measures have been put in place to ensure that this does not recur,” the letter read.
On March 12, the TTSE issued a notice on its website of Rahaman’s transaction.
Ramkhelawan, in an interview on the CNC3’s Early Morning show yesterday, said the “angst” in the public’s mind over the First Citizens IPO was because of misinformation and misreporting. He maintained 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 Service.