Chanka Seeterram, the father of First Citizens deputy chairman Anil Seeterram (now acting chairman), purchased 458,274 shares during the bank’s Initial Public Offering (IPO) at the end of July, 2013.
Medical Associates, the institution at which he is corporate secretary and owns 14,572 preference shares, also acquired 155,261 shares in the State banking group.
Chanka Seeterram, a chartered accountant, paid $9,623,754 million for his shares while Medical Associates would have paid $3,260,481.
Both Chanka Seeterram and Medical Associates disposed of their shares by September 30.
On September 30, 800,904 FIRST shares were traded at $35.
On the week, which began September 23 and includes September 25, 26, 27 and 30, almost 1,500,000 shares were traded with an average price of $35.
The Sunday Express calculated that if the shares were sold during that week at $35 a share, Chanka Seeterram could have netted about $6.4 million on his month-long investment while Medical Associates would have netted $2.1 million.
On September 30, First Citizens closed its annual accounts for the financial year.
It means that transactions to related parties would not have registered.
In First Citizens 2013 annual report, Anil Seeterram is listed as owning 4,141 FIRST shares while his connected parties amount to 12,357.
Anil Seeterram was a member of the Bank’s audit committee and three weeks ago chaired a board meeting which produced a report recommending disciplinary action for three members of the bank’s executive over the Philip Rahaman scandal.
During the bank’s IPO, Rahaman, the bank’s former chief risk officer, bought 659,588 shares from the employee bucket and sold 634,588 of those shares four months later to his cousin Imtiaz Rahaman, his aunt and five Rahaman-controlled businesses. The share purchase raised questions about ethics while the financing of the transaction is under investigation.
Insider Trading Policy
On July 23, 2013 First Citizens approved an Insider Trading Policy which was distributed to all directors of the group and all staff.
Section 3.4 of the policy titled “Prohibition on Trading for Restricted Persons stated:
“Certain employees, all senior officers and directors within the Group are presumed to have access to material non-public information. These persons are considered restricted persons and are set out below. Restricted persons are not allowed to buy, sell or trade in the securities of the Bank during the black-out periods set out below.
Restricted persons include:
a. The directors of the bank and its subsidiaries
b. Senior officers of the Group which includes the members of the executive management and senior management teams of the Group
c. All employees designated by the Chief Compliance Officer upon consultation with the Group Chief Executive Officer.
d. Relatives of the persons set out in items (a) to (c) above.
While Medical Associates would not have been a connected party to Anil Seeterram, Chanka Seeterram would have been a connected party.
The Sunday Express was told that Chanka Seeterram would have qualified as a restricted person according to the bank’s insider trading policy and would have had to conform to the 90 day black-out period after shares were first traded.
Under this policy, restricted people would have had to have pre-clearance of trades.
“At least two days prior to the trading of the Bank’s securities, a restricted person must complete and submit a pre-clearance form to the Chief Compliance Officer, Legal and Compliance Department for approval. A restricted person shall not trade until he/she has received an approved pre-clearance form,” it said.
According to this policy, Rahaman’s sale on January 14 would have been in violation as well.
Anil Seeterram’s response
Contacted for comment on the issue, Anil Seeterram told the Sunday Express that he was aware that his father intended to buy shares.
He distanced himself from the purchase of shares by Medical Associates because while his father was a shareholder, he was not the “controlling shareholder” of the company.
He said the first time he was asked to report on connected parties was in December 2013 when the legal department was finalising its annual report.
That cut off date, he noted was September 30.
By that time, Anil Seeterram explained his father did not have any shares.
Following the Rahaman scandal, Seeterram said questions were being asked since March about the shareholding.
He said he had made the necessary declarations to the legal department.
Shortly before a story on the report by the present board recommending disciplinary proceedings against three bank officers last week, a document outlining the Seeterram transaction was sent to the Sunday Express.
The Sunday Express was told that the leak was orchestrated by a senior bank officer to discredit the acting chairman and raise credibility issues about the contents of the report.
When Anil Seeterram was asked about this, he responded: “I am concerned about leaks about confidential bank information. Timing is another issue because people are pushing it which will affect the bank and shareholder money.”
An internal investigation by the remaining board members of State bank First Citizens has recommended that disciplinary action be taken against three bank officers — chief executive Larry Nath, deputy chief executive and corporate secretary Sharon Christopher and head of the legal department, Lindi Ballah-Tull.
That investigation concluded that Nath knew about Rahaman’s purchase after the IPO was closed last August as he was alerted by Jason Julien, head of First Citizens Investment Services, a subsidiary of the bank.
Nath is now the largest shareholder of employee stock. He owns 215,000 shares. Nath applied for the shares during the period August 8, just before the IPO was closed. The Sunday Express was told that Nath was advised against selling any of his shares by a director.
The Sunday Express was told that the board held a special board meeting where it was decided that any media questions on the report would be answered by “no comment” as the report is now with a law firm seeking advice.
Asked about this, Seeterram responded: “No comment.”
However, the Sunday Express understands that the bank’s officers have threatened legal action over the contents of the report and have sought legal advice on the matter.
Into the hands of the SEC
Contacted on the issue yesterday morning, Finance Minister Larry Howai responded: “I did receive an anonymous, unsigned sheet of paper with certain allegations on it which I asked the Securities and Exchange Commission (SEC) to look into.
As far as I am aware, no further matters for the SEC’s review came out of it.”
The Sunday Express was unable to contact SEC chairman Prof Patrick Watson or chief executive Wain Iton.
Former chairman Nyree Alfonso said: “I received that information anonymously on a sheet of paper prior to my retirement from the board. I did raise it with the deputy chair who assured me that he had complied.”
Anthony Mohammed, a remaining director of First Citizens submitted his resignation to the Ministry of Finance on Friday, four days before the bank’s extraordinary meeting on June 17.
Mohammed was one of the remaining directors who finalised the report on the bank officer and was not voted out during the annual general meeting on May 12.
The remaining directors include Ved Seereeram, John Tang, Nian Vishnu, DK Musai, Ramish Ramanand and Seeterram.
Former Attorney General Anthony Smart has been nominated by Howai to be the new chairman of First Citizens.
Smart will replace Alfonso, who retired from the board at the bank’s annual general meeting on May 12.
Smart, Jean-Pierre du Coudray, Joel Pemberton, Michelle Durham-Kissoon, Courtenay Williams and Hazar Hosein are nominees to the board to replace the four directors who exited the company at the last AGM in Port of Spain.
Two other directors are expected to join the board, one member from the Chamber of Commerce and another from the Trinidad and Tobago Manufacturers’ Association (TTMA).
The IPO scandal has had several casualties: Rahaman; Subhas Ramkhelawan, the managing director of Bourse Securities, who resigned as an Independent senator and former chairman of the Trinidad and Tobago Stock Exchange; and the four First Citizens directors.
It is still the subject of two investigations—one by the Securities and Exchange Commission (SEC), the Central Bank.
An audit done by PricewaterhouseCoopers has been handed over to the Director of Public Prosecutions Roger Gaspard.
Meanwhile, Rahaman’s LinkedIn profile says he is “taking a sabbatical”.