Tuesday, May 8, 2012

Void NSB-TFC deal raises more questions

By Mario Andree

 After President Mahinda Rajapakse cancelled the controversial deal of the National Savings Bank (NSB) purchase of The Finance Company (TFC) shares above the market price, which raised many concerns, the Securities and Exchange Commission has assured brokers a fair investigation.

On what grounds NSB purchased shares of TFC at Rs. 49.74 per share when the then market price was at Rs. 30 per share needed to be revealed.

According to brokers the market performance on Friday (25th) was justifiable for TFC share price close at Rs.44 after the controversial deal.

However with the President intervening on the deal more concerns are now being raised, especially on how the trades would be reversed? Brokers told The Island Financial Review the possibility was higher on the cancellation of the four cross trading, but there was a chance that the whole days trading to be cancelled as well.

Whatever the decision the CSE makes the transactions, would have to be reversed tomorrow, brokers said.

Brokers pointed out that the trading which took place through Taprobane Securities was unethical as other applications which were received got rejected, but not of those of the four directors who managed to make their profits when the markets were down.

Brokers fear that the cross trading which took place between four TFC directors and NSB was due to a possibility that TFC had made losses which only they knew since the financial results have so far not been published.

Securities and Exchange Commission Chairman Dr. Tilak Karunaratne has asssured a fair investigation following data from April 30 and further on the deal, which questions the credibility of both NSB and TFC, brokers said.

According to market sources Sampath Bank which holds some of the Custodian Accounts had paid the TFC directors despite NSB failing to deposit the troubling several broking houses who had not received their receivables on Friday.

SEC officials were not available for comment.

source - www.island.lk

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