Record fines for scandal plagued brokerage bosses

AFTER TWO YEARS of investigations Panama’s Stock Exchange Superintendency (SMV) has begun to address several of the issues uncovered at the failed Financial Pacific(FP) brokerage, and have levied the heaviest fines in the institution’s history.

The Superintendency found that West Valdes and Ivan Clare, ex-directors of the brokerage Financial Pacific (FP), committed serious offenses and administrative offenses and will pay heavy fines.
Meanwhile Mayte Pelligrini,, a former employee of the brokerage who blew the whistle on the  alleged involvement of former president Martinelli using an account at FP to manipulate stock prices in Petaquilla Gold, is facing her third Christmas behind bars and has yet to come face to face with her former employers whom she blames for a $12 million disappearing act.

An SMV auditor who uncovered the scandal went missing, and is widely believed to be dead. Another investigator was stabbed in Parque Urraca while on his way to the FP offices.
La Prensa reports that fines, have been imposed on Valdes for $380,000 and another for $330,000 on Clare.
They were reported to be the visible heads of the brokerage that went through a complex process of restructuring including two interventions, license suspension, suspension of operations and its subsequent sale ending in a forced liquidation. The fines would be the first sanction of several processes against the ex-directors. The final amount may be up to a million dollars each, reports La Prensa.
The investigation determined by the regulator is linked to the public offering of securities of Facebook and the absence of a contract related to the purchase of shares through Second Market Holding.
FP acquired a block of private shares of Facebook from Second Market to offer to the customers and the general public through a database of 10,000 emails.
The transaction was never notified or registered as required by the securities regulator.
Compliance with this requirement seeks to reassure investors the ability to have complete and accurate information when making decisions and assessing risks.
FP executives defended themselves in the process. They did not accept the charges and said that Facebook shares were “private” and therefore did not require registration or authorization of the regulator.
However, the SMV said that the shares were offered to the general public; to 10,000 to be exact. From the offer there were 77 transactions.
The fine imposed by the SMV is the highest in its history and marks an important milestone in the collapse of the brokerage owned by Valdes and Clare. Although Valdés and Clare managed to capitalize the company and then sell it, this operation does not exempt themfrom liability. For this reason the regulator is continuing administrative processes.
Sources close to the securities industry warn about how crucial are this type of administrative sanctions, because they result in the expansion of criminal investigations.