Stock Exchange Commissioner Ionel Oprea has launched an investigation into this month's transactions with shares of Banca RomAâsna pentru Dezvoltare (Romanian Development Bank - BRD), to determine whether those that bought and sold stock benefited from insider trading, capital market sources said.
This is the first probing of this size at the Bucharest Stock Exchange and was launched because of the big amounts of money that have been earned or lost in the past few weeks on the BRD stock, and following the protests of bankers. Some of them moved for the annulment of the past week's transactions involving BRD shares, arguing that losses - worth hundreds of thousands of dollars - were also triggered by the confidential information held by several privileged investors.
Over the past few days, the brokerage companies that closed transactions with BRD shares this month have been asked for detailed accounts on these deals: sale and purchase prices, reason why they were concluded, the clients they were conducted for, the companies these clients work for.
"I cannot comment on this information," Ionel Oprea told Ziarul Financiar.
There are two intervals of time under investigation: the period before the notice summoning the Extraordinary General Assembly of Shareholders (EGM) and the interval after the reference date passed.
The quoted notice said that BRD was planning to increase capital stock by granting 0.2 new free shares for every old one. In such cases, the share price usually goes up before the reference date for registering the shareholders that benefit from the increase.
However, in the particular case of BRD, the price went up before the increase notice was posted, which gave birth to suspicions regarding the access of certain persons to confidential information, before most of the investors had a chance to learn about it.
After revolving around 26,000 ROL for a long time, the price of BRD shares suddenly soared several days before the capital increase plans were revealed. In the trading hours before the official announcement, the shares were already being sold for 30,100 ROL.
In the days preceding the release of the increase notice, the value of transactions increased, from 1-2 billion ROL per session, to 10 billion ROL. In the three hours preceding the announcement, the transactions' skyrocketed to 13 billion ROL. After the announcement was released, the shares were suspended from trading to give the investors time to assimilate the information.
After the BRD shares resumed trading, the closing price went up to 31,100 ROL. This means that those having bought the bank's shares for 26,000 ROL two weeks before obtained a 19% gain.
The second interval under investigation is related to the confusion generated by the EGM notice. The shareholders were supposed to vote for the capital increase by free-share granting.
The capital increase was to be done in a rather unusual manner: in the first stage, the shares, with 5,000 ROL in face value, were to be split in shares with a nominal value of 1,000 ROL each. The free shares were to be granted afterwards, then the entire stock was to be concentrated into shares with 3,000 ROL in face value.
The scandal started after the reference date had passed, as many investors sold for small prices, thinking they owned shares with a 3,000 ROL face value. Since the face value modification did not take place, because the EGM was not held, the face value was in fact worth 5,000 ROL.
BRD cleared things up the same day, attesting that the nominal value is still 5,000 ROL until the capital increase is approved and the modifications are operated.
However, confusion made several investors lose hundreds of thousands of dollars, as they asked for the transactions to be annulled, arguing the release's lack of clarity. Moreover, some brokers said that those who bought cheap BRD shares held inside information on the bank's official stance.
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