CNVM pushes forwards in fighting fraud and insider trading

Even if the number of transactions on the Romanian capital market that are in breach of the current legislation has probably not gone up during the past few years, the number of investigations conducted by the market watchdog is increasing by the day. Frauds similar to those committed in the United States or Western Europe can occur at any time on the Romanian market, according to officials from the National Securities Commission (CNVM), and they are almost impossible to prevent.

In a few days, the National Securities Commission will wrap up the investigation concerning the transactions of stock in Rompetrol Rafinare (Petromidia Refinery), which occurred in the days following the floatation of the company on the Bucharest Stock Exchange. Their conclusions will be made public.

“We are still conducting hearings regarding the case of transactions in Rompetrol Rafinare stock. We have organised additional hearings for persons that were connected to the transactions, but some of them are abroad at the moment. As soon as the investigation is completed, the results will be made public,” said Gabriela Anghelache, president of the National Securities Commission.

In April, Rompetrol Bucharest (Vega) sold large stakes in Rompetrol Rafinare on the Bucharest Stock Exchange, for a price deemed as extremely small by most brokers – 116 ROL/share. It then bought back some of the shares for a much bigger price – more than 500 ROL. Dinu Patriciu, the main shareholder of the Rompetrol group, said he had sold the shares to raise the stock’s market liquidity and to help the prices go up.

The National Securities Commission has also completed an investigation into other transactions which it considers suspicious. The body has been looking into last year’s transactions in Oltchim Ramnicu Valcea stock, which tripled in value before a capital increase was announced. CNVM suspects eight persons of using insider information to make trades, which is strictly forbidden under the capital market law. The Commission has sent the list of persons suspected of breaching capital market legislation to the prosecutors.

“The information regarding Oltchim’s capital increase was accessed, before market players, by company officials, persons from the Bucharest Stock Exchange, the Privatisation Authority and the National Securities Commission. I can only tell you that none of the eight names from the list belongs to a CNVM employee,” said the National Securities Commission Spokesperson Ciprian Ene.

Capital market surveillance and the prevention of money laundering are also the main themes of a conference organised this week by CNVM and the SEC, the United States’ Securities and Exchange Commission.

“We have organised such conferences in many of the countries that joined the European Union on May 1. I do not believe that the Romanian capital market raises special surveillance issues, any different from those encountered in the neighbouring countries” said Robert Strahota, assistant director from the SEC’s Office of International Affairs.
vlad.nicolaescu@zf.ro