SEC: Fine of €200k to Orphanides and Christos Orphanides – Reprimand to Marfin CLR
10/9/2014 11:54
The Board of Directors of the Cyprus Securities and Exchange Commission would like to inform the investing public that at a meeting, it decided to impose an administrative fine of €200,000 to Orphanides Public Company Ltd and to Mr. Christos Orphanides, Chairman of the Board of Directors of the Company, for violations concerning the content of the Prospectus dated 11.10.2011 for the listing for trading on the Cyprus Stock Exchange of 191,500 Guaranteed Bonds (‘the Prospectus’).
Specifically, the Commission decided:
(A) To Orphanides Public Company Ltd
(i)To impose an administrative fine of 50,000 for violating article 19, as specialized in article 20(1)(c) of the Law on the Actions of Persons Holding Confidential Information and Market Manipulation Actions (Market Abuse) 2005, as amended (N.116(I)/2005), since on 11.10.2011 it published a Prospectus providing misleading indications about its titles, and
(ii) To impose an administrative fine of €50,000 for violating article 20(4) of the Takeover Bid Law 2005 (N.114(I)/2005) as a person that signed the Prospectus, since the information provided in it was not accurate, complete and up-to-date.
The above breaches emerged after the Prospectus failed to state that the amount of €9.150.000, which was part of the capital from the issue of Guarantee Bonds and was destined for the financing of the plan for the expansion of the Company and the enhancement of its working capital, had already been used by the Company for the purchase of Convertible Capital Securities of Enhanced Capital.
In order to determine the administrative fines, the following factors were taken into account:
1. For article 19 of L.116(I)/2005:
1.1. The seriousness attributed by the legislator in this type of violations, which is reflected by the level of the administrative fine provided for such violations.
1.2. The fact that the manipulation acts via misleading information affect the integrity of the financial market since they impede the smooth operation and the creation of conditions of full transparency.
1.3. The importance of ensuring that the market is not manipulated in any way, which contributes to enhancing the confidence of the investors in it.
1.4. The seriousness to provide full information about the movable securities and the issuer in the Prospectus, which is an effective tool for the improvement of the investors’ confidence in securities and therefore contributes to the proper functioning and development of the securities markets.
2. For article 20(4) of L.114(I)/2005:
2.1. The seriousness that the legislature gives in such violations, which is reflected by the level of the administrative fine provided for such violations.
2.2. The importance attached in maintaining the confidence of the investors in the securities market. The signing of the Prospectus Bulletin by persons identified as responsible for the provision of the information presented in it, gives the investment public the necessary safety for investment in securities as it acts as an assurance for the accuracy, completeness, clarity and timeliness of the content.
(B)To Mr. Christos Orphanides, Executive Chairman of the Board of Directors, the imposition of an administrative fine of €100,000 for violating article 20(4) of L.114(I)/2005 as a person that signed the Prospectus, since the information included in it was not accurate, complete and up-to-date after the Prospectus failed to state that the amount of €9.150.000, which was part of the capital from the issue of Guarantee Bonds and was destined for the financing of the plan for the expansion of the Company and the enhancement of its working capital, had already been used by the Company for the purchase of Convertible Capital Securities of Enhanced Capital.
In order to determine the administrative fine to Mr. Orphanides, the Commission took into account:
1.The seriousness that the legislature gives in such violations, which is reflected by the level of the administrative fine provided for such violations.
2. The importance attached in maintaining the confidence of the investors in the securities market. The signing of the Prospectus Bulletin by persons identified as responsible for the provision of the information presented in it, gives the investment public the necessary safety for investment in securities as it acts as an assurance for the accuracy, completeness, clarity and timeliness of the content.
3. The fact that Mr. Orphanides held the position of Executive Chairman of the Board of Directors and was a key person for the proper functioning of the Company and the Board.
4. Due to the position of Mr. Orphanides as Executive Chairman of the Board of Directors he was able to access all the information relating to the Company and should ensure that the necessary information regarding the purpose of the issue of Guaranteed Bonds, is included in the Prospectus.
The Commission decided to reprimand did not imposed any administrative fine to other members of the Board of Directors of the Company who signed the Prospectus, and in particular to Messrs. Giorgos Hadjimichael, Simos Kyriakides, Marios Antoniades, Dinos Lefkaritis, Michalis Petsas, Christos Fylaktou and Polys Kourousides, although there was an infringement of their Article 20 (4) L.114 (I) / 2005 on behalf of them, taking into account that:
- Those persons held a position of Non-Executive Member in the Board Directors of the Company.
- Since they did not have any specialized task in the Company, these non-executive directors, based on the facts, were not able to affect the contents of the Prospectus to the extent that an executive director could do it.
- Based on the above, the degree of involvement of these non-executive directors in connection with the Executive Director of the Company, who led to the signing of the Prospectus, was such that the imposition of penalty on them is not justified.
The Commission also decided to reprimand Marfin CLR (Financial Services) Ltd, the Manager of the Prospectus of the Company, for violating Article 23 (2) of L.114 (I) / 2005, as it failed to show the necessary thoroughness in the preparation of the Prospectus to ensure accuracy, completeness and timeliness for the proper, complete and objective information to investors.
The Commission decided not to impose to Marfin CLR (Financial Services) Ltd an administrative fine for violation taking into account that, as a responsible contractor preparing the Prospectus, it tried to confirm the information included in this Prospectus ensuring a certificate of the Issuer, signed by the Chairman of the Board, for the correctness, completeness and accuracy of the data granted.
Specifically, the Commission decided:
(A) To Orphanides Public Company Ltd
(i)To impose an administrative fine of 50,000 for violating article 19, as specialized in article 20(1)(c) of the Law on the Actions of Persons Holding Confidential Information and Market Manipulation Actions (Market Abuse) 2005, as amended (N.116(I)/2005), since on 11.10.2011 it published a Prospectus providing misleading indications about its titles, and
(ii) To impose an administrative fine of €50,000 for violating article 20(4) of the Takeover Bid Law 2005 (N.114(I)/2005) as a person that signed the Prospectus, since the information provided in it was not accurate, complete and up-to-date.
The above breaches emerged after the Prospectus failed to state that the amount of €9.150.000, which was part of the capital from the issue of Guarantee Bonds and was destined for the financing of the plan for the expansion of the Company and the enhancement of its working capital, had already been used by the Company for the purchase of Convertible Capital Securities of Enhanced Capital.
In order to determine the administrative fines, the following factors were taken into account:
1. For article 19 of L.116(I)/2005:
1.1. The seriousness attributed by the legislator in this type of violations, which is reflected by the level of the administrative fine provided for such violations.
1.2. The fact that the manipulation acts via misleading information affect the integrity of the financial market since they impede the smooth operation and the creation of conditions of full transparency.
1.3. The importance of ensuring that the market is not manipulated in any way, which contributes to enhancing the confidence of the investors in it.
1.4. The seriousness to provide full information about the movable securities and the issuer in the Prospectus, which is an effective tool for the improvement of the investors’ confidence in securities and therefore contributes to the proper functioning and development of the securities markets.
2. For article 20(4) of L.114(I)/2005:
2.1. The seriousness that the legislature gives in such violations, which is reflected by the level of the administrative fine provided for such violations.
2.2. The importance attached in maintaining the confidence of the investors in the securities market. The signing of the Prospectus Bulletin by persons identified as responsible for the provision of the information presented in it, gives the investment public the necessary safety for investment in securities as it acts as an assurance for the accuracy, completeness, clarity and timeliness of the content.
(B)To Mr. Christos Orphanides, Executive Chairman of the Board of Directors, the imposition of an administrative fine of €100,000 for violating article 20(4) of L.114(I)/2005 as a person that signed the Prospectus, since the information included in it was not accurate, complete and up-to-date after the Prospectus failed to state that the amount of €9.150.000, which was part of the capital from the issue of Guarantee Bonds and was destined for the financing of the plan for the expansion of the Company and the enhancement of its working capital, had already been used by the Company for the purchase of Convertible Capital Securities of Enhanced Capital.
In order to determine the administrative fine to Mr. Orphanides, the Commission took into account:
1.The seriousness that the legislature gives in such violations, which is reflected by the level of the administrative fine provided for such violations.
2. The importance attached in maintaining the confidence of the investors in the securities market. The signing of the Prospectus Bulletin by persons identified as responsible for the provision of the information presented in it, gives the investment public the necessary safety for investment in securities as it acts as an assurance for the accuracy, completeness, clarity and timeliness of the content.
3. The fact that Mr. Orphanides held the position of Executive Chairman of the Board of Directors and was a key person for the proper functioning of the Company and the Board.
4. Due to the position of Mr. Orphanides as Executive Chairman of the Board of Directors he was able to access all the information relating to the Company and should ensure that the necessary information regarding the purpose of the issue of Guaranteed Bonds, is included in the Prospectus.
The Commission decided to reprimand did not imposed any administrative fine to other members of the Board of Directors of the Company who signed the Prospectus, and in particular to Messrs. Giorgos Hadjimichael, Simos Kyriakides, Marios Antoniades, Dinos Lefkaritis, Michalis Petsas, Christos Fylaktou and Polys Kourousides, although there was an infringement of their Article 20 (4) L.114 (I) / 2005 on behalf of them, taking into account that:
- Those persons held a position of Non-Executive Member in the Board Directors of the Company.
- Since they did not have any specialized task in the Company, these non-executive directors, based on the facts, were not able to affect the contents of the Prospectus to the extent that an executive director could do it.
- Based on the above, the degree of involvement of these non-executive directors in connection with the Executive Director of the Company, who led to the signing of the Prospectus, was such that the imposition of penalty on them is not justified.
The Commission also decided to reprimand Marfin CLR (Financial Services) Ltd, the Manager of the Prospectus of the Company, for violating Article 23 (2) of L.114 (I) / 2005, as it failed to show the necessary thoroughness in the preparation of the Prospectus to ensure accuracy, completeness and timeliness for the proper, complete and objective information to investors.
The Commission decided not to impose to Marfin CLR (Financial Services) Ltd an administrative fine for violation taking into account that, as a responsible contractor preparing the Prospectus, it tried to confirm the information included in this Prospectus ensuring a certificate of the Issuer, signed by the Chairman of the Board, for the correctness, completeness and accuracy of the data granted.
