The Securities Industry Act, 1995 (Part IX – Dealing by Persons Connected with Issuers)

Selective Disclosure Facilitates Illegal Insider Trading

The Trinidad and Tobago Securities and Exchange Commission has noted with concern, the practice by many companies listed on the Trinidad and Tobago Stock Exchange, of disseminating price sensitive information to certain select persons and audiences ahead of their release of such information to the general public. Such action constitutes Selective Disclosure, a practice not conducive to the operation of a fair and equitable securities market. Further, in many instances, Selective Disclosure facilitates breach of the insider trading provisions of the Securities Industry Act, 1995.

Specifically, the Commission is concerned about the practice by some Listed Companies of releasing information about their financial affairs to certain select persons, such as stockbrokers, financial analysts and the media, before publishing such information in the local media for the benefit of the general public. That information is price sensitive information, being specific unpublished information which, if generally known, might reasonably be expected to affect materially the price or value of the securities.

The Commission has communicated its concerns by Circular Letter to all Listed Companies and to the Stock Exchange. Listed Companies have been requested to desist from the practice of Selective Disclosure, and specifically, to ensure that any officer or employee who has access to price sensitive information relative to that company or to a related company, does not communicate such information to any other person who he knows or ought reasonably to know, could use that information to trade in the securities of the Listed Company or a related company on a securities exchange.

The practice of Selective Disclosure is inimical to the interests of investors in the local securities market. The Commission does not approve of the practice and insists that it cease immediately. If Listed Companies must disclose information which is considered price sensitive information, such disclosures must be made to the general public, not to selected audiences.

Carlton M Robinson
Chairman

April 10, 2003