Top businessman calls for quarterly Financial Reports

CHAIRMAN of  Prestige Holdings Ltd Joseph Esau has called on large companies which trade on the local stock exchange to begin releasing financial results on a quarterly basis rather than half-yearly, to enhance transparency and openness of the equities market. Esau was responding to information from Central Bank Governor Ewart Williams, who said as part of the bank’s plan to reform the regulatory framework for the capital market, the Securities and Exchange Commission (SEC) would soon introduce international standards for disclosure to move quarterly reporting for listed companies instead of semi-annual reporting, which now exists.

Williams was addressing a gathering at the UWI Institute of Business (IOB) Ideas Forum, where he stated that a lack of market transparency and low market confidence were hampering capital market development. Recent studies, Williams said, revealed a general suspicion among players in the capital market that insider trading and price manipulation are prevalent practices on the Stock Exchange. Esau shared the Governor’s belief, saying reluctance on the part of companies and in particular stock brokers, to initiate quarterly reporting showed they were taking advantage of several “windows of opportunity,” to use and abuse insider information. “The brokers,” Esau said, “have a majority position on the Exchange and are one of the reasons for the manipulation of the market and they don’t want change.”

The use of insider trading, he continued, very often resulted in an abnormal movement in the price of shares and thus there was a need for companies to initiate internal investigations rather than relying on the SEC, which he criticised for being inactive for a number of years. Esau maintained the move to impose quarterly reporting was a step in the right direction. “The SEC is here to protect and look after the interest of the average investor in the market. That is your total obligation and I am glad to see that we are moving in that direction,” Esau said.

His points were debated by securities advisor Overand Padmore, who noted that although he agreed with Esau to some extent, he did not share the belief that stock brokers had a majority position on the Stock Exchange. “The Stock Exchange is not owned and controlled by the stock brokers,” Padmore asserted, explaining that it is instead partially owned by listed companies, with approximately one third being controlled by stock brokers, since listed companies in fact own the three stock broking firms.