By Poly Pantelides
THE Securities and Exchange Commission (SEC) on Thursday announced its decision to issue an administrative fine of €100,000 on the former CEO of the now-defunct Laiki bank in relation to misleading the public about the lender’s capital needs.
A statement by Efthimios Bouloutas appeared in the media on September 28, 2011 claiming the group was healthy and had adequate liquidity, SEC said in an announcement.
But the lender started drawing emergency liquidity assistance (ELA) on September 27, 2011 via the Central Bank so could not be considered healthy, the SEC added. “By contrast, as the name shows, [ELA] was an emergency [mechanism] and was the last resort to a bank for drawing liquidity.”
The SEC said that in its decision – which dates back to September 30 – it bore in mind the gravity of Bouloutas’ action, deserving the maximum allowable fine, as well as the “fundamental importance” of reliable information to investors.
“Violations of the obligation for reliable information undermines the market and should therefore be strictly punished,” SEC said.
Bouloutas issued a same-day response announcing his intention to legally contest the decision and accusing the SEC of twisting his words.
The SEC’s decision was based on “a supposed statement to a journalist, reproduced with a two-month delay to just one magazine with a limited circulation, [and] was twisted by [the SEC] as to its meaning,” Bouloutas said.
He said the SEC’s decision was “wrong, illegal, defamatory, and abusive [of its power]”.
Laiki, formerly the island’s second biggest lender, asked for a €1.8 billion state bailout in June 2012, unable to comply with obligatory recapitalisation requirements.
The island was later forced to shut Laiki down as part of the terms of an EU/IMF bailout in March. Laiki had been relying on ELA to get by and had amassed over €9.0 billion, most of which was inherited by the Bank of Cyprus, which was under Central Bank administration for months after the March bailout.
Bouloutas became Laiki’s CEO in March 2006, and stepped down in December 2011, leaving a new board to try and fail to attract private investors.