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CySEC disagrees with supreme court over Eliades, BoC decision

After the attorney-general, the island’s securities and exchange commission (CySEC) also expressed its disagreement over a Supreme Court decision that acquitted a top banker on appeal, after he was jailed for two and half years for market manipulation.

The supreme court on Wednesday acquitted former Bank of Cyprus CEO Andreas Eliades, and the bank as a legal entity, who had been found guilty in January this year of providing misleading information to investors during the bank’s annual general meeting (AGM) of shareholders on June 19, 2012. The misleading statements related to the bank’s capital shortfall at the time.

The two-one decision of the three-member appellate court was disputed by the attorney-general shortly after it was issued.

On Thursday, CySEC issued a statement also expressing disagreement with the top court’s decision.

Like the attorney-general, CySEC said it respected the decision but it disagreed with the rationale concerning the meaning of market manipulation ascribed by the court.

At the AGM in question, it was claimed the bank was close to full recapitalisation and that the capital shortfall was €200m.

But in a letter to the Central Bank dated June 20, 2012, the bank raised its capital needs to approximately €400m.

The court said it did not consider Eliades’ action at the AGM a bid to make gains by fiddling with the price of the company’s share.

If that were the case, the judges said, why didn’t Eliades use it in his opening speech, which the criminal court found to contain no information that could have been judged as being misleading as concerns the shortfall.

The decision said Eliades’ effort at the time was to avoid the pressure and to handle the angry shareholders and their persistent questions.

“He didn’t want to give the true picture at the time,” the criminal court said. “This, however, in itself, does not constitute a criminal offence, especially a felony.”

The commission said it was its long-standing position that senior public company executives cannot convey “misleading data or messages to their shareholders and be absolved of any responsibility just because they did so under pressure from the shareholders in an AGM with the aim of reassuring them.”

On Wednesday, Attorney-general Costas Clerides said he disagreed both in relation to its legal aspect and the rationale it presents.

In his view, the attorney-general added, the decision made proving such cases in court “almost impossible” because, despite the proven and recognised deception caused to the shareholders and potentially the wider public by false statements uttered by bankers, market manipulation was not substantiated, according to the decision.


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