The ASF has notified the criminal investigation bodies about thefts of shares through Harinvest

Adina Ardeleanu (Translated by Cosmin Ghidoveanu)
Ziarul BURSA #English Section / 27 august 2014

The ASF has notified the criminal investigation bodies about thefts of shares through Harinvest

The Financial Oversight Authority (ASF) has notified the competent bodies, after reviewing two complaints from investors, who reported that their shares were sold through "Harinvest", even though they did not have a contractual relationship with the former, according to the representatives of the Authority.

Also, on August 11th, the ASF received a notification about the sale 240,000 Proprietatea Fund shares by SSIF "Harinvest". "The complaint is being reviewed by the ASF, and once it is analyzed, depending on the conclusion, the ASF will decide on the appropriate measures, within the limits of its competences", according to the representatives of the institution.

Last autumn, tens of customers of "Harinvest" Râmnicu Vâlcea filed complaints about having been left without money and shares in their brokerage accounts, after the settlement of a trade failed. It was then found, that for a whole year, "Harinvest" had resorted to sell-offs, operations which are considered exceptional, to cover losses incurred using structured products. The Financial Oversight Authority shut down the brokerage firm, in December 2013, but the case is very far from being closed, as it has been handed over to the DIICOT.

Several thefts of shares were revealed in autumn last year, such as the notorious situation of Ana Maria Mihăescu, the head of IFC Romania, who lost shares worth 200,000 Euros, which were stolen using forged documents.

The Central Depository has received no complaints about stocks being stolen through Harinvest

The Central Depository, the institution which keeps the stock registry, told us that so far, it has not received any complaints concerning the trading of shares in the Proprietatea Fund, through a brokerage firm that the shareholders had no contract with.

The representatives of the institution also added that according to the legislation in effect, the chain of operations made by a broker to sell an investor's shares does not involve any operations or authorizations that would involve the Central Depository.

The Depository provided us with a comprehensive explanation of the process: "According to the law, the line of business of the Central Depository involves overseeing the compliance of market participants with the obligations they have to their customers when it comes to the selling of their stocks.

Within the system of the Central Depository, securities are recorded in individual accounts, opened in the names of the holders in Section 1 (the section of the owners of securities that do not have an account opened with a brokerage participating in the clearing-settlement and registry system of the Central Depository) or in global accounts, opened in the Second Section of the Registry (the section of nominee accounts which keep the records of the holdings of customers that have accounts open with a brokerage participating in the clearing-settlement and registry system of the Central Depository).

The trading of securities is done through an authorized intermediary. The latter, based on the documents stipulated by the legislation in effect, has the obligation to conclude an intermediation contract and to perform all due diligence when it comes to getting to know their client. Once these formalities are concluded, the shareholder, who once that happens becomes a client of an intermediary, tells the latter what trades it wants to have executed. If the client already owns shares and wants to sell them, based on the instructions provided by the client, the broker must transfer the shares from the individual account opened in the First Section, to the nominee account of the intermediary, opened in the Second Section. Once the transfer is completed, the intermediary will introduce into the trading system the appropriate sell order, at the price indicated by the client. If the sell order is executed, the money resulting from the sale of the shares will arrive, within three working days, into the account of the intermediary, which then transfers it to the bank account indicated by the client. Therefore, the chain of operations made by a broker to sell the shares of an individual, does not involve, according to the legislation in effect, any operations or authorizations that would involve the Central Depository".

The representatives of the institution have also added that since its creation, it has made available to securities holders the service which allows restricting access to securities upon demand. The operation involves the blocking of securities in the individual accounts opened in the 1st section: "The financial securities blocked in the individual accounts opened in the First Section may not be transferred to the Second Section by the intermediaries and therefore can not be sold by them. The unlocking of the securities for trading is done by the Central Depository upon request of the titleholder or of their legal or conventional representative".

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