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SEC to investigate Atlantik brokers
By Jiri Kominek New case would pit brother against brother The Securities Commission (SEC) has announced it will investigate Prague Stock Exchange (PSE) charges that Brno-based Atlantik misused clients' money and failed to document off-market trades. PSE officials, however, would not verify the amount. The PSE has already slapped Atlantik with a six-month suspension and a 50,000 Kc ($1,500) fine effective April 23. "If the PSE discovered irregularities in Atlantik's activities, then it is the job of the commission to investigate," said commission chairman Jan Muller. "Our goal is not to influence the PSE decision, but simply to conduct our own independent investigation." After the investigation is completed in a few months, the commission can demand that Atlantik correct any wrongdoing, and can also impose a fine of up to 100 million Kc. The SEC's launching of its own investigation illuminates tensions that have already built up between the commission and the PSE. Muller claims the PSE did everything possible to avoid consulting with the commission during the course of its investigation, but would not say why. The commission itself may find the investigation problematic. The results of its investigation may come under suspicion because of a potential conflict of interest. Muller's assistant is David Gladis, the brother of Atlantik General Director Daniel Gladis. But Muller tried to minimize the potential conflict. He said, "The entire commission -- not just David Gladis -- will investigate Atlantik." The ties between SEC and Atlantik were enough to rattle the new watchdogs, though, who didn't seem united in their decision to pursue the case. Just before Muller announced that the SEC would look into the matter, David Gladis already had said the commission would not investigate. After the SEC announcement David Gladis said, "I do not want to comment because anything I say may be interpreted as a conflict of interest," he said. PSE Secretary General Jiri Franc already sees such a conflict. "Show me one instance in any civilized country where a securities commission employs a relative of a person who runs one of the largest brokerage firms in that country," he said. "The PSE must treat all of its members equally whether they are big or small. No foreign investor will set foot in this country because what we have here is a state of anarchy, and something must be done to change this." Atlantik controls 18 percent of all trading on the PSE, and racked up 112 billion Kc ($3.2 billion) in revenues last year. Franc said he is distressed by accusations from Atlantik's Daniel Gladis in the Czech press that the PSE's decision to suspend the brokerage firm is based on a personal conflict between Franc and Muller. "The decision to suspend Atlantik was made by the PSE Chamber ... once investigators submitted their findings that showed Atlantik was guilty of wrongdoing," he said. "Since I am the secretary general of the PSE, I had no choice but to respect the findings and could not overturn them." Franc also rejected Atlantik's charges that the PSE failed to notify the brokerage firm of its suspension. The PSE, he said, had informed Atlantik in writing. "Why would I risk my reputation and credibility by not informing Atlantik of the PSE's decision?" he asked. "Even if we couldn't fax them the decision, I would at least call them and inform them." After the decision, Atlantik launched an aggressive media campaign in which its officials claim they have been unfairly targeted by the PSE. Atlantik's Daniel Gladis said his company had informed the PSE prior to the suspension announcement that it had already stopped misusing clients' money. Atlantik's boss justified the company's off-market trading activities, saying "all the other brokerage firms do it as well." "I think we will come out of this stronger than before the suspension," said Daniel Gladis. Although PSE has suspeded Atlantik's membership Daniel Gladis said that the brokering arms of two of the largest domestic banks, Ceska sporitelna and Ceskoslovenska obchodni banka, will represent Atlantik clients in trades on the PSE. Though the banks' aid to Atlantik may signal trust in the brokerage, Franc said, "This is a good indication of the magnitude of the problem -- when you get two large banks that are willing to represent a brokerage firm that has just been suspended for unethical practices." |
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