Benchmark (Bahamas) Limitedﾴs (BBL) president Julian R. Brown issued a press release in response to a report over the weekend, which not only suggested that the company had been withholding material information from and possibly misleading the market but that a BBL subsidiary was the subject of a lawsuit. BBL is listed on the Bahamas International Stock Exchange (BISX).
ﾓAt no time were we attempting to mislead or withhold information which could impact the trading activity of our shares,ﾒ Mr. Brown stated.
Fidelity Capital Marketﾴs one of only two market makers (Colina Financial Advisors are the other), in its weekly report stated that Benchmark (Bahamas) Limited (BBL), had ﾓfinally published its financial results for the year ending December 31, 2003.ﾒ The report went on to state that ﾓit sent shockwaves throughout the investment community.ﾒ
According to Fidelity, BBL ﾓposted net income of $2,429 after establishing a provision for doubtful debts in the amount of $1.48 million. The provision was to cover the ﾓhighly probableﾒ effects of a pending litigation against a BBL subsidiary.
It was the failure to disclose this ﾓhighly probableﾒ outcome valued at $1.48 million that, according to the Fidelity market report, had ﾓmarket participants [are] up in arms as to why this information, material in nature, was kept from the investing public for over eight months.ﾒ
Mr. Brownﾴs release stated that ﾓfor clarification purposesﾒ Benchmark wished to inform the public ﾓthat there is no legal action against it or any of its subsidiaries for US$1.48 million.ﾒ
The ﾓapparent confusionﾒ caused by the delay in publishing its financial statements arose from a series of events that began during the fourth quarter of 2003 and into the first six months of 2004.
According to his statement Mr. Brown said that a client owed a BBL subsidiary, Alliance Investment Management Ltd., $1.48 million for trades executed and settled by Alliance for the clientﾴs account. The client subsequently cancelled the transactions leaving Alliance with a potential loss of $1.48 million.
Mr. Brownﾴs release stated that as a result, Alliance not only requested ﾓa provision for doubtful debts in its annual accounts for 2003ﾒ but had taken steps to retrieve its money and had ﾓtaken out an action against the issuer of the securities and a demand claim against the client.ﾒ
Mr. Brown noted that Alliance had been advised by its auditors to take the prudent path by providing ﾓfor the full amount owed to it by the client notwithstanding the action which it had taken against the issuer of the securities.ﾒ
The Business Journal contacted BISX, executive director Keith Davies and asked him what were the guidelines or rules governing when a company should make its various reports and if any of these had been violated in light of the 8-month delay in publication of BBLﾴs financial statements.
ﾓQuarterly reports must be reported within three months of the end of the quarter and four months following the end of the fiscal year,ﾒ Mr. Davies explained. ﾓIn cases where a company, for whatever reason believes it will be unable to meet those deadlines, it is required to come forward and inform BISX and upon consideration an extension is granted.ﾒ
Mr. Davies said that Benchmark had approached BISX giving reasons for its delay and requested an extension.
ﾓOur policy is that in cases where there is an extension granted to a company to delay release of its financial statements, we require them to publish a disclosure,ﾒ Mr. Davis said. ﾓIn this case we did not. It was our fault. At all times Benchmark observed the rules approached us made their presentation requested and received the extension. We did not ask them, as we should have, to publish a disclosure.ﾒ
Mr. Davies expressed concern at the impression created by the report.
ﾓThe report did leave the impression that the company had acted in a way that would mislead the public,ﾒ he stated. ﾓTo ensure we do not have a repeat of this we are tightening up our requirements and making sure this does not happen again.ﾒ
The Journal contacted Ms. Velma Miller a market analyst at Fidelity Capital Markets who declined to comment and referred the reporter to a company vice president James Graham who was not available and had not responded by press time.
C. E. Huggins, The Bahama Journal
