ISLAMABAD: The board of the Pakistan Stock Exchange (PSX) is expected to demand the resignation of Managing Director Richard Morin sometime next week, Dawn has learnt.
The move is in response to controversy around not disclosing information as required under the law and breach of legal requirements related to conflict of interest.
“We expect that there will be board meeting by the end of next week, and either Mr Morin will accept the demand to resign or his contract should be terminated,” said one of the Pakistani directors at the PSX board while speaking to Dawn under condition that their name not be disclosed.
The PSX issued a show-cause notice to Morin last month for breaching the employment contract by simultaneously operating his own wealth management company. Morin was given 15 days to come up with an explanation, but he has yet to reply to the notice.
Morin took charge in January 2018, appointed by the Chinese consortium that holds a 40pc stake in the PSX, but he continues as chairman of the board, CEO, chief compliance officer and portfolio manager of ‘Archer Wealth Management’, a Montreal-based firm.
His affiliation with another firm was identified in late January and the PSX board issued a notice to him, followed by an explanation letter and a final show-cause notice was issued to him in February.
Another PSX board member said that the reply did not address the issue clearly “he has said that his post in the Canadian-based financial advisory firm were only title positions and all his affiliations were known when he was appointed by the Chinese strategic investors.”
“This is clear that his continuation of both jobs was a conflict of interest, however the final decision has to be taken by the Chinese firm — but they are under severe pressure too because the situation could hurt the image of PSX and sentiments of investors,” said one of the board members.
The brokers also have a say in the situation and criticised the apex regulator of the stock market –SECP for not taking any note.
“There are numerous occasions that Morin did not fulfil the legal requirement but the SECP continued to ignore the flaw or does not have the capacity to check a foreigner — but the SECP is always at arms whenever there is a minor mistake by any of the brokers,” said one broker in PSX, who was afraid of possible reaction to be named.
“The conduct of MD PSX is a breach of the Code of Corporate Governance and the Companies Act 2017 but the SECP did not do anything, besides the regulator did not even bother to note the performance of new PSX management in 15 months,” he added.
Meanwhile, the senior officials of the SECP Wednesday talked to the PSX management over the subject and conveyed to them their apprehension that the matter could be exploited by several lobbies.
“We are engaged with PSX board and it is expected that the board would take some decision to resolve the matter,” the official added.
It is expected that SECP would intervene including use the power to dissolve the board if the PSX board failed to come to any decision by the end of next week to resolve the matter.
Morin didn’t reply to calls and messages sent by Dawn.
Published in Dawn, May 9th, 2019