- ‘It is disappointing that after leaving the exchange and the country, Richard Morin has chosen to make false and incorrect statements’
KARACHI: The Pakistan Stock Exchange (PSX) on Friday strongly repudiated the assertions made by former chief Richard Morin through a published article.
“This is a ruthless attempt to malign PSX and the Securities and Exchange Commission of Pakistan (the apex regulator). PSX being a national exchange enjoys a high degree of credibility as a front line regulator,” a statement issued by the exchange read. “The article is a collection of frivolous allegations and fabrications which are far from reality. Whereas the fact remains that Mr Richard Morin disclosed his positions of Founder, CEO and CCO of Archer Wealth Management (AWM) on a form submitted before his appointment, with a footnote mentioning that ‘Appointment of Successor is in process’.”
The PSX continued, “As per his (Morin’s) employment contract, the MD-PSX was not allowed to be directly or indirectly involved, engaged or interested in any capacity (including but not limited to employee, officer, director, shareholder, trustee or agent) in any other business other than the business of PSX. On joining PSX, Mr Richard Morin also submitted the employee’s data form in which he clearly ‘disclosed’ his complete disassociation as Founder, CEO and CCO of AWM.”
Based on the findings of the explanation process, it was evident that Mr Richard Morin made a false declaration of leaving AWM and has himself accepted his association in writing as a shareholder, CCO and also portfolio manager which was never disclosed earlier, the PSX maintained.
It further stated, “Mr Richard Morin continued to manage the affairs of AWM and even signed the Anti-Money Laundering and other Compliance Reports of AWM even till his last day at PSX. This was not only a conflict of interest but (it) also endangered the reputation of PSX and its interests by making the AWM and PSX associated companies. PSX reserves the right to report this major violation to the relevant international authorities.”
The enquiry conducted by the PSX Board revealed that some obvious and blatant violations were committed by Mr Richard Morin, including false declaration on employee’s form, concealment of material facts, conflict of interest (sharing of time and resources simultaneously for his own company, while being employed by PSX), failure to comply regulations, compromised on applicable fit & proper criteria, violation of articles of association of PSX, failure to meet contractual obligations, etc.
“Upon being confronted with the findings of the wrongdoings committed by him (Morin), he preferred to step down on his own and tendered his resignation instead of facing the investigation, which was unanimously accepted by the board, allowing him to take a graceful exit. However, it is disappointing that after leaving the exchange and the country, he has chosen to make false and incorrect statements.
“Aside from the above-mentioned facts, which led to his disassociation with PSX, it is also pertinent to mention that he had not achieved his outlined objectives and commitments as per the business plan approved by the Board during his tenure of 16 months. Not a single new product was introduced during this period.”
As per PSX, Morin’s allegation of a nexus between legacy brokers in order to derail the reform process of the stock exchange is entirely concocted. Brokers are the backbone of the stock exchange as they participate in the market activities and are the major clients and stakeholders of PSX, it added.
“The affairs of the Board of PSX are however run purely by the directors/representatives of local and Chinese shareholders and independent directors. Further, the chairman of the board has been appointed from amongst the independent directors unanimously by the board.
“The frontline regulatory function of PSX is fully segregated from the commercial function of PSX and directly reports to the Regulatory Affairs Committee comprising of only independent directors of PSX, and to SECP as its extended regulatory arm having common goals and objectives to ensure maximum protection of rights and interests of investing public, without any discrimination on size or type of investment.”
As per the statement, Mr Morin’s contention that the trading system at PSX is ‘leaky’ does not match with the facts. “PSX has a robust trading system providing automated trading solutions, fully integrated with the National Clearing Settlement System and Central Depository System ensuring all end-to-end information security aspects. This system is up-to-date and fully compliant with the risk management features with a capacity to allow efficient execution of trades at par with international standards.”
‘Legacy Brokers Behind My Ouster’
On Thursday, former PSX CEO Richard Morin came out swinging against rumours surrounding his abrupt resignation.
“My ownership of Archer was fully disclosed to PSX and SECP, both before and after I joined PSX,” he wrote in an op-ed.
Mr Morin claimed that after joining the PSX as CEO, he sold his majority of Archer, which then nominated a CEO and hired a portfolio manager to replace him, something he claims is indicative of his level of commitment to PSX while he was its chairman. He also called bluff on the idea that Archer could develop any type of business outside Quebec, calling it “a pure fabrication by my detractors.”
He had pointed to the fact that his involvement with Archer was a well-known fact, something that he openly discussed during his tenure at PSX, and which always remained on the Archer website as well as his public LinkedIn profile.
Morin in his article had blamed the culture at PSX as the real reason behind his downfall, terming the exchange “a market lacking a culture of compliance.”
“Why was I then pushed out the door? Very simply because the arrival of a foreigner at the helm of the stock exchange – one who is very familiar with best international practices – constitutes an existential threat to the ‘legacy brokers’ who have long held a stranglehold on this market. Indeed, their attacks started as soon as my candidacy emerged, months before I actually joined.”
According to Morin, these “legacy brokers” had used their contact in the SECP to force the removal of independent directors from the PSX Board of Directors in April 2018. These legacy brokers and their henchmen, as Morin called them, then gained effective control of the PSX Board, installing a new, subservient chairman and putting their nominees on all Board Committees as well as NCCPL and CDC Boards. As a result, the demutualisation of PSX has effectively been rolled back, with a single broker now calling the shots from his living room.
With himself gone and these legacy brokers allegedly running the show, Morin called the PSX “possibly the most underdeveloped emerging market in the world”, measured by the number of domestic investors (the second worse exchange in the region is 6 times more developed, while Bangladesh is 17 times more developed on a per capita basis).
