Top banker breaches FSA rules in £2 million share trade

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By:
Eric Ellis
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Standard Chartered’s CEO for Asia failed to comply with UK rules on trading his own stock in the bank. The bank itself then breached FSA rules while awaiting details of the transaction

Jaspal Bindra, Standard Chartered
Jaspal Bindra, group executive director, Standard Chartered
A Standard Chartered plc director has breached Financial Services Authority regulations over millions of pounds of his personal share dealings in the bank’s stock.

An investigation by Euromoney into the share dealings of Stanchart’s Hong Kong-based group executive director and CEO for Asia, Jaspal Singh Bindra, has learnt that Bindra failed to promptly disclose his dealings in 153,000 Stanchart shares, worth £2.14 million, to the bank.

Once it had been informed of Bindra’s dealings, Stanchart itself then failed to promptly disclose the dealings to the market, as it is obliged to under FSA rules on disclosure of public company directors’ dealings.

The breaches, confirmed by Standard Chartered yesterday, relate to a transaction by Bindra which took place on December 28, 2011, in Hong Kong, where he is based. Tim Baxter, Stanchart’s London-based head of corporate communications toldEuromoney: “Yes, there has been a breach.”

“There was a delay between the relevant transaction and Mr Bindra notifying the company,” Baxter said.

"There was then a short delay between the company being notified and filing the announcement as it sought further details on the transaction.

“The company has disclosed both the timing and nature of the transaction in the filings you have seen. We confirm the relevant shares are ordinary shares of Standard Chartered PLC.”

On December 28, 2011, Bindra had pledged 153,000 Stanchart shares to BMI Offshore Bank Ltd, a bank in the Seychelles. The filing said that the shares were pledged as security to a credit facility from that bank. That information was contained in a filing Stanchart made 27 days later, on January 24, 2012 to the three stock exchanges where its stock is traded; the primary listing in London, plus Mumbai and Hong Kong.

The filing disclosed that Bindra had informed his employer of the transaction on January 20, 2012.

Under the strict rules of the UK market regulator, the Financial Services Authority, and the London Stock Exchange, directors of public companies are required to notify their companies of any personal dealings in their company’s stock within four days of the transaction.

The company is then required to report the transactions to the London Stock Exchange’s company announcements office “no later than the end of the business day” following receipt of information from the director for release to the wider market.

These rules over public company director personal dealings have been tightened in recent years by the FSA and banking and business regulators globally, in response to the banking crisis. (The specific regulation is as required by DTR 3.1.4R(1)).

The disclosure of Bindra’s dealings is made in accordance with DTR 3.1.2R. These regulations are detailed on the FSA’s website

However, Bindra took 23 days to advise his employer he had dealt in its stock. Once advised by Bindra, Stanchart took another four days to inform the market.

The former head of Stanchart’s Indian operation, which he turned into the bank’s biggest national profit centre, Bindra became a group executive director in January 2010.