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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Investor Sues Broker For Rs 35 Million

Investor Sues Broker For Rs 35 Million

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1Investor Sues Broker For Rs 35 Million Empty Investor Sues Broker For Rs 35 Million Sun Sep 01, 2013 12:53 am

sriranga

sriranga
Co-Admin
Capital Trust Securities let me down – U L M Nowfer, Investor from Kandy

Unpaid dues on Margin Trading Account disputed by T_ushan Wickramasingha
By Faraz Shauketaly

An investor in the Colombo Stock Exchange is suing Capital Trust Securities alleging unpaid settlement on his margin trading account. The investor U L M Nowfer, a businessman from Kandy, claims that Capital Trust Securities has acted ultra vires and is in breach of the tri-party Margin Trading Account entered into between Nowfer, Capital Trust Securities and the Commercial Bank of Ceylon.

For their part, Capital Trust Securities responded through T_ushan Wickramasinghe claiming that Nowfer owed them funds on a non-Margin Trading Account amounting to Rs 17 Million. “We are permitted to set-off those funds against what he owes us. Mr Nowfer does not appear to understand the issues at hand.”

The troubles started when share prices on the Colombo Stock Exchange started to nosedive in the first half of 2012. Nowfer alleges that he noticed a definite trend of late settlement by his brokers, Capital Trust.

In one instance in July 2012 Nowfer caused a tranche of shares to be sold. The value of that sale amounted to Rs 797,000. He alleges in documents filed in Court that the settlement was not paid within the time period stipulated in the Margin Trading Agreement. According to those documents Capital Trust Securities only paid out after “several requests by Nowfer and Commercial Bank.”

Nowfer’s Attorneys-at-Law wrote to Capital Trust Securities asking that they comply forthwith with the terms of the Margin Trading Account, reminding them, inter alia, that Nowfer had a prima facie case against them.

Part of this compliance included the request to remit all proceeds of sales of mortgaged securities to the Margin Trading Account with Commercial Bank. They also asked that all bought and sold notes be forwarded to Commercial Bank, and finally that a sum of Rs 35 Million be also remitted as losses/damages arising from the failure of Capital Trust Securities to settle dues on time.

Nowfer is a broken man: from an all time high where financiers fell over backwards to finance his forays into the business of stock market investments. T_ushan Wickramasinghe, for his part, says that Nowfer does not fully appreciate the ramifications and seems to ignore the fact that on another credit account Nowfer owes Capital Trust nearly Rs 17 Million.

Nowfer’s finances took such a severe dip that he was unable to pay a high-profile politically-connected attorney-at-law to facilitate immediate settlement. That Attorney refused to appear unless he was paid an advance of Rs 500,000.

For Nowfer, faced with financial ruin and with the market in the doldrums, raising Rs 500,000 was not even a distant possibility.

Nowfer is highly critical now of the market as it operated then, saying that prices fluctuated to all time highs; when smaller investors like himself tried to sell, their returns were insignificant compared to the ‘killings’ made by larger investors.

In another instance, Capital Trust Securities is accused of not settling dues against a sold note which had a value of Rs 6,098,000 (Rs 7 Million).

This amount, says Nowfer, is still owing.

Certainly there is nothing in the Margin Trading Agreement permitting the non-depositing of funds due to that account. Nowfer says, “This is a clear violation of the Margin Trading Agreement document. The brokers are using their own interpretations of the agreements instead of sticking to the written document.”

Initially Nowfer went round the countryside – in a manner of speaking. His quest for natural justice, to be upheld over all personal gain and benefit, consumed his life. His house, which is linked to the Commercial Bank Margin Trading Account, is at risk and he and his young family face an uncertain future.

He has lost his creditworthiness; he has become liable to pay interest on his borrowings on the purchases he made on his Margin Trading Account. In July 2012, as the markets plunged and stock nosedived in value, he wrote poignantly, if not hopefully, to Commercial Bank asking them not to force-sell his shares, as the potential loss he faced could have been up to Rs 20 Million – placing his home, which had been used as additional collateral, at risk.

On the face of it, Nowfer appears to have a strong case notwithstanding Capital Trust Securities’ own counter-claim. Nowfer maintains that Capital Trust Securities has not at any point until then (July 2012) denied its liability to deposit the sale proceeds and to forward bought notes as required under the Margin Trading Agreement.

In fact, Capital Trust Securities has deposited a sum of Rs 1,598,484.41 on June 18, 2012, and Nowfer cites this as a reason why the broker is estopped from legally denying liability on the Rs 6 Million they have not deposited to the Margin Trading Account.

Adding to the veritable mess Nowfer finds himself in, are claims he makes about the serious lack of service delivery levels by his broker. He maintains that he has been unable to serve papers on Capital Trust Securities and was eventually forced to rely on an order of the Court for him to accompany Fiscals to the brokers’ offices. On one occasion he says he felt threatened by in-house security when he called to negotiate the issuance of a cheque in his favour. The Sunday Leader was unable to confirm the veracity of these statements.

T_ushan Wickramasingha, responding to our e-mailed questions, invited us to examine the many files he says are in his possession about Nowfer and the claims he is making. He denies trading on Nowfer’s account without permission, and says he is confident that an examination of the records in his offices will vindicate his company.

The Sunday Leader has agreed with Mr Wickramasingha to visit him next week in order that we examine his documents and report his version of events in a forthcoming issue. The Sunday Leader does not infer any wrongdoing on the part of any individual and or corporate mentioned in this article.
(faraz@thesundayleader.lk)
http://www.thesundayleader.lk/2013/09/01/investor-sues-broker-for-rs-35-million/

http://sharemarket-srilanka.blogspot.co.uk/

K.Haputantri

K.Haputantri
Co-Admin
Thanks Shri for sharing the article. I invite the novices to study this case carefully, as it contains a number of lessons to be learnt.

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
@K.Haputantri wrote: I invite the novices to study this case carefully, as it contains a number of lessons to be learnt.
Most of the novices need quick rich mantra, can't waste time on reading materials(that is the curse of our generation).

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
When 95% of the people want quick money and if not panic too quickly , no wonder the market becomes more unstable.

Btw, wonder what kind shares Mr Nowfer held.. Can I guess there were some hot stocks ( at that time) also



@Redbulls wrote:
@K.Haputantri wrote: I invite the novices to study this case carefully, as it contains a number of lessons to be learnt.
Most of the novices need quick rich mantra, can't waste time on reading materials(that is the curse of our generation).

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@slstock wrote:

Btw, wonder what kind  shares Mr Nowfer held.. Can I guess there were some hot stocks ( at that time)  also

GREG, CLPL & TWOD for sure Twisted Evil 

I feel bad for this chap.. For he has lost his living due to another broker jilmart..

I've been keep on saying this - that unless otherwise broker has a proven track record of being a successful earner (at least 75%) for himself or a friend, relative, etc.. (someone that you can trust), never to trust the broker with your valuable money.
The reason is; whatever the transaction a person does is commission for them regardless of wining or losing. So they care less for the common man and concentrate highly on big boys as they earn much considerable revenue for them...

6Investor Sues Broker For Rs 35 Million Empty Re: Investor Sues Broker For Rs 35 Million Wed Sep 04, 2013 12:22 pm

gamaya


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
"For their part, Capital Trust Securities responded through T_ushan Wickramasinghe claiming that Nowfer owed them funds on a non-Margin Trading Account amounting to Rs 17 Million. “We are permitted to set-off those funds against what he owes us. Mr Nowfer does not appear to understand the issues at hand.”

Now this passage is self explanatory. How the hell did CT give 17Mil debt to a non margin account?

D.G.Dayaratne


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
It appears that Capital trust has not followed CSE guide lines.


8Investor Sues Broker For Rs 35 Million Empty Capital TRUST Securities Clarifies Sun Sep 22, 2013 12:09 am

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
The Editor,
The Sunday Leader,

We refer to an article captioned ‘Investor sues broker for 35 million’ which you had carried on page 08 of The Sunday Leader of the 01st September 2013. In the said article, you have cast several aspersionson on the conduct of Capital Trust Securities (Pvt) Ltd and its Managing Director/ CEO, Mr. Deleted Wickramasinghe. The article is also one sided, biased and deliberately intended to embarrass Capital Trust Securities and Mr. Wickramasinghe.

At the very outset, we wish to point out to you that your article merely sets out one side of the story, based on unsubstantiated allegations that have been made by the said Mr. Nowfer.

Though your reporter claims that he sought to grant us an opportunity to respond to the allegations, what in fact transpired was that he contacted Mr. Deleted Wickramasinghe, and having heard part of his explanation, categorically assured Mr. Wickramasinghe that he would not run the story until he met Mr. Wickramasinghe during the following week and obtained clarifications. Despite this assurance, you have resorted to sensationalizing the story, with the obvious intent to embarrass Mr. Wickramasinghe, Capital Trust Securities and the Stock Broking community at large.

As you are aware, this dispute is presently before the Courts and is sub judice. We have therefore been legally advised not to respond in detail to the facts or legal issues, unlike your reporter, who has ventured to gratuitously pass judgment that Mr. Nowfer appears to have a “prima facie case on the face of it”.
We would however like to state that we have always acted strictly on the basis of orders placed by Mr. Nowfer; acted in compliance with legal agreements that exist between ourselves and Mr. Nowfer; and that we possess written authority from Mr. Nowfer in respect of every action taken by us.

What has obviously not been disclosed to your reporter by Mr.Nowfer is that he transferred a partly paid share portfolio to a Bank on the strength of a letter given by him to Capital Trust Securities instructing the said Bank to issue a cheque to Capital Trust Securities to pay the entire amount outstanding in his personal CDS account.

Despite this letter of instruction, Mr. Nowfer wrongfully took a sum of Rs. 4,500,000 which had been released by the Bankwhen it should have been handed over to Capital Trust Securities, thereby violating the understanding between him, the Bank and the Capital Trust Securities. Consequently, Capital Trust Securities paid all sales proceeds to the said Bank that Mr. Nowfer refers to in the said article, having deducted the aforesaid sum of Rs. 4,500,000 for the reasons set out above.

It is also important to note that the Colombo Stock Exchange and the Securities and Exchange Commission have, after due inquiry, initiated on the complaint by Mr. Nowfer, confirmed that they are unable to proceed with the complaint. Perhaps, your reporter, in his haste, rushed to print the story before verifying these details.

In conclusion, we wish to state that the manner of the presentation of your article makes it manifestly clear that the intention was to sensationalize the story and assist Mr. Nowfer by coercing Capital Trust Securities into giving into his demands.

If Mr. Nowfer’s story has been reported in the public interest you should question yourself as to why you have not given similar exposure to thousands of similar disputes that exist in relation to virtually most other firms.

Yours sincerely
Capital Trust Securities (Pvt) Ltd.
Deleted Wickramasinghe
Managing Director/CEO

Editor’s Note: Our reporter fully stands by his story.
http://www.thesundayleader.lk/2013/09/22/capital-trust-securities-clarifies/

9Investor Sues Broker For Rs 35 Million Empty Re: Investor Sues Broker For Rs 35 Million Sun Sep 22, 2013 10:49 am

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Hmmm good to see that CT has responded to the questions raised.. So lets see how the court proceedings are..

However, this is a good lesson for every investor/trader out there..

I dont wanna blame either party as to me I see problems with both sides.
But what I'm tying to emphasize is; one must safeguard his money and know one's limits. Also be aware what's happening and what you do and broker does. Additionally keep everything filed as proof when buy/sell is done.

10Investor Sues Broker For Rs 35 Million Empty Re: Investor Sues Broker For Rs 35 Million Sun Sep 22, 2013 4:08 pm

K.Haputantri

K.Haputantri
Co-Admin
@smallville wrote:Hmmm good to see that CT has responded to the questions raised.. So lets see how the court proceedings are..

However, this is a good lesson for every investor/trader out there..

I dont wanna blame either party as to me I see problems with both sides.
But what I'm tying to emphasize is; one must safeguard his money and know one's limits. Also be aware what's happening and what you do and broker does. Additionally keep everything filed as proof when buy/sell is done.
Good advice. I might add few more for the use of novices. Go for fundamentally sound equities, avoide craps and never buy on credit.

11Investor Sues Broker For Rs 35 Million Empty Re: Investor Sues Broker For Rs 35 Million Sun Sep 22, 2013 4:55 pm

econ

econ
Global Moderator
We all know How CT does business.. TW is one of the biggest culprit in the market.

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