Claridge stockbrokers in the hot seat over Agalawatte sale

The family feud involving the children of the late Sriyani Nonis, chairperson of the Mackwoods group, to wrest control of the company, came to the Colombo stock market this week after the Securities and Exchange Commission (SEC) suspended the sale of plantation asset in the group.

Following a complaint, the SEC suspended the sale of 60.8 per cent stake in Agalawatte Plantations Plc owned by Mackwoods Plantations Pvt Ltd to Browns authorised by Mackwoods chairman Chris Nonis and reprimanded the selling broker Claridge Stockbrokers over impropriety and conflict of interest.

Nonis’ sister Nirmalie Samaratunga and their aunt Ms. M. J. Verma together complained that the the 60.8 per cent stake had been sold by Dr. Nonis without proper authorisation and approval of the shareholders. “Further to the complaint, the SEC has obtained a copy of the CDS account opening form of Mackwoods Plantations Pvt Ltd and note that the two persons authorised to issue instructions are Ms. Shalendra Ranaweera and Mr. Lalith Fonseka, whereas according to the information provided by you (broker) to the CSE (stock exchange), the written instructions for the sale of the 60.8 per stake … has been issued by Dr. Chris Nonis.”

The SEC in a severe reprimand of the broker said that the transaction was in violation “of the written instructions issued to you (Claridge Stockbrokers Pvt Ltd) and contrary to a directive issued by the SEC is a serious breach of discipline on your part and a matter on which the SEC takes very serious cognizance. Your conduct is aggravated by the fact that Claridge Stockbrokers Pvt Ltd is a company in which Dr. Chrishantha Nonis has an interest.”

Despite all this, on Thursday Claridge sent a letter to the SEC saying that the transaction was done before the SEC issued the directive, sources said. “The SEC has checked with the bank in question, Commercial Bank which said that the funds were in the accounts by 10.30 on Wednesday. This will be further probed by the SEC and they aim to take maximum action,” a source told the Business Times.

In these circumstances and subject to inquiry, the SEC said it was withholding the sale under further examination.

Since May, the two parties have been squabbling through public statements issued by both sides with two public relations agencies hired last week to disseminate this information and, according to brokers, which is seen intensifying the battle which is also in courts.

Meanwhile Browns officials say that Agalawatte was acquired with a willingness and capacity to re-build the company.