This email has been around trading floors for a while now.
Any insights are welcome.
John
_________________________________________________________
From: Stephen Rothstein
Sent: Wednesday, May 11, 2005 4:25 PM
To: snipped-for-privacy@banca.mps.it; snipped-for-privacy@banca.mps.it; snipped-for-privacy@banca.mps.it; snipped-for-privacy@banca.mps.it
Cc: snipped-for-privacy@consob.it; snipped-for-privacy@cec.eu.int
Subject: BANCA MONTE DEI PASCHI DI SIENA - SUSPECTS OF INSIDER TRADING ACTIVITY
ATTENTION: BOARD OF DIRECTORS, BANCA MONTE DEI PASCHI DI SIENA
OBJECT: SUSPECTS OF INSIDER TRADING ACTIVITY
Dear Sirs,
following latest press rumors about a suspected case of Insider Trading at Monte dei Paschi di Siena (MPS) we have been conducting researches just to discover some very questionable behavior at the top management of the bank.
As an advisory firm involved in making valuations about equity positions, we find ourselves in a difficult stance with customers when these kind of problems arise outside our database of information and in the midst of major Italian banking transactions; where your bank is involved.
This adds up to the appallingly poor performance of the MPS stock which is a striking evidence of the difference it bears from the rest of the Italian banking sector.
In particular, we are told that MPS has been contested a huge trading activity (at the stunning rate of millions of Euros per day) on its own stock; kept secret at its own fund managers and almost casually discovered by a former employee.
This has also been reported in an article on the Italian financial newspaper MF by reporter Sara De Banis on last April 8.
As per our research, this all took place in the Private Banking Division of Monte dei Paschi di Siena, headed by directors: Giorgio Olivato, Silvano del Greco and Maurizio Ravezzi.
MPS Private Banking is famous for its attitude toward secrecy even when this may conflict with compliance. In light of this, under the direction of Ravezzi, the bank would operate transactions on MPS stock for millions without releasing any public disclosure of interest conflict.
Furthermore, the bank now seems to "unofficially" claim the transactions were done on behalf of a customer. Was this the case, this customer has surely been the beneficiary of a special treatment from the bank as his/her transactions (on the stock of the bank) were advised by bank directors and kept secret to others.
In addition, all these transactions are said to fall into key periods of the bank's year as the dividend date. In the Milan financial area, the voice is also spreading that many of those transactions were, in fact, equity arbitrages with opposite BNL (Banca Nazionale del Lavoro) positions.
In light of all the above and the current events at BNL, we deeply believe it would be the case for MPS to release a public statement; especially when there seems already to be legal correspondence questioning the roles of both President Fabrizi and CEO Tonini.
We would highly appreciate if you could cover the following questions in your desirable public statement about the case:
1) How much has the bank being trading its own stock and why?
2) Why hasn't there been communication to shareholders and to the Italian securities commission?
3) If these transactions were done on behalf of a customer, why has a customer (obviously Italian) been given such a preferential treatment others don't have?
4) Why the company has not replied to any correspondence nor released a public statement about the case?
5) How does the company plan to protect the interest of minority shareholders now?
6) How does the company plan to protect the value of its stock in front of this?
7) How will the company ensure that these happenings (which are, at minimum, serious misunderstandings) be prevented from taking place?
8) Who has been running all the show and how does the bank plan to deal with him/her?
We want to emphasize that, while Italian banking/securities authorities may be warmly tolerant of all the above, the interest of foreign investors seems to have been damaged here; in spite of their good faith in the bank.
Failing your bank to give proper answers (that we hope to be public) we will pursue any needed means to obtain satisfaction up to advising our customers to file a case in an Italian and/or foreign court of justice.
Sincerely,
Steve Rothstein,
Chief Equity Analyst
Miller & Taylor LLC