Byron Thompson (right), managing director of Seprod, in discussion with chairman Desmond Blades at the company's August 2005 annual general meeting in Kingston. Seprod's shares remain suspended after several weeks. - File

Ashford W. Meikle, Business Reporter

Almost a month after the Jamaica Stock Exchange (JSE) suspended trading in the shares of the Seprod Group for its failure to submit its audited accounts, sparking criticism from analysts and the JSE that the company seems to be treating the issue too casually.

"It's a total disgrace that a so-called blue-chip company which people rely on for dividends has qualified accountants - sitting both on the board as well as at the executive level - who have allowed the company to be [suspended] by not having the financial records of the company in a state to facilitate speedy disclosure of information," said economist John Jackson.

In fact, according to the Investor's Choice magazine publisher, when it comes to tardy submission of its accounts, Seprod is a repeat offender.

"It happened two or three years ago when there were some problems and foul-up with their inventory," Jackson told Wednesday Business.

Problem

"There seems to be some fundamental, systemic problem that exists within the group itself - not necessarily Seprod, per se - and it is something they need to pay atten-tion to."

JSE General Manager Marlene Street-Forrest, who was also critical of the company's management, could not say when the suspension would be lifted.

Neither Seprod's Managing Director, Byron Thompson, nor board chairman, Desmond Blades, was available for comment yesterday.

On May 11 the JSE announced that it would be suspending trading in Seprod shares for violating JSE Rule 407, which speaks to submission of a company's quarterly results within 45 days of the end of the quarter.

Stocks and Securities' Mark Croskery has labelled the suspension and its handling as a public relations blunder on the part of Seprod.

"Seprod is a blue chip. You don't expect this type of thing to happen to them," he said.

"It has been poorly handled and it has a number of negative effects. It's a public company and there has to be accountability. There has been no release from them to say [when] they will submit their statements and reapply to the JSE. There has just been no communication."

In fact, the stock exchange's top executive echoes a similar view to Croskery.

Make a statement

"Seprod should make a statement to shareholders," agreed Forrest-Street. "I think separate and apart from what is coming out of the [JSE], they have a duty to make a statement to shareholders. And I am not talking about the regulatory requirement where they have publish the problems they may have in completing their accounts. I think they need to face their shareholders for good order."

In fact, the JSE boss fretted about the effect the suspension would have on an already fragile equities market which has seen the main JSE Index - which closed at 89,774.43 points yesterday - dip 11 per cent year to date.

"A company cannot go that long without providing financial information to its shareholders - it is a disturbing situation and where shareholders and investors cannot have information on a timely basis, it does nothing to engender confidence, either in the company or in the market," said the JSE general manager.

According to Jackson and Croskery, it is the small investor who ends up losing.

"All the suspension does is stifle trading in the stock and nobody really benefits in the final analysis," criticised Jackson.

Exposed

Croskery said the suspension has left investors exposed, particularly those who might have borrowed against the stock.

"If a client had a margin account with Seprod when [the] stock is suspended, we count that security as zero."

Jackson argues that, to protect investors, the JSE needs to go further in its sanctions by targeting directors of delinquent companies.

"The stock exchange should probably move to fining directors - which should be paid by the directors and not the company - and certainly by way of excluding these directors from serving on any other board of the stock exchange," hesaid.

But it's an idea that Street-Forrest, though firm in her criticism of Seprod - has poured cold water on.

"The stock exchange cannot do that, but I think the directors of Seprod and other directors who sit on other boards that fail to provide relevant information to shareholders should be held liable."

ashford.meikle@gleanerjm.com