DUE TO INCOMPATIBILITIES AND CONFLICTS OF INTEREST The BSE group has committed self mutilation

• At the General Meeting of Shareholders of the Central Depository, the officials of the BSE have disbanded the OTC market

• The managing director of the BSE, Valentin Ionescu, said that he has become the chairman of the Depository

• The chairman of the BSE, Stere Farmache, had a conflict of interest with every item on the agenda

• The two members of the former Board of Directors of the Depository, who had falsely affirmed their compatibility, were allowed to issue new affidavits regarding their compatibility

The BSE has decided to shut down the OTC market which the Board of the Central Depository had launched just one month ago, as the representatives of the Bucharest Stock Exchange (BSE) voted yesterday, at the meeting of the Board of Directors of the Depository (in which it holds 66%), the invalidation of the Decision by which the OTC market had been created, after canceling yesterday the first and only trade which took place on that market, which involved the transfer of 100,000 shares of SIF5.

Yesterday"s General Meeting of Shareholders of the Central Depository apparently went in a civilized manner, but it was still a circus, in keeping with the tradition of the Romanian capital market.

When checking the records of the Trade Registry on the names of the management of the BSE, the secretary of the meeting (representing the "Broadhurst" fund led by Siminel Andrei, being one of the members of the tiny faction opposing the "Ţepeş group" on the Board of Directors of the BSE), found out that the older members of the Board of Directors of the Central Depository hadn"t been stricken off, so the records of the Trade Registry indicated that the Board of the Central Depository now has 15 members, instead of nine (as for why the records didn"t indicate 18 members, was because three of the members of the current Board had also served on the old Board).

Valentin Ionescu, the managing director of the BSE, made the committed to perform the due diligence to correct the error.

When checking the new candidates for the new Board of the Depository, the secretary of the meeting found out that Doru Boloş and Cristinel Sandu Popescu, who had admirably announced their resignations from the management positions they held in two companies (to eliminate their incompatibility with serving on the Board of Directors of the Central Depository), still held those positions according to the records of the Trade Registry, and were therefore still incompatible at the time of the meeting.

They issued new affidavits, and the Board of Directors accepted them, even though the situation is simply absurd, given that the previous affidavits were false.

Besides, these affidavits will need to be validated by the CNVM, a process in which the commissioners will need to take into account the ethic profile of the people who made the statements - one of the official criteria for their approval - which is rather thorny issue given the fact that the previous affidavits were false.

Yesterday"s meeting of the Depository, which was controlled by the representatives of the BSE on the board, which were in turn controlled by the "Ţepeş group", decided that an impact study would need to be performed, before the any talks around the launch of the OTC market were to begin.

The Board of Directors has decided to no longer call for the former members of the Board of Directors of the Depository to answer for their decision to launch the OTC market (they are accused of trying to harm the BSE group, by opening the OTC market).

The interesting part is that in all of the aforementioned cases, the chairman of the BSE had a conflict of interest.

Stere Farmache was a member of the former Board of Directors of the Central Depository, event though his position in the BSE was incompatible with his position at the Depository.

As member of the old Board of Directors of the old Depository, Farmache agreed to the launch of the OTC market, only to completely shift his position now and go against his own vote. He demanded that the former members answer for their decision, in other words he accused himself as well, only to become tolerant and give himself a reprieve.

A circus.

By canceling the OTC market, the Bucharest Stock Exchange remains a big fish in a small pond, at a time when quick and decisive action would have been needed to help it grow, and to allow it to survive.

It is "a self-mutilation case".

The title of a famous movie which became a reality on the stock market.