The compensation of the Proprietatea Fund

Trading of shares of the "Proprietatea Fund" "on street corners" has been going on for the last two years, while the authorities paid it no mind; no one took the responsibility of overseeing this trading or protecting shareholders. Some of the intermediaries (even among brokers) made money by trading the shares, by capitalizing on the lack of information of the Fund"s shareholders.

Many of them sold their shares for less than half of the amount they received as compensation. Even as Tuesday Some of the shareholders of the Proprietatea Fund had not even heard by Tuesday (the last day when the Central Depository was accepting transfers of shares in the Proprietatea Fund) that the Fund would get listed on the Stock Exchange on January 25th.

This raises the question: who should watch over the interests of the old and uninformed shareholders.

"The Ministry of Finance should have provided accurate and fair information to the shareholders in question to prevent them from being the victims of those who understand the market mechanisms", Varujan Vosganian, the former minister of the Economy and Finance said for BURSA. Varujan Vosganian was the initiator of the ordinance that greenlit the trading of shares of the Proprietatea Fund on the Over-The-Counter market.

Varujan Vosganian said: "The creation of the Proprietatea Fund had a morality factor to it which should have been kept. I was one of those who decided that the people who had their assets seized by the Communist regime be compensated by receiving shares in Transgaz and Transelectrica, but we sent letters to the shareholders, we provided the necessary information. It seems the Ministry of Finance lost this habit along the way".

Even though some of the shareholders accuse the former minister of Finance that he opened "Pandora"s box" when he allowed the trading of shares of the Proprietatea Fund, Varujan Vosganian says that his intention was precisely to help older shareholders, who needed money and who were at risk of not living long enough to see the Fund get listed: "I did not release this ordinance to benefit someone in particular. I did it because some of the shareholders of the Proprietatea Fund asked for it, as they needed money. I met their representatives, it wasn"t a unilateral decision, it was made in cooperation with the shareholders. Those who rushed to sell their shares did so at their own risk".

Sources from inside the Commission who did not wish to be named said that the CNVM (Romanian National Securities Commission) had their hands tied on the issue of the matter of the trading of shares of the Proprietatea Fund shares on the OTC market, because the capital market law does not mention this kind of trades.

"The Romanian law has omitted fixing the issue of OTC trades, which is why we never had the authority to oversee this kind of trades", the quoted sources said, and they added: "The activity of brokers is regulated, but they are allowed to buy unlisted shares as well. What brokers do on the OTC market may not always be ethical, but I think it is up to other institutions, such as the Association of Brokers, to investigate and maybe punish them".

• Whose responsibility was it to inform the shareholders?

Dana Mirela Ionescu, the chairwoman and managing director of "Raiffeisen Capital&Investment", one of the members of the consortium that handles the listing of the Fund, claims that both the Fund, and the intermediaries of its listing, have tried to keep shareholders informed using all the available means.

Mrs. Ionescu said: "Being the intermediaries of the listing, we have advertised it on all the available media channels: printed press, TV and radio. The Proprietatea Fund used every means at its disposal to keep its shareholders informed, by sending them letters, emails, TV appearances, by announcing the listing in press conferences, during the General Shareholder Meetings and even setting up a special section on its website. There was nothing more that we could have done. It is also the duty of the Shareholder Associations that have already established contact with the shareholders to keep them informed on what is happening with the Fund, about the fact that the listing is getting near, etc, but it is also a moral responsibility of brokers that buy shares".

Contacted by "BURSA", Marius Murgu, the chairman of the Association of Private Owners of the Proprietatea Fund, and one of those who claimed he was "consulting" to the shareholders of the Fund that were selling their shares on Tuesday, at the headquarters of the Central Depository, say he is overwhelmed by calls he receives from shareholders that are lacking information.

"After spending ten minutes with each of them and I update them on the situation of the Fund, they tell me they want to sell their shares because they need money. I urge you to take my phone and see how out of the loop they are and how hard it is to make them understand things", said Marius Murgu.

The listing of the Proprietatea Fund, scheduled for January 25th, 2011, which comes five years after the creation of the Fund, is presented in an optimistic light and as a benefit for the initial shareholders that would be able to make an exit in a transparent manner. However, the question arises on whether the listing actually comes too late for these shareholders and if some of them haven"t actually sold their shares a long time ago, below the price that the state offered them as compensation.