THE ELECTIONS OF THE BUCHAREST STOCK EXCHANGE, WITH SCANDALS, TO KEEP WITH TRADITION Asterisks cause a row at the BSE

Tempers flared on the meeting of the Board of the Bucharest Stock Exchange on Monday night, after the posting of the list of candidates for the new management, after the BSE flagged three candidates with an asterisk, and wrote next to their names that "these candidacies are seen as risky".

The three people who were tagged were Stere Farmache, former CEO of the BSE, Dan Paul, the president of the Association of Brokers and vice-president of the BSE and Octavian Molnar, the head of IFB Finwest.

Next to their names, the BSE wrote: "If a member of the Board of Directors of the Exchange does not have the right to hold that position, according to article 41 paragraph (1) of the Articles of Incorporation of the Company, the BSE would be exposed to a major legal risk when it comes to the validity of the decision of its Board of Directors. In that case, there are reasons, supported by legal opinions, which cause us to feel that the person in question no longer has the right to be a member of the Board of the Exchange or, at the very least that there are serious doubts over that right, which can not be presently eliminated".

The BSE officials did not respond to BURSA's enquiry sent yesterday, asking who issued those legal opinions based on which the BSE placed asterisks next to the names of three of the candidates for the management positions in the BSE, who made the request for those legal opinions and what were the basis and the cost of legal aid the BSE received this year. "BURSA" also asked the BSE to consult these legal opinions or the main arguments.

On the other hand, the BSE yesterday removed the asterisks next to the names of the three candidates and came with a new clarification: "The legal references concerning some of the candidates have been removed because the process for the approval by the Board of Directors of the final version of the List of candidates for the positions of member or member and chairman of the Board of Directors of the BSE is ongoing".

The BSE did not make this change in a transparent manner, but covertly, without publishing any press release or making an errata.

The amendment apparently came after the huge row which started on the Board of the Exchange, because of the diverging interpretations of the article in the Bylaws of the BSE which stated that the Board member term can only be renewed once.

Market sources say that the opinion of the ASF on this matter has been requested as well.

Apparently, none of the employees of the BSE, not even CEO Ludwik Sobolewski, acknowledge having asked for those legal opinions or having written the footnotes of the list of candidates, and are even less capable of specifying on what legal basis they have taken this unprecedented action.

Even though there are some people who feel that shareholders should be informed if there are risks concerning some candidates, the fact that the BSE isn't' transparently standing behind that claim raises questions over the legality of its action. The legal opinions invoked by the representatives of the Bucharest Stock Exchange should also have included the documentation of the legal basis, so that the responses requested by the BSE should have come naturally, not in the form of tests.

It bears reminding that the BSE did not think that legal opinions were necessary when it backed four incompatible candidates for the elections for the management of the Central Depository, candidates who were subsequently rejected by the ASF.