SSEC INVESTIGATES INTO RECENT DEALS IN LUKOIL NEFTOCHIM SHARES
Somehow unexpectedly the State Securities Exchange Commission (SSEC) began investigating the deals in LUKoil Neftochim stocks, closed on the exchange on October 11 and 12, when more than 30,000 shares changed hands. The main actors in the transactions were the investment underwriters Yug Market of Plovdiv and Phar of Bourgas. SSEC's motive was that there was probably an attempt to manipulate the market.According to players on the capital market, the principle aim was to lower the exchange price of the company's stocks from some BGL5.50 to BGL3.75 apiece. This purchase price was negotiated in advance for the sale of about 30,000 preferential shares, held by the oil refinery's employees. As the regulations of the stock exchange do not allow tranference of packages lower than 5% of the respective company's capital on the block segment, the transaction had to be effected on the free market. Thus, without really wanting it, the underwriter Phar had to cut down the quotations of LUKoil Neftochim in order to fulfill its clients' orders. The deal was fully legal.According to experts, the price reduction was not so much the underwriter's doing, but was a result of the Bulgarian Stock Exchange regulations, amended last March. Cross deals on both the official and the free market were banned then, as well as a large part of the transactions on the block segment. In that sense, the initiated investigation is rather motivated by SSEC's desire to show that its respresentatives really execute control. In the beginning of August LUKoil Neftochim made public its financial results for the first half of 2001, reporting a triple decrease in its sale proceeds, but the SSEC did not respond then and was accused by Deputy Premier and Minister of Economy Nikolai Vassilev of being a passive viewer.The stir up among SSEC's 7 members is probably related to the recently spread rumours about their dismissal in the weeks to come, in spite of the fact that their mandates expire in May 2006. It is said that the replacement of SSEC's incumbent members will be propted by the amendments to the Public Offering of Securities Act, to be passed by Parliament in the near future.