A former bank manager and a stock broker have been convicted of securities fraud.

Wayde Bethel, a former manager at Commonwealth Bank, and Hiram Cox, a broker at First Bahamas Capital, facilitated the black market sale of shares purchased through an employee stock option plan (ESOP), Deputy Chief Magistrate Carolita Bethell ruled this month.

The court found that between November 2005 and February 2006, Bethel participated in a scheme where bank managers sold shares to third party purchasers, who had unwittingly financed the purchase of the employee stock options.

 During the charged period, the value of the shares fluctuated between $8 and $10, but employees had the option to purchase them at the reduced rate of $6. The managers who participated in the scheme earned a $2 profit per share.

 As part of the scheme, the managers signed blank powers of attorney that purportedly transferred the not-yet-purchased shares under the ESOP to First Bahamas Capital, which sold them to third parties.

 None of the transactions were registered on the local BISX exchange.

 The prosecution, led by Garvin Gaskin, deputy director of public prosecutions, argued that the scheme had the ability to erode confidence in the market and result in a crash.

The magistrate fined Bethel $50,000 for dealing in securities without being a licensed stock broker. He was fined $25,000 for his part in the securities scheme.

If he fails to pay the fines, he will spend a year in prison. Bethel was also ordered to repay Commonwealth Bank $164,650 in commissions he earned through the illegal scheme.

Cox, who facilitated the purchases, was fined $15,000 for his role. He faces a year in prison if he fails to pay the fine. Cox also has to repay $7,805 in commissions.

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