A controversial trade of nearly $3 million worth of Bank of Bermuda shares on the Bermuda Stock Exchange was handled properly, according to the exchange's chairman.

Mr. William Dolan, who is vice president of Bank of Bermuda subsidiary Bermuda International Securities Ltd., said the transfer -- which was the subject of a complaint by the Island's independent securities firms -- had been investigated by the Exchange's members.

"There was a complaint registered from outside the exchange,'' he said. "I investigated the transaction as chairman and all members agreed it was a properly transacted deal.

"The Bermuda Monetary Authority as the supervisor of the exchange has also agreed it was a proper transaction,'' he said.

Mr. Dolan said the share offer had been properly offered with the asking price and number of shares posted. When a buyer could not be found, it was dealt with by the bank, he said.

First Bermuda Securities president Mr. Jeff Conyers, whose firm issued the complaint, said he had not yet heard anything about the result of the investigation.

"Our point is there were other people who were trying to sell shares who were unfairly treated,'' he said. "But if the rules of the Exchange permit that kind of trade, then those are the rules.'' Mr. Conyers said he was also awaiting word on whether off-Exchange trades would be exempted from stamp duty as trades on the Exchange are.

Mr. Dolan said he had not yet heard anything new. An early ruling by Attorney General Mr. Walter Maddocks has stated that only trades executed on the Exchange will be exempted. Finance Minister the Hon. David Saul said yesterday that when the exemption was agreed two years ago, it was assumed that all people who wanted to be on the Exchange would have joined and there would be no over the counter trades and stamp duty exemptions would apply to all sales.

"We agreed to the exemption because we thought it would help get the Exchange up and running and out of the ping pong ball era,'' he said. "The banks tell us they are open to all members.'' In a letter yesterday, Mr. Dolan said the banks, which own the Exchange and are currently the only companies which have seats on it, had no desire to prevent the exemption from applying to all trades.

"The banks have always intended and indeed made clear to Government that stamp duty exemption should apply across the board such that trades `made over the counter' and not only through the Exchange would likewise benefit from stamp duty exemption, provided only that the shares be listed on the Exchange,'' he said.

"Lastly, it should be noted that although the Exchange is presently controlled by the local banks, opportunities exist in the near future for others to become trading members on the Exchange. This would allow other members to have an active participation in the management and growth of the Bermuda Stock Exchange.'' But Mr. Conyers said the Exchange had not yet replied to his letters asking to join. Nor was he certain FBS would join, he added. That would depend on the cost of membership and the degree of control a member would have compared to the banks.