SSL safe and secured


SSL safe and secured

We have nothing to hide declares Harding

Observer business writer

Sunday, March 29, 2020

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Investment and stockbrokerage firm Stocks and Securities Limited (SSL) is safe for business, based on information provided by company executives and corroborated by an independent audit done, as directed by its financial regulator the Financial Services Commission (FSC).

The Jamaica Observer's Caribbean Business Report, in its expose, sought to unravel the regulatory breaches identified by the FSC – in particular SSL's ability to ensure that proper internal records were maintained for it's on- and off-balance sheet funds under management. The FSC complained that the failure to maintain such records prevented it from confirming the adequacy of securities held by SSL to cover client liabilities.

However, SSL CEO Zachary Harding sought to set the record straight as he explained to Sunday Finance that the reference about failure to ensure that proper records are kept was as a result of a technical glitch in its IT system, which has now been corrected.

According to Harding, “last year SSL underwent an IT systems upgrade. While client accounts remain safe, the new system unfortunately presented a gap in providing some information which is crucial to our regulators”.

He further explained that “as soon as the cause was identified our IT experts fixed the issue. Again, with full transparency, we invited the FSC to evaluate the correction. We welcome and respect the FSC's directions and guidance, and we were assured that everything is to their satisfaction and it was approved”.

During the period of examination, the FSC guided SSL to some other areas that needed to be addressed in order to ensure that the investment and brokerage firm remains compliant, and to date SSL continues to meet the statutes presented by the FSC, Harding declared.

Questioned on why SSL was holding large sums of cash balances not being invested in securities, Harding responded, “Any sums of cash that were on our books are fully accounted for, reconciled, and available to clients at any time. After a liquidity event, some clients opt to keep cash on their accounts until they are ready to invest with us again. In essence, they treat their investment account like a savings account and hold funds there to reinvest it in the future.”

He pointed out that, “SSL [has] advised our clients on how and where they can invest these large sums of cash, which in some instances have include ETFs (exchange-traded funds) or private equity deals.”

He confirmed that an independent operations audit was successfully completed in January for the on- and off-balance sheet assets and that “coming out of the audit, we had some reporting adjustments that needed to be done and these have now been successfully completed”.

Sunday Finance asked what steps have been taken regarding the $1.1 billion in client funds not invested in securities and the SSL CEO responded: “We have now placed these uninvested funds into bonds, securities and private equity deals. From the existing amount of uninvested cash, we have completed the placement of approximately 80 per cent into such opportunities [as has been] approved by our clients.”

Quizzed on whether SSL is now accepting new funds in relation to portfolio management services, Harding replied in the negative but made the point that it is however accepting funds into brokerage, investments and private equity deals as they are still fully allowed to do by the FSC.

On the general issue of whether SSL is now in compliance with the FSC directives, as outlined in correspondence to the company addressed to Chairman Jeffrey Cobham dated October 25, 2019, Sunday Finance was advised that, to date, the firm has completed the necessary actions within the required timelines and continues to respond to the outstanding ones in a timely manner before they become due.

We further quizzed Harding about the circumstances that caused SSL to be in breach of the regulations, as stated in the correspondence from the FSC executive director but he emphasised that “for clarity, SSL has not been in 'breach of regulations' but [has] been very transparent with the FSC and with the public in indicating that SSL has been restructuring and committed to aligning operations with good governance”.

He argued that the directions from the FSC clearly highlight “instances where an entity is about to engage in an unsound practice”, which he contends does not constitute a breach but was cautionary. Harding was adamant that SSL is safe and secured, so much so that the FSC has not taken any action against the investment and brokerage firm outside of the October 25 directives with which they are, for the most part, in compliance.

In concluding, the SSL boss stated: “We continue to work closely with the FSC and they have expressed great satisfaction with the actions and responses from SSL so far.”

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