THE assets of the principals of failed financial entity, Lorreston Bailey (LB) may be frozen following the discovery that investors owed J$685 million would only be able to recover $8.883 million.

In response to questions sent by Caribbean Business Report, the Financial Services Commission (FSC) — the regulatory body of the securities and insurance sectors — advised that it would “collaborate with other

government agencies to take appropriate action to protect the interests of the investors” and that the Financial Investigations Division (FID) of the Jamaica Constabulary Force has taken over the case for possible prosecution.

“The Financial Investigations Division (FID) has obtained a temporary restraining order. Further details will be provided by FID,” The FSC said. However, when contacted a representative at the FID declined to provide any further information, saying that the division does not respond to press queries.

In addition to the legal proceedings, the regulatory body will be requesting that the court appoints a trustee in bankruptcy as the receiver/manager of LB.

“On his appointment, the FSC’s role will end as the trustee in bankruptcy will take charge of the assets, verify claims from creditors and provide appropriate guidance to the investors or creditors,” the FSC said. However, the FSC declined to give a timeline as to when the new receiver/manager would be appointed or who he would be.

The latest development continues a lengthy process that began on July 23, 2010 when the securities firm was issued a cease and desist order following the discovery of irregularities at the entity. Ken Tomlinson was shortly after appointed as receiver/manager of LB to determine the true state of affairs of the company and it was discovered that of the $685 million owed to investors, only $14 million was recovered. From this amount, the fees of the temporary manager and the expenses incurred by the FSC would have to be recovered, amounting to $3.65 million and $1.767 million respectively.

The FSC said it would continue to mobilise all its available powers in the interest of investors, including forwarding the matter to the Director of Public Prosecution (DPP) for possible legal action.

“The FSC continues to pursue all legal remedies available to it, under the FSC Act. As indicated in our public notice, the FSC has referred the matter to the DPP. In addition, the FSC has commenced bankruptcy proceedings against Lorreston Bailey. The public will be advised of ongoing developments,” the FSC said.