INVESTORS with accounts at Stocks and Securities are facing greater uncertainty after the Jamaica Stock Exchange (JSE) on Friday terminated the member dealer agreement of the securities dealer, leaving them, at least temporarily, with no means of cashing in equity accounts.

The JSE made the announcement on Friday through a vaguely worded release on its website under the title, ‘Jamaica Stock Exchange Providing A Fair, Efficient And Transparent Stock Market’.

“Please be advised that the Jamaica Stock Exchange (JSE) terminated its member dealer agreement with Stocks and Securities Limited (SSL), effective immediately. Consequently, SSL will no longer be allowed to trade on the exchange. All account holders in SSL will be further advised concerning their accounts,” the announcement read.

It concluded saying, “The JSE remains committed to providing a fair, efficient, and transparent stock market!”

Efforts to ascertain when investors in SSL will get any word concerning their accounts proved futile. The Jamaica Observer tried but failed to reach the JSE’s Managing Director Marlene Street Forrest after seeing the notice. Up to press time, questions sent to JSE Chairman Julian Mair were unanswered.

The latest blow to the entity and its clients comes three weeks after the company was suspended from conducting online trading as part of the requirements of the Financial Services Commission (FSC) to approve all trades done by SSL before they are executed.

According to a recent article in The Gleaner, SSL’s fidelity insurance expired on January 22, which resulted in it being in breach of a rule for member/dealer (broker) firms. This was on top of SSL’s annual returns for 2022 being outstanding up to December, along with the litany of breaches committed in 2022 as noted by the JSE’s Regulatory and Market Oversight Division (RMOD) monthly reports. It was cited in eight of 12 reports by the RMOD in 2022.

SSL was not initially suspended by the JSE following the announcement of the alleged fraud at the firm. SSL’s termination of its member dealer agreement means that the Regulatory and Market Oversight (RMOC) Committee held disciplinary proceedings and levied the highest sanction on the securities dealer. This is carried out as per Rule 228 of the JSE’s rules and would have been executed once a complaint by JSE Managing Director Marlene Street-Forrest, Chief Regulatory Officer Andrae Tulloch, or another authorised officer was submitted to the RMOC for acts of misconduct. The RMOC is chaired by attorney-at-law Janet Morrison and has members Livingstone Morrison, Dian Black, Eric Scott and Michael McNaughton.

Numerous SSL clients have reached out to the Jamaica Observer expressing concern and disgust at the lack of effective communication by the JSE and FSC surrounding the whole matter, which has left them very concerned about the ability to move their JSE stock holdings held at the Jamaica Central Securities Depository Limited (JCSD).

Others are concerned about the status of their international investments purchased through interactive brokers and held in SSL’s general account on their behalf. SSL had more than 9,000 clients, according to Finance Minister Dr Nigel Clarke in his prior public discussions.

SSL’s suspension comes at a time when stocks affiliated with SSL’s proprietary and managed accounts saw substantial trades on the market in the last three weeks. SSL owned 22,689,783 shares of FosRich Company Limited at the end of 2022 through its Alpha account. A fire sale of SSL’s stake on Friday dragged the stock down by 14 per cent to $2.63, with an intra-day low of $2.50.

This was preceded by the sale of 29,134,517 shares of Everything Fresh Limited on February 13 between $1.20 and $1.48 which caused the stock to slump 17 per cent to $1.20. A trader at a brokerage firm told Sunday Finance that various VM Group entities, including managed pension funds, purchased SSL’s shares on that day. The absence of a connected party disclosure also suggests that SSL was the likely party to that trade.

SSL sold almost 32 million shares of Everything Fresh between September and November to various parties, with the main benefactor being PAM – Pooled Equity Fund which rose to the number three shareholder spot. Another beneficiary from SSL’s sale during that period was the Jamaica Stock Exchange Pension Fund, as confirmed by the top 100 list between September and December 2022.

First Rock Real Estate Investments Limited’s share price tumbled between February 13 to 17 as SSL directly held 100,000 shares at the end of 2022. SSL’s managed account owned 135,000 shares of Consolidated Bakeries (Jamaica) Limited and 3,756,000 shares of MFS Capital Partners Limited at the end of 2022. SSL’s pension plan owned 50,000 shares of Sygnus Real Estate Finance Limited Jamaican-dollar shares and 8,730,000 shares of Wigton Windfarm Limited. Substantial volumes of MFS shares traded between February 13 and 14 while February 21 had a sizeable Wigton trade.

SSL was the broker for the JSE’s 2013 initial public offering and led the listing of Consolidated Bakeries (Jamaica) Limited, Caribbean Cream Limited, AMG Packaging & Paper Company, Fosrich Company Limited, Everything Fresh Limited, and C2W Music Limited which is now MFS Capital Partners Limited.

SSL was formed in 1973 as Paul Chen-Young & Company and was the second-oldest brokerage firm in Jamaica. It was renamed SSL in September 2006 and was majority-owned by the Croskery family. With SSL’s termination there are now only 14 member dealer/brokers remaining on the JSE.