FSC returns to court in SSL matter
The Financial Services Commission (FSC) will be returning to court tomorrow in its case against fraud-hit Stocks & Securities Limited (SSL) whose clients are growing increasingly anxious about their assets.
The matter is to be heard in the commercial division of the Supreme Court by Justice David Batts.
To be heard are the FSC confirmation of it being vested with full and exclusive powers of management of SSL from January 17; leave to present a petition to the court under the Companies Act for the winding up of SSL; leave for Kenneth Tomlinson to be appointed as the trustee for SSL; and other such orders as the court deems fit.
The FSC is seeking these orders on the grounds that the value of SSL’s assets is substantially less than liabilities, SSL is insolvent, and that the orders being sought are in the best interest of SSL’s investors, customers, and creditors.
On June 2 the Court of Appeal had struck down a request for an extension of time to file a notice and grounds of appeal from SSL and Caydion Campbell, whom the company had appointed as trustee.
This is just one of several court cases involving SSL which has been under the temporary management of the FSC since January after fraud allegations surfaced.
Limited liability company Welljen Limited, which handled an account for Jamaican sprint great Usain Bolt, has taken former SSL client relationship manager Jean-Ann Panton and SSL to court over a decline in Bolt’s portfolio value from US$12.76 million to US$12,048.
Another client, Jean Elizabeth Forde, filed a separate claim against SSL, Panton and several directors relating to US$830,000 taken from her account.
Both cases are being heard together by Justice Cresencia Brown Beckford with the last hearing on May 31.
SSL also had recent court hearings with Jamaica Small Loan and Microfinancing Limited (trading as Boost Financial Services Limited), De Lisser and OGH Jamaica Limited, and Anor. Its parent SSL Growth Equity Limited had a case against Franz and Anor.
On February 24 the Jamaica Stock Exchange (JSE) terminated its member-dealer agreement with SSL. That resulted in the securities held at the Jamaica Central Securities Depository Limited (JCSD) being held in escrow.
Clients who have sought to move their securities to another approved member-dealer have been unable to do so as the FSC has only logged these queries, but not actioned any event. While clients can have dividend payments related to their SSL accounts updated to go to a bank account, this has not been the same for others who hold fixed income and international securities.
As a result, pensioners and other clients have gone almost six months without any interest income from their bonds and other assets to take care of their living expenses. This is compounded by the fact that clients cannot sell their stocks to access cash.
The JSE Index is down nine per cent year-to-date, but the significant decline across the market has resulted in some clients reporting that their portfolios have been cut in half.
Clients who hold international securities, like stocks on the Nasdaq, have been unable to get any clarity regarding the assets held under an omnibus account with a US broker. Also, there are concerns by many regarding promissory notes in their portfolio which are due by October 2023.
When the Jamaica Observer contacted the FSC about the reason for the delay in approving transfer requests, the regulator claimed confidentiality to maintain its legal obligations.
Questions sent to Tomlinson also yielded no result as he redirected queries to the FSC.
“The public is also aware that there is an ongoing dispute involving the commission and SSL as we aim to establish the full scope of our authority and ability to act to deal with the matter, based on the assumption of temporary management. This has caused a delay in certain actions which the commission would have taken to resolve the concerns of current SSL clients and stakeholders but for the extant matters being litigated before the court,” the FSC said in a June 12 public statement.
However, the silence by the FSC and JSE regarding their financial securities has left several clients livid and disappointed at the handling of the situation. Many have said that while they understand the nature of the situation, an update on the ongoing developments would be appreciated. Some say they have called the FSC for answers but have received no response.
On Monday, SSL clients received an e-mail headed ‘SSL Account Update â€“ [Urgent Action Required]’ which stated that the temporary management team is finalising the requirements to allow clients access to their accounts again. It requested certain information from clients. The letter said that all client records are to comply with regulatory requirements regarding KYC (know your customer) and that all client accounts are accurate as of June 30.