UP to $7 billion in investments and funds at Stocks and Securities Limited (SSL) are set to be unfrozen starting this Friday as operations at the fraud-hit securities dealer gets closer to winding up, though a timeline on completing the process is unclear.

“Beginning on Friday, September 22, SSL will begin the process of transferring these J$ client securities from SSL’s custody to other security dealers selected by clients, and any J$ cash balances in client accounts will be transferred to banks specified by clients,” a release from the Ministry of Finance said Tuesday.

The funds are part of $17 billion in Jamaican dollar (J$) securities (ie stocks and bonds) belonging to SSL clients which are held in the Jamaica Central Securities Depository and form part of SSL’s off-balance sheet business. Off-balance sheet items are typically those not owned by or are a direct obligation of the company. SSL has 8,000 client accounts.

“While we expect up to one-third of J$ client balances to be transferred within days, the entire process could take up to six weeks to be completed, given the volume of client accounts,” Dr Nigel Clarke, Jamaica’s minister of finance, was quoted as saying in the release.

It was however noted that the transfer of US dollar securities owned by SSL clients will involve collaboration with US-based regulators and US-based investment houses which will therefore take more time.

The development comes eight months after all accounts at SSL were frozen after it emerged in January this year that skullduggery, extending over decades, had resulted in up to 70 client accounts being defrauded of up to US$20 million. One person has been charged in the matter so far. Others are expected to be charged before the case returns to court in December, according to a recent release from the finance ministry.

The release making the announcement added that the Jamaica Central Securities Depository and the Jamaica Stock Exchange are working with the temporary manager and the Financial Services Commission (FSC) to facilitate the transfer of the Jamaican dollar securities and balances.

“SSL clients will be required to complete the relevant Know Your Customer documentation. SSL will communicate directly with its clients on the procedures to be followed,” it continued.

At the end of that process, which is expected to last six weeks, the company will then cut its staff to the bare minimum it needs to operate while the temporary manager completes his work amidst a court challenge.

“Given the progress in the investigation recently announced by the Financial Investigation Division, and the expected winding down of SSL’s off-balance sheet book of business, as per the above, SSL’s staff complement is projected to decline from 22 persons currently to no more than eight persons by the end of November,” the release acknowledged.

In recent weeks, the Government has come under fire after it was revealed that SSL ran out of funds to manage its monthly expenses, including salaries for staff, which amount to $15 million. The finance minister at the time said it could result in the Government stepping in to provide support, but that support is no longer needed after an insurance claim made by the temporary manager of SSL in April of this year, to SSL’s insurers in England, has now been settled.

“SSL received the insurance payout of US$1 million on Thursday, September 7, enabling SSL to settle the remainder of their August staff salary bill last week Monday, September 11. As such, with this new development, no taxpayer money, no Government of Jamaica resources, no public funds have, or will be, used to support SSL in the payment of any of its employees or any other of its expenses,” stated Clarke.

SSL’s receipt of insurance proceeds occurred prior to the Financial Services Commission’s finalisation of the steps required for the commission to provide short-term support to SSL. With SSL’s receipt of the insurance proceeds, SSL no longer needs the commission’s support. As such, approximately two-thirds of SSL’s net salary bill for August was paid last Monday, without any financial support from the Government of Jamaica. The other one-third had been paid earlier by SSL.

The temporary manager had filed the claim on SSL’s overseas insurers, through its insurance brokerage, in April 2023. However, payment from the overseas insurers in respect of the insurance claim was made to SSL five months later in an amount that represents the maximum limit claimable under SSL’s insurance policies.

Clarke however noted that complete removal of SSL as a contingent liability of the Government requires a final determination by the court on the issues surrounding who has proper authority over SSL: whether it is the Financial Services Commission’s appointed temporary manager or the SSL board-appointed trustee.

If the FSC prevails in the matter before the courts then the on-balance sheet assets and liabilities of SSL would be vested with the FSC and a trustee would be appointed by the FSC to wind up the affairs of the company. However, under this scenario, other outstanding litigation to which the SSL is a party would then influence how speedily SSL can be wound up. SSL would be wound up after all the lawsuits are settled and SSL would thereafter cease to exist.