FSC issues cease and desist order
THE Financial Services Commission (FSC) has issued a cease and desist order against licensed security dealer Lorreston A Bailey, prohibiting the company and its agents including Deborah Bailey, from engaging in further securities trading activities.
Lorreston A Bailey is also prohibited from accepting or paying out money to new or existing clients, advertising or soliciting its activities and withdrawing and transferring the property of the company. The FSC has also assumed control of the company until further notice.
The securities sector regulator took action against the dealer following investigations which it said revealed “unsound practices”.
“The Cease and Desist Order issued by the FSC demands that Lorreston Bailey, Licensed Securities Dealer and Deborah Bailey immediately stop conducting securities business as it has reason to suspect that an offence under the act has been committed,” a release from the FSC stated.
According to the Cease and Desist Order, Lorreston Bailey has failed to provide clients with statements of accounts, to maintain the capital adequacy ratio required, to comply with the FSC’s request for specified information and to produce documents regarding the true state of its affairs. The FSC claims that the company has also misrepresented to it the total of its funds under management and its corresponding liabilities.
The FSC stipulates a minimum benchmark of 6 per cent of capital to total asset ratio, and 10 per cent of capital to risk weighted assets ratio. However, in the release the regulators noted that the value of the dealer’s assets is substantially less than the amount of its liabilities.
In its Memorandum of understanding with the Jamaican Government, the International Monetary Fund noted that some securities dealers were under-capitalised, while others had become over-leveraged as a result of lax controls. Since then, the FSC has vowed to improve its regulatory requirements and enforcement.