Leading investment and brokerage firm, Barita and its Board of Directors have moved to “unreservedly assure” its customers that the safety and security of their funds is the entity’s top priority.
Barita gave the assurance in a letter sent on Sunday to its clients which has been obtained by Loop News.
The assurance follows the fraud scandal which has rocked Stocks and Securities Limited (SSL), which has generated unease in sections of the financial sector in Jamaica.
Barita told its clients that it’s writing to address recent media reports regarding alleged financial fraud in the industry. The entity noted that the news has understandably raised concerns among the public regarding the safety and security of their investments.
This positions the company to be a safe haven for its clients
“At Barita, we pride ourselves on our strong financial foundation established over the course of 45 years, further strengthened since the acquisition by Cornerstone, as reflected in our formidable prudential ratios, including our capital adequacy ratio which is significantly above regulatory requirements and well above the industry average.
“This positions the company to be a safe haven for its clients as we have the capacity to fully absorb several shocks, whether emanating from risk factors associated with financial markets or our business operations, including occupational fraud,” the company wrote.
Barita told its clients that with shareholders’ equity of over J$32 billion as at September 30, 2022, it has by far the largest capital base in the securities dealing industry.
The entity noted that this makes it the third largest financial institution among commercial banks and securities dealers in the country by shareholders’ equity, a step that was deliberately taken over the last 4 years by Cornerstone.
According to Barita, “this statistic which is the subject of publicly disclosed audited financial results, is the single most critical, objective demonstration of our significant financial strength”.
The letter added: “This means that in addition to our balance sheet assets providing full coverage of all our client obligations, we held over J$32 billion in reserves to withstand and absorb any shocks within our business. Our Capital to Risk-Weighted Assets, the key prudential measure of a financial institution’s ability to withstand the risks associated with its business, stood at a robust level of 33.5% which is more than three times the regulatory minimum requirement of 10% and comfortably above the industry’s average of 24.5%.”
According to Barita, the ratios it referred to are important as they provide objective assurance that the institution has more than enough cushion to absorb any reasonable amount of losses and also affirm its ability to comfortably meet its financial obligations.
“This strong financial foundation, driven by the Board of Barita and Cornerstone, gives our clients the peace of mind that their investments are in safe and sound hands and in the unlikely event of fraud on any of our client’s accounts, we have tremendous capability to make them whole,” Barita wrote as it moves to assure its clientele.
Barita said since the acquisition by Cornerstone, it has invested heavily in its governance and risk management architecture and “with the assistance of world-class consulting partners made several significant improvements”, including:
The comprehensive overhaul of our policies and procedures to ensure that our internal control environment is aligned with best-in-class standards.Implementing an Enterprise Risk Management Framework (ERM) complemented by regular ERM training sessions with management and team members to embed the risk-aware culture, especially to bolster our first line of defence against our various risks.Onboarding several highly skilled and experienced risk management, audit and compliance personnel to strengthen not only our second and third lines but also our first line of defence.
Barita told its clients that the team members come with experience in, and exposure to, global best practices, which they have brought to bear on Barita’s operations.
The entity noted that its team members include:
Interim CEO Dane Brodber, CFA, CAIA, FRM, MBA who formerly led Market Risk Management for the English Caribbean at Scotiabank; Deputy CEO Ramon Small-Ferguson, CFA, CAIA, FRM who currently Chairs the Risk Committee of the Jamaica Securities Dealers Association (JSDA); SVP, Risk Management Geoffery Romans, ASA, MBA, CBCA who also formerly led Market Risk Management for the English Caribbean at Scotiabank; The Head of its Compliance Unit, Lerone Palmer, MSc who has over 10 years of experience as a compliance professional, including most recently at Scotiabank; Cornerstone’s Chief Legal and Compliance Officer, Malindo Wallace, MBA, LLB, LEC who has over 30 years of experience in Finance and Law including at GraceKennedy and NCB; Cornerstone’s Chief Audit Executive, Sebrena Freeman, MSc, CISA, CRISC, who formerly led Operational Risk Management (which includes fraud) at Scotia Caribbean; and Cornerstone’s Chief Investment Strategist, Damion Brown, CFA, FRM, PRM, CAIA, MSc who was formerly JMMB’s Chief Risk Officer
Barita’s letter was sent under the name of Board Chairman, Mark Myers, Chairman of Barita’s Audit Committee Carl Domville and Interim Chief Executive Officer, Dane Brodber.
Barita said it has also moved to strengthen its governance framework to, directly and indirectly, build multiple layers of independence including, outsourcing elements of its internal audit function, which reports directly to the Audit Committee of the Board.
The entity said it also has in place an independent chair for its Board’s Audit, investment and corporate governance sub-committee.
In concluding, the entity said additionally, it is the subject of oversight from three different regulatory bodies: the Financial Services Commission, the Jamaica Stock Exchange, and the Bank of Jamaica.
Barita told its clientele that its systems and internal processes are designed to ensure the segregation of duties and to limit unauthorised access, both of which are strong mitigants against fraud.
The entity said in particular, among several other proprietary security measures, the steps it has taken to ensure the safety and security of funds and accounts include:
Independent call-back verification to ensure the veracity of client orders.Multiple layers of verification of trade or disbursement instructions to effect a transactionSystems to ensure that no single person can either enter or process a transaction.Monthly account reconciliations to confirm that balances are what they should be to detect any discrepancies.Embedded system controls designed to prevent unauthorised access and continuously monitor for any suspicious activity.Electronic access control to effect physical access restrictions across our various departments
Barita also urged its customers to utilise its online platform, Barita Online, to keep track of their investments at any time, including account balances and transaction history, using its system generated and independently produced client account information.
The entity wrote in the email that its board and management team are committed to maintaining clients’ security, trust and confidence by continuously improving its processes to provide the highest level of security and safety for funds while maintaining the assurance that comes with a financially strong, well governed and well-capitalised institution.