With a temporary manager now in place at the fraud-hit Stocks and Securities Limited (SSL), its regulator says it won’t be long before it receives a recommendation on the course of action for the investment firm.
The Financial Services Commission (FSC), on Tuesday, appointed Kenneth Tomlinson as the temporary manager of SSL following revelations of massive fraud at the institution, where several customers, including eight-time Olympic champion Usain Bolt, lost millions.
Executive Director of the FSC, Everton McFarlane described the fraud as a “despicable case of dishonesty”.
McFarlene has indicated that it could be a matter of weeks before the commission receives a report from the temporary manager.
Indeed, the regulator is seeking to move swiftly to take remedial action as the FSC’s head suggested that Tomlinson could provide a recommendation much earlier than the 60 days, as prescribed by the Financial Services Commission Act (2001).
“He’s not been given a long time. It’s not months, it’s weeks. We know how urgent it is and how potent it is,” McFarlene told Loop News following a press briefing on Wednesday morning.
Everton McFarlane, executive director of the Financial Services Commission
Speaking at the briefing, McFarlane pointed out that the case of SSL should not be seen as “symptomatic” of the wider industry amid widespread shock at the information that the “questionable actions” on some SSL accounts date back to over a decade.
In the meantime, the temporary manager, whose primary task is to assess and make recommendations with SSL customers in mind, would look at the issue of insurance and its accessibility.
McFarlane indicated that the SSL has fidelity insurance, which is taken out against losses incurred through dishonestly of employees. SSL’s insurance coverage, however, has not been disclosed.
And, on the question of SSL’s solvency, McFarlene said, “the work of the temporary manager will determine the cash position of SSL as it stands now.”
McFarlane described Tomlinson as a widely experienced professional who has acted as a receiver, as a liquidator, and as a temporary manager for the FSC in a context where there has been no liquidation.
With respect to SSL, he will make recommendations on how to handle the company.
Tomlinson’s recommendations could include restoring the institution to its board of directors or owners or petitioning the court for the winding up of the institution.
“One of the things the temporary manager is mandated to do is to make a recommendation on how to handle the company, so liquidation is not a foregone conclusion,” McFarlene told Loop News.
Other recommendations, according to the FSC executive director, could includewhether “the entity is to be sold, if any part of the business is to be sold, if portfolios are to be transferred or, God forbid, there may be an occasion to wind up”.
McFarlane insisted that the FSC has to get the facts.
“We need a complete picture; how much [money] is involved, who is affected, the totality of assets… We need to get a comprehensive picture of what is facing the company and its clients,” he stated.
McFarlane admitted, however, that he could not ignore the intelligence on the impact and size of the fraud and those affected.
The SSL fraud became public on January 12 after it was revealed that decorated Olympian Bolt was among individuals hit by embezzlement.
Bolt’s legal team, yesterday, January 17, issued SSL with an ultimatum to return his missing money, which contains in excess of US$12 million ($1.8 billion) as at October 31, 2022. The retired sprinter’s account now reportedly contains US$12,000.
It was also reported that the FSC had flagged SSL as a problem entity several years earlier over its questionable business practices.
When quizzed on its oversight of the institution, the FSC’s McFarlane said: “We are aware that there are a number of questions that are of public concern. Questions, for instance, relating to the FSC’s past actions, what we knew, when we knew and what we did. Our ability to answer such questions at this time is constrained.”
The FSC’s acting general legal counsel Donia Fuller-Barrett also pointed out that suspending a licence, or “pulling the plug” was the last resort, and entities are given an opportunity to fix issues to not “shock the system”.