Alleged Fraud Detected At Jamaica’s SSL
The recent fraud allegations contend that over $1 billion has reportedly been misappropriated from local investment firm Stocks & Securities Limited with some indications the figure could be higher.
For the last 8 years, Jamaica has seen enormous growth due to its Stock Exchange which has garnered world acclaim as safe and hugely profitable. With exceptional performance that from year to year has been capable of multiplying dividends, the Jamaica Stock Exchange (JSE) has led the world since delivering booming exponential growth when compared with dozens of competitive markets. The JSE has offered safety from crime and theft while racking in abundant profits, but is the recent fraud allegation a signal that the JSE operations have fallen prey to its own success or evidence that the reforms undertaken have helped unearth these old frauds?
Jamaica’s authorities have given reassurance of the multi-branch efforts put into motion to ensure the integrity of the island’s financial system and safeguard stakeholders’ interests. The main institution responsible for the workings of the system is the Ministry of Finance & public service and the Bank of Jamaica (BOJ), as their guidance and leadership are sought after the case of alleged fraud being investigated at the investment firm, Stocks and Securities Limited (SSL). The BOJ assured everyone, the commercial banks, building societies, and one merchant bank that are under its supervision are still appropriately capitalized, liquid, safe, and secure so there is no sign of instability.
The JSE was Incorporated in 1968, and opened operations in 1969 however, it was not until recent years that medullary changes in the JSE's management structured its approach and succeeded in revamping the direction of the company and, impacting the country's economy in a positive manner. Many believe the exponential growth was mainly due to a fresh management approach by the Jamaica Stock Exchange (JSE) in close collaboration with the Jamaican Government to restart the Jamaican capital market.
The recent fraud allegations contend that over $1 billion has reportedly been misappropriated from local investment firm Stocks and Securities Limited (SSL) with some indications the figure could be higher. The defense attorney Tamika Harris confirmed that she represents “a person police have some interest in. I can confirm that the person has not yet been charged and we are in dialogue … she is making herself available. I have indicated to them her willingness to come in and have that dialogue and have that discussion and we are arranging a date and time.”
According to T. Harris the defense attorney, the chief suspect had not been charged as of yet. The suspect is a former manager at Stocks and Securities Limited, making this a gross misappropriation case. Now the suspected female is implicated with fraud regarding the theft of money from approximately 40 investors, Olympian Usain Bolt among them. The fraud appears to be long-standing, as there is evidence the activity dates back from as far as 2010 and it is believed by the local observers that the employee in question has allegedly been selling shares of SSL clients without their knowledge while providing them with false financial statements.
In a leaked police statement the accused outlines the various methods that she used to steal from clients — though weirdly enough the documents don’t make any mention of Bolts account — The suspect and / or her possible accomplices, if it was somebody else at the same firm used a similar method. It appears that in several of these misappropriations, she took money from clients' accounts without their consent. And on other occasions when clients really did ask for money for funds from their accounts she added on an extra amount and kept the difference for herself.
This is a very serious accusation especially since the responsibility of the brokerage houses is to be a sort of employee of the client, to look out for the client, as any honest enterprise must be, these houses should have the best intentions and the best practices when dealing with the clients money. When brokers come into play there are three main methods of utilizing their financial services, each is a level of agency and trust that is given to the brokerage house. For instance one could choose to either give the brokers 1) Full control 2) Partial control 3) No control. Thereby financial observers can easily see how the fraud of which the former SSL employee stands accused took place mostly on accounts that were granted full control. Full control is what it says the broker will take decisions and is not obligated to contact the client to dispense capital for trades. Partial control means that the broker must contact the client to clear all the decisions before actually employing them.
Yet many observers of Caribbean finances ask themselves what the recent allegations of fraud which are pending negotiations or trial will mean for the JSE moving forward. The former head of the Fraud Squad in the DSP Albert Diah contends that fraud laws are weak in a recent Jamaica Observer article he states that fraud is still a major problem in Jamaica because the laws under which the act is prosecuted do not function as a deterrent. Diah told the Jamaica Observer,"The law is definitely too weak and, oftentimes, the police are frustrated in their efforts to investigate,"
SSL confirmed the incident in a statement indicating that its management “became aware of fraudulent activity by a former employee of the company” it says “following initial internal investigations the management referred the matter to the relevant law enforcement authorities to facilitate a thorough and complete examination of all aspects of the matter ”to ensure the integrity of the probe. SLL says it has taken steps to secure its assets and strengthened internal protocols to detect suspicious activity in the shortest possible time. The company says it will “continue to liaise and cooperate fully with law enforcement throughout the investigation and ensure that the responsible parties face the full consequences of the law”. It's understood that the Financial Services Commission (FSC) has mandated a pause in SSL's operations citing what it calls exposure to possible fraudulent activities the matter is being investigated by the fraud Squad and the Financial Investigation Division (FID).
The FSC has indicated investigations are underway as the FID is appointing Ken Tomlinson of Business Recovery Services Limited as the special auditor for SSL, serving as the securities firm’s temporary manager. On his part, Prime Minister Andrew Holness spoke on these fraudulent activities at Stocks and Securities Limited and said that “all the relevant government entities are seized of the urgent nature of this matter... the entities understand the implications and the potentially complex nature of this matter, and the need for transparency, diligence, and prudence in all their operations. A thorough investigation is being undertaken to identify the perpetrators and colluders involved in the fraudulent activity and bring them to justice, as well as to trace the funds and secure forfeiture of assets acquired with stolen funds”.