STOCKS and Securities Limited (SSL) and the Financial Services Commission (FSC) will return to the Supreme Court this week in a resumption of the multi-billion-dollar fraud saga that has rocked the country since it was uncovered more than a year ago.

Since January 2023 the investment house has been embroiled in the fraud scandal which has seen multiple lawsuits and court cases to determine control of the firm. The FSC assumed temporary management of SSL but lost control at the end of May when Justice David Batts ruled in favour of Caydion Campbell who was appointed trustee of SSL by its former board of directors.

Arising from that decision, Justice Batts set Thursday, September 26, 2024 as the date for Campbell to submit a report to the court and receive any new directions on the way forward. That hearing will also be twinned with the hearing of the FSC’s previous court filing to wind up SSL and appoint Kenneth Tomlinson, the former temporary manager, as trustee of the firm. That court hearing is scheduled to take place at 10:00 am for two hours.

Since regaining control of SSL, Campbell had asked creditors and claimants to submit a proof of claim form by July 26 in order to determine the state of claims and benefit from any distribution of the SSL estate. Campbell had also set October 18 as the date for the meeting of creditors and claimants.

Prior to Campbell regaining control of SSL on May 31, more than 98 per cent of the international securities portfolio worth US$32.8 million, or $5.06 billion, had already been disposed of by the temporary manager. However, there weren’t many disbursals to SSL clients due to Tomlinson being dislodged from his role by Justice Batts’s ruling.

It has since come to light that some SSL clients have been remitted their portion of the international securities which would have been invested through SSL prior to the developments in January 2023. However, some individuals noticed that they were charged a 5-10 per cent fee on their original funds balance.

Campbell mentioned in his June 21 letter that unaffected trust claimants or SSL clients who were not victims of the perpetuated fraud would be charged a management fee since they bore no costs for the temporary management’s activities from which they benefited since January 2023. He highlighted that this meant other creditors and claimants would have borne the temporary manager’s expenses.

“This is a breach of the principle of fair allocation of the cost of insolvency. It is therefore likely that a ‘management fee’ or some such charge will be deductible from balances held by unaffected trust creditors before there is the finalisation of the transfer of the balances on their account to the new institution of their choice,” the letter stated.

Campbell also noted that he would be seeking a mechanism to recover the insurance proceeds of SSL’s fidelity insurance policy which was used to cover the expenses of the temporary manager. This is to cover affected trust creditors or those who were victims of the perpetuated fraud that took place at the firm.

In an updated letter to SSL clients dated September 13, Campbell stated, “I would also like to bring to your attention that, given the costs incurred during the temporary management of SSL between the period January 17, 2023 and May 31, 2024 to protect and facilitate the liquidation of clients’ investments, an application will be made in court for a fee of between five per cent and 10 per cent to be levied on clients’ accounts to cover these costs. In lieu of awaiting the determination by the court, I would be prepared, with your consent, to remit a further five per cent in full and final settlement of SSL’s obligation with respect to the cash balance(s) on the captioned account(s) within seven business days of receiving your written authorisation. That is, you would receive in total 95 per cent of the balance that was standing to the credit of your account as of May 31, 2024.”

Since Justice Batts’s ruling, the FSC has submitted an appeal to the Court of Appeal against SSL and Campbell. It is challenging four of Justice Batts’s rulings and listed 12 grounds of appeal. The FSC is seeking to have SSL’s decision to commence winding up proceedings as null, void and no effect; a declaration that SSL was insolvent when it assumed temporary management; a declaration to nullify Campbell’s appointment as trustee and have Tomlinson’s oversight take precedence; and several other orders.

However, in Batts’s original ruling he put a stay on all proceedings, including criminal, against SSL, which could not commence without the court’s permission. Thus, it’s unknown if this potential appeal can take place.

SSL was the subject of several lawsuits, with the highest-profile one being filed by WellJen Limited, a holding company connected to sprint icon Usain Bolt. The WellJen and Jean Elizabeth Forde case was last heard on May 29.

The FSC’s appeal was not shown on the Court of Appeal’s cause list for the week commencing September 23. However, a video by conference hearing was held yesterday, before Justice Batts, in the lawsuit of George Lloyd Chai versus Hugh Croskery, Mark Croskery, Jean-Ann Panton and SSL Growth Equity Limited. The court listing mentioned an application for relief from sanctions and for an extension of time to file defence. Chai, a retired businessman and 37.5 per cent SSL shareholder, filed a $4.20-billion lawsuit in February over fraud and breaches of trust and fiduciary duty. SSL Growth Equity owns 62.5 per cent of SSL and is associated with the Croskery family.

Former SSL Manager Jean-Ann Panton returned to court on Friday, September 20, 2024 for a plea and case management hearing, after her last court appearance on May 27. Panton is the only individual associated with SSL to be charged so far in the entire saga. She is facing a 22-count indictment on several charges, among them forgery, larceny as a servant, and engaging in a transaction involving criminal property.

The Office of the Director of Public Prosecutions (ODPP) last updated the public in March that the absence of outstanding documents not yet collected by Financial Investigations Division (FID) investigators was hampering the ability to lay charges against other parties in the whole SSL investigation. A meeting was supposed to have taken place at the end of March to discuss all materials submitted to date. The first set of documents was submitted to the ODPP in November 2023 while the FID itself last published an update on its investigative work on SSL in December 2023.

“It is imperative that we have sufficient material which meets the evidentiary threshold, as a matter of law, to prove all the elements of each offence while establishing a nexus between the offences and the offender beyond a reasonable doubt,” stated then DPP Paula Llewellyn.

On Monday, the FSC provided its first public statement on the SSL matter in nearly four months. It noted that it provided new directions or guidelines to SSL on July 31 which require the investment house to provide periodic update — in particular, the status of payments to clients. The FSC noted that it will be closely monitoring SSL’s actions throughout the disbursal of the international securities client portfolio to clients. Although SSL is no longer a broker of Jamaica Stock Exchange (JSE) it still holds a securities dealer licence with the FSC which regulates the securities, pension and insurance industries.

“The FSC remains resolute in its mission to facilitate the fair treatment of SSL investors. This vigilant oversight is crucial to ensuring that SSL meets its obligations to clients in a timely and transparent manner, in alignment with the legal and regulatory framework established by the Securities Act,” said Lieutenant Colonel Keron Burrell, executive director of the FSC, in the release.

Despite that release, an SSL client reached out to the Jamaica Observer saying they haven’t received the September 13 letter from Campbell to SSL clients on the status of their funds. The client said he had sent the proof of claim form to Campbell by the July 26 deadline but is still awaiting new updates. SSL’s website doesn’t contain that letter to clients.

SSL no longer occupies its former 33½ Hope Road offices and is now based at Campbell’s offices at 47E Old Hope Road. SSL Number 4 Limited is the owner of the Hope Road property and had tried leasing it in the past at US$14,500 per month. Despite the firm no longer operating its securities business, it restored its subsidiary SSL Number 1 Limited in October 2023 to a registered status.

A venture called Delta Capital Holdings Limited, led by former SSL Chief Executive Officer Zachary Harding, has apparently scaled back somewhat over the last year. Checks on the Saint Lucia International Financial Centre’s website called
Pinnacle revealed that Delta Financial Services, Delta Health and Wellness, Delta Real Estate, and Delta Media and Entertainment are no longer showing up as active international business companies (IBCs). Some SSL clients had Delta Capital Holdings promissory notes, as seen by October 2022 client summaries.

It was announced in late 2022 that Delta Payment Services (Barbados) Limited, a subsidiary of Delta Capital Partners (Jamaica) Limited, would acquire Massycard (Barbados) Limited’s credit card portfolio. However, there was no subsequent announcement regarding the completion of the acquisition.

“It should be noted that Massycard (Barbados) Limited (MCBL) as a company is not for sale, but specifically the assets associated with the credit card portfolio owned by MCBL is still being held for sale. Also, I confirm that the sale to Delta Capital Partners has been officially terminated,” said Massy Holdings Limited in an e-mail to the Business Observer.

The SSL saga has resulted in massive changes for financial sector regulation in Jamaica, with the country to adopt a twin peaks model in the coming years under which Bank of Jamaica (BOJ) will oversee prudential regulation while the FSC will oversee market conduct and financial consumer protection. A BOJ concept paper revealed that the FSC could possibly be renamed the Financial Services Conduct Authority. A consultation period with several key stakeholder groups is now taking place with BOJ on the implementation of twin peaks.

After the recently completed pilot resulted in the completion of new ABM industry guidance/standards, another pilot will be implemented by both regulators. BOJ will conduct prudential regulation examination, in collaboration with the FSC, for Scotia Jamaica Life Insurance Company Limited, plus Barita Investments Limited and JMMB Investments. The FSC will spearhead market conduct examination for National Commercial Bank Jamaica Limited and have policy review on three areas. This information was disclosed in the Government of Jamaica’s filing to the United States Securities and Exchange Commission.