SSL clients to regain access to accounts after investigation

Aftermore than eight months since revelations came to light about fraudulent activities at Stocks and Securities Limited (SSL), Finance Minister Dr Nigel Clarke is optimistic that clients will regain access to their assets in short order.

SSL clients have been unable to access their funds since January when the Financial Services Commission (FSC) took over temporary management of the securities dealer. The situation became more complicated in February for clients who invest on the Jamaica Stock Exchange (JSE) after SSL’s member-dealer agreement was terminated. The client holdings are now being held in escrow with the Jamaica Central Securities Depository (JCSD) which is still requiring asset movements to be first processed through the broker associated with the account.

“There will come a time, hopefully relatively soon, where the client money held by SSL will be returned to the clients and that will be a good day, because clients of SSL have not had access to their funds held in custody by SSL over the past several months. In this financial fraud matter, the equivalent of putting the yellow tape around is investigators saying the client funds need to remain until we finish our investigation,” Clarke explained last Friday regarding SSL client funds.

Apart from institutions, individuals and pensioners, government entities which include the National Housing Trust and National Health Fund have under $1 billion in assets with the entity. Clients have not received any interest income or other funds to be disbursed from SSL over the last several months. There have also been more than 70 affected accounts including one related to Welljen Limited, which is connected to sprint icon Usain Bolt.

The finance minister noted that there is currently a reconciliation exercise ongoing between the general ledger of SSL’s assets under management compared to primary sources which include clients and registrars. Different clients have been sent letters by SSL asking them to confirm the assets and balances sent to them and provide evidence if there is any discrepancy. This is an ongoing exercise which is being handled by temporary manager Kenneth Tomlinson.

“The sequence begins that there’s $30 billion in client funds. We got a report that $3 billion was missing. Let us ring fence this thing, let’s see the full extent of this fraud because we know that in situations like that, what needs to happen first may only be part of the story,” said Clarke as he made an analogy to a crime scene for client funds to remain isolated at the firm.

The FSC has been swarmed with calls and queries by clients and the media over the last eight months, but the regulator has refused to give any context or additional information regarding queries on the ability for clients to access assets. Clarke expressed hope that an update will be made in a public announcement once that stage has been reached. He also took notes from the public about a landing page for the public to keep up to date with information regarding the entity.

While SSL represents less than three per cent of assets under management in the financial sector, Clarke remains adamant about the Government’s commitment to investigating the events that took place at the firm which span multiple administrations. The financial sector is set to face significant reform in the coming years with the Bank of Jamaica set to take the reigns of prudential oversight by 2025.

“I have to weigh that legitimate interest which is against a background of 30 years of impunity with respect to financial sector fraud. Am I going to allow a temporary support which could be in the order of $14-$15 million, it could be a little more per month over a short period of time to stymie that overall objective for a country that is crying out for accountability in matters such as this. Faced with both interest, the superior interest has got to prevail and that’s the decision I’ve made in ensuring that justice is served in this matter. It is through that process that we restore faith and confidence in the financial system. Jamaicans will know if these things happen, people will be brought to account,” Clarke closed.