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SSL Board Seems More Annoyed At The Scrutiny That At The Serious Breach Affecting The Company…

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I was a lit­tle sur­prised to see a rather long expose in the Jamaica Observer regard­ing the SSL Scandal that came to light recent­ly, which includ­ed a tremen­dous loss of mon­ey to for­mer track star Usain Bolt and others.
My sur­prise is two-fold, despite the tremen­dous inter­est of the pub­lic to know what is hap­pen­ing in this seri­ous mat­ter, the some­what lengthy raft of infor­ma­tion released by the board and man­age­ment of Stocks and Securities Limited (SSL), includ­ing spe­cif­ic date, time, and oth­er cru­cial infor­ma­tion is infor­ma­tion that should be kept secret as part of a com­pre­hen­sive crim­i­nal inves­ti­ga­tion into SSL.

Jamaica is steeped in many aspects of moder­ni­ty, yet the small nation does not have the leg­isla­tive or phys­i­cal infra­struc­ture to deal with the com­plex­i­ties of a func­tion­ing mod­ern soci­ety. It is com­pa­ra­ble to build­ing high­rise com­plex­es yet hav­ing no infra­struc­ture to fight fires that may break out in such complexes.
The leg­isla­tive frame­work need­ed to cor­ral and con­tain insti­tu­tions like SSL and oth­ers that con­trol peo­ple’s assets is sim­ply lack­ing. At the same time, the bureau­cra­cy around open­ing a sim­ple sav­ings account by the lit­tle guy is astounding.
To begin with, imme­di­ate­ly after a breach of the size that fleeced Usain Bolt and oth­ers were dis­cov­ered, the gov­ern­ment should have stepped in and frozen all of the com­pa­ny’s assets and lim­it­ed day-to-day oper­a­tion to only under the stead­fast gaze of gov­ern­ment auditors.
But this can­not occur in Jamaica because, as I have said repeat­ed­ly, Jamaica is not a nation of laws but a place where any­thing goes. It is a place where the so-called big man is king. People with mon­ey and con­nec­tions do as they please.
The fact that SSL has con­tin­ued oper­at­ing despite this scan­dal may prove that what­ev­er sham inves­ti­ga­tion may occur is already com­pro­mised and doomed to unearth noth­ing but half-truths touch­ing on low-hang­ing fruits.
For an inves­ti­ga­tion to mean any­thing, the com­put­ers ot SSL should have been seized by a com­pe­tent law enforce­ment agency imme­di­ate­ly the scan­dal came to light. At the same time, com­pa­ny lead­ers should have been iso­lat­ed from each oth­er and inter­ro­gat­ed individually.
Instead, SSL seems to be oper­at­ing as if noth­ing hap­pened while the nation’s polit­i­cal lead­ers are reduced to mak­ing state­ments, none of which will bring to light exact­ly who are the peo­ple responsible.
Even more shock­ing is the cal­lous lan­guage being used by the board as it seeks to speak to the seri­ous issue at hand but is obvi­ous­ly fum­ing that any­one dared to spec­u­late as to what occurred at SSL.
Here is the full response as report­ed by the Jamaica Observer.

“The Board and Management of Stocks and Securities Limited intend­ed to facil­i­tate law enforce­ment and oth­er pro­fes­sion­al inves­ti­ga­tors as they probe the recent events at Stocks and Securities Limited, with­out mak­ing pub­lic com­ment. However, it has become nec­es­sary to set the record straight in respect of some dam­ag­ing and wide­ly repeat­ed inac­cu­ra­cies which sug­gest, inter alia, that the SSL direc­tors and man­age­ment sought to dis­pose of assets in order to frus­trate efforts by author­i­ties to take con­trol of same. This is sim­ply untrue. Here are the facts regard­ing that false alle­ga­tion as well as some oth­er canards.

Notification to the FSC

On Tuesday, January 10, 2023, Stocks and Securities Limited noti­fied the Financial Services Commission of the dis­cov­ery of appar­ent fraud and of the imme­di­ate steps being tak­en. The let­ter specif­i­cal­ly stat­ed: “This serves to advise the Financial Services Commission that Stocks and Securities Limited (SSL) is cur­rent­ly inves­ti­gat­ing alle­ga­tions of alleged fraud com­mit­ted by an employ­ee serv­ing in the role of Client Relationship Manager. The expo­sure is unknown, and SSL is cur­rent­ly under­tak­ing inves­ti­ga­tions with the sup­port of our attor­neys, Guardsman Élite, and exter­nal audi­tors. The employ­ee was inter­viewed by our attor­neys on January 6 and 7, 2023 in the pres­ence of her attor­ney and has admit­ted to wrong­do­ing. Other inter­views are sched­uled for the week of January 9, 2023, with known associates.

Nature of the sus­pect­ed fraud­u­lent activ­i­ty by employee

At this time, it appears that the employ­ee amend­ed and gen­er­at­ed fraud­u­lent client doc­u­ments includ­ing encash­ment requests and state­ments to cir­cum­vent the inter­nal protocols.

Steps tak­en and next steps

The mat­ter has been report­ed to the Board of Directors and com­mu­ni­ca­tion to clients has com­menced. The Company esti­mates that with­in sev­en (7) to four­teen (14) days there will be a rea­son­able esti­mate of the expo­sure, how­ev­er, this is unknown at this time. SSL has con­firmed that its insur­ance pol­i­cy includes cov­er­age for employ­ee dis­hon­esty and forgery with cov­er­age up to US$1 mil­lion. Efforts are also being made to have the employ­ee com­mit to resti­tu­tion. The very next day, January 11, 2023, a rep­re­sen­ta­tive of Dr the Hon Usain St Leo Bolt vis­it­ed the offices of Stocks and Securities Limited and indi­cat­ed that the said employ­ee had turned up at their offices to con­fess that she had fal­si­fied state­ments pro­vid­ed to them, had stolen mon­ey from them and oth­er SSL clients, and was request­ing help from Dr. the Hon Usain St Leo Bolt’s man­age­ment team to repay the clients whose funds she had stolen. It is believed that the rea­sons that she did not ini­tial­ly con­fess to defraud­ing this par­tic­u­lar client are (1) she was aware of the tremen­dous spot­light which the Bolt name would bring to bear on her activ­i­ties, and (2) amaz­ing­ly, she, for what­ev­er rea­son, and despite hav­ing admit­ted to the Bolt man­age­ment team that Dr, the Hon Usain Bolt was among her vic­tims, appar­ent­ly still believed that she could bor­row the mon­ey from the Bolt man­age­ment group to repay the oth­er SSL clients. The very first point at which the com­pa­ny became aware that the fraud affect­ed this client was when the mem­ber of the Bolt man­age­ment team vis­it­ed SSL’s office, the for­mer employ­ee hav­ing omit­ted any men­tion of this client in her ini­tial con­fes­sion. Work had start­ed to review all trans­ac­tions relat­ed to those clients whom she had ini­tial­ly list­ed and to car­ry out the noti­fi­ca­tions to the FSC, JSE, affect­ed clients, insur­ance, etc when the rep­re­sen­ta­tive of Dr the Hon Usain St Leo Bolt vis­it­ed the offices of Stocks and Securities Limited. The shock expe­ri­enced by all was and remains pal­pa­ble. While the com­pa­ny believed that the impact on the first iden­ti­fied 39 clients could be addressed with the coöper­a­tion of reg­u­la­tors, it was imme­di­ate­ly appar­ent that the nation­al and indeed, glob­al stature of the last client impact­ed would like­ly make a mea­sured and sys­tem­at­ic approach to inves­ti­ga­tion very chal­leng­ing indeed.

Why has SSL not com­ment­ed pub­licly before today?

On Tuesday, January 10, 2023, SSL noti­fied the FSC and on January 11, 2023, SSL issued a press release noti­fy­ing the pub­lic that alleged fraud had been iden­ti­fied. At the time of the FSC notice, SSL was unaware of any alleged fraud relat­ed to Dr the Hon Usain St Leo Bolt’s hold­ing com­pa­ny. SSL appoint­ed a trustee on January 16, 2023, and the Financial Services Committee appoint­ed a Special Investigator and Temporary Manager on January 17, 2023. Practically, the FSC through their Temporary Manager has had con­trol over the enti­ty so SSL has not been in a posi­tion to respond pub­licly or clar­i­fy allegations.

Did the Directors and Shareholders of SSL attempt to wind up the enti­ty in con­tra­ven­tion of FSC

instruc­tions? Emphatically No. The appoint­ment of the Trustee was noti­fied to the FSC on January 12, 2023, and dis­cus­sions were ongo­ing. SSL appoint­ed Mr. Caydion Campbell of Phoenix Restructuring, Advisory and Insolvency Services Enterprise (PRAISE) as Trustee under the Companies Act of Jamaica effec­tive Monday, January 16, 2023. SSL’s direc­tors and share­hold­ers met that day to con­firm the appoint­ment, in keep­ing with the work plan sub­mit­ted to the FSC by man­age­ment. It was the inten­tion of the direc­tors that their pow­ers and author­i­ty be vest­ed in the Trustee and that the affairs of SSL would be under his con­trol. The fur­ther inten­tion was that the Trustee and his team would con­duct an Independent Business Review (“IBR”) and oth­er inves­ti­ga­tions into SSL’s oper­a­tions to deter­mine, among oth­er things, its finan­cial state of affairs as of the date 16 January 2023. The pur­pose of the appoint­ment was not, we repeat, not to wind up the com­pa­ny. Among Mr. Campbell’s key objec­tives were intend­ed to be to ensure that all nec­es­sary con­ser­va­to­ry mea­sures were in place over the assets of SSL, as well as to ensure com­pli­ance with the enhanced gov­er­nance pro­to­cols as direct­ed by the FSC. It was intend­ed that he would also use the results of the IBR to explore the restruc­tur­ing and reor­ga­ni­za­tion options that were avail­able to pre­serve and enhance the val­ue of the busi­ness, oper­a­tions, and under­tak­ings of SSL for the ben­e­fit of all its stake­hold­ers. Once agreed with the FSC, a res­o­lu­tion plan would have been devel­oped and imple­ment­ed. Mr. Campbell is a Trustee licensed under the Insolvency Act by the Supervisor of Insolvency. He has 30 years’ expe­ri­ence in Corporate Recoveries, Turnaround Management, Proposals, Receiverships and Bankruptcies. He also has exten­sive expe­ri­ence in pro­vid­ing pro­fes­sion­al ser­vices in the areas of finan­cial analy­sis, due dili­gence, inde­pen­dent busi­ness review, busi­ness reor­ga­ni­za­tion and dis­pute analy­sis investigation.

The answer is again, No. Disciplinary pro­ceed­ings which ulti­mate­ly end­ed with her ter­mi­na­tion were com­menced in September 2022. The hear­ings were delayed for a num­ber of rea­sons, pri­mar­i­ly relat­ed to her med­ical issues. Specifically, it was dis­cov­ered that she had pro­duced a false state­ment to a client of SSL. After inves­ti­ga­tions and meet­ings with the client and his attor­ney, it was con­firmed that there was no fraud­u­lent activ­i­ty by the employ­ee (ie. no evi­dence of cash being stolen) in rela­tion to that client, although the employ­ee’s actions may well have been prepara­to­ry to com­mit­ting fraud in respect of the client. The dis­ci­pli­nary pan­el ulti­mate­ly rec­om­mend­ed that the employ­ee be dis­missed for her neg­li­gence and gross incompetence.

Why did SSL not dis­cov­er the alleged fraud com­mit­ted against WellJen Limited (Dr the Hon Usain St Leo Bolt’s hold­ing company)?

On December 20, 2022, a client pre­sent­ed a state­ment that he said was gen­er­at­ed by the for­mer employ­ee and when com­pared with the port­fo­lio state­ment was found to be inac­cu­rate. SSL imme­di­ate­ly engaged a team to com­mence inves­ti­ga­tions into the employee’s activ­i­ties. During the hol­i­day peri­od, dis­cus­sions with her attor­ney com­menced simul­ta­ne­ous­ly and by the first week of January 2023, it was agreed that she would pro­vide a con­fes­sion. By January 6 and 7, 2023 SSL had obtained a state­ment from the for­mer employ­ee, pro­vid­ed in the pres­ence of her attor­ney, and sworn before a Justice of the Peace. Her con­fes­sion revealed that 39 clients had been defraud­ed (not includ­ing WellJen Limited), and inves­ti­ga­tions com­menced to deter­mine the pre­cise sum that had been stolen. The mat­ter was report­ed to the Board of Directors on the first busi­ness day after the con­fes­sion – January 9, 2023. On January 10, 2023, the FSC was noti­fied. And on January 11, 2023 SSL was noti­fied of the con­fes­sion she made direct­ly to the team of Dr the Hon Usain St Leo Bolt at his office. No cur­rent board mem­bers or man­agers were aware that Dr the Hon Usain St Leo Bolt had an account giv­en: 1. The account was not held in his name; and 2. The account did not from 2018, have bal­ances which would have flagged it as a high-val­ue account.

What is the nature of the invest­ments that were sub­ject to fraud?

As a licensed secu­ri­ties deal­er, SSL facil­i­tates clients’ invest­ments in secu­ri­ties – includ­ing local and inter­na­tion­al stocks and bonds. SSL has had an envi­able rep­u­ta­tion over the years for the man­age­ment of client port­fo­lios, par­tic­u­lar­ly in inter­na­tion­al instru­ments, and there­fore it has been one of the insti­tu­tions of choice for high-net-worth indi­vid­u­als, fam­i­lies, and com­pa­nies. The for­mer employ­ee was well respect­ed in the indus­try and was trust­ed com­plete­ly by her clients. She abused this trust in var­i­ous ways for her own per­son­al enrich­ment. She con­fessed to mod­i­fy­ing and fab­ri­cat­ing requests to sell secu­ri­ties, and to using var­i­ous tech­niques to steal the pro­ceeds of the liq­ui­da­tion of the securities.

Why was the alleged fraud not detect­ed before?

Investigations and a review of all process­es will be required to deter­mine the com­plete answer to this ques­tion. SSL has an online sys­tem that all clients can use to track their port­fo­lio per­for­mance. In fact, this sys­tem is con­sid­ered one of the best in the world and accu­rate­ly shows clients’ port­fo­lio hold­ings. Unfortunately, it is com­mon to the affect­ed clients that they did not use the online sys­tem, but rather, relied on state­ments gen­er­at­ed by the for­mer employ­ee, which undoubt­ed­ly was the like­ly rea­son they were tar­get­ed. In her con­fes­sion, the employ­ee indi­cat­ed that she con­duct­ed trans­ac­tions for clients out­side of SSL’s sys­tems, she con­tin­ued to make pay­ments to those clients from the pool of funds which she her­self had per­son­al­ly accu­mu­lat­ed. This meant that the clients would not have been aware of the con­di­tion of the actu­al account at SSL because they were being paid accord­ing to their requests. Being trust­ed by clients, she was giv­en a great deal of lat­i­tude by them. It is now known that some clients even pro­vid­ed pre-signed undat­ed encash­ment letters.

Did SSL use the funds defraud­ed from clients in their operations?

No. SSL Board and Management does not know how or where the funds stolen from clients of SSL were used. Client funds and Proprietary Funds (Funds for SSL’s oper­a­tions) are entire­ly sep­a­rate, with sep­a­rate depart­ments and con­trols to ensure they are not mixed. There are clients that have also invest­ed in, or par­tic­i­pat­ed in debt offer­ings by SSL or its relat­ed enti­ties (ie. They pro­vid­ed loans). These are nor­mal activ­i­ties. The FSC con­duct­ed an audit between February and June 2019 and no such irreg­u­lar­i­ties were detected.

Did SSL have pre­vi­ous breach­es and did SSL do any­thing about them?

Not all breach­es relate to fraud or fraud­u­lent activ­i­ty. There was no indi­ca­tion of any fraud or use of client funds by SSL in any audits, whether by inde­pen­dent audi­tors or by the FSC. It is not uncom­mon for finan­cial enti­ties to have breach­es of some nature or anoth­er. This usu­al­ly results in Directives from the reg­u­la­tor, pri­mar­i­ly relat­ing to time­frames for address­ing these issues. SSL rec­og­nized the con­se­quences of non-com­pli­ance with direc­tives and took the req­ui­site steps to address them.

Is SSL a failed entity?

There has been no ‘run’ to date on invest­ments made through SSL. The vast major­i­ty of clients have not been affect­ed by fraud. Nevertheless, trust in the enti­ty has been deeply dam­aged. The rumour mill con­tin­ues to gen­er­ate unfound­ed claims, while the con­fessed per­pe­tra­tor remains at home.

How would SSL have resolved this matter?

SSL self-report­ed to the FSC and the pub­lic when the fraud was dis­cov­ered. Between the first meet­ing with the FSC on January 12, 2023, and the appoint­ment of the Temporary Manager by the FSC on January 16, 2023 there was one busi­ness day. The plan, as out­lined, was to appoint a Trustee to man­age the enti­ty, inde­pen­dent­ly sup­port the FSC’s inves­ti­ga­tion, and work with all stake­hold­ers to see how the enti­ty could be restruc­tured. SSL con­tact­ed its insur­ers on January 11, 2023, and Shareholders and Investors were also will­ing to exam­ine arrange­ments to pro­vide resti­tu­tion to affect­ed clients. Other finan­cial enti­ties that have been hit by finan­cial prob­lems of one type or oth­er have had the oppor­tu­ni­ty to exe­cute their work plans, how­ev­er, the incor­rect impres­sion appears to be that SSL has tak­en no steps and had no plan.

Conclusion

The events that have unfold­ed have had tremen­dous adverse con­se­quences for the affect­ed clients, and for the hard-work­ing staff at SSL. The for­mer employ­ee’s dis­hon­esty has led to the most wide­ly pub­li­cized news event from Jamaica in recent years. The Board and Management had 5 busi­ness days between the con­fes­sion and the FSC tak­ing over the enti­ty. During that time steps were tak­en to engage audi­tors, report the mat­ter to the author­i­ties, and hold meet­ings with stake­hold­ers and the FSC. The fire has been fueled by sen­sa­tion­al spec­u­la­tion, which tends to affect adverse­ly the essen­tial trac­ing of ill-got­ten assets and indeed, the over­all inves­ti­ga­tion, activ­i­ties that the Board and Management were and are pre­pared to sup­port. The Management of SSL con­tin­ues to go to work every sin­gle day to sup­port the FSC, FID, and Fraud Squad in their work. These staff mem­bers are mind­ful of the attacks and asser­tions which have been made on them from var­i­ous quar­ters, while the for­mer employ­ee who con­fessed remains at home. This is extreme­ly demor­al­iz­ing for those who con­tin­ue to work hard to try to ensure jus­tice is done. Jamaica has a high­ly rep­utable finan­cial mar­ket, with a sound reg­u­la­to­ry frame­work oper­at­ing at inter­na­tion­al stan­dards. This remains so despite the recent spate of cas­es of fraud at var­i­ous finan­cial insti­tu­tions. A few bad apples, who do what fraud­sters do – find ways to beat the sys­tem – should not cast doubt and sus­pi­cion on the many thou­sands who toil dai­ly to pre­serve the integri­ty of the sec­tor. Justice should be the objec­tive for all affect­ed clients, famous or unknown. That is our aim and we will con­tin­ue to sup­port that objec­tive in every way possible.”

End.….….….….….….….….….….….….….

The infor­ma­tion laid out by the SSL board though crit­i­cal to the pub­lic’s need to know must be weighed against the more impor­tant task of bring­ing to jus­tice the perpetrator/​s of this crime. Some, if not all, of the infor­ma­tion laid out by the board is almost assured­ly infor­ma­tion that will form part of any future crim­i­nal inves­ti­ga­tion and should not have been released by the board.
The tone of the let­ter appears to reflect annoy­ance, even anger, at what it seems to see as a mere nui­sance rather than the seri­ous issue it is. The assur­ance giv­en by the board that clients are pro­tect­ed up to the tune of US 1 mil­lion is cold com­fort to those who are report­ed to have lost upward of US $12 million.
The annoyance/​anger that the mem­bers of the SSL board appear to feel at this intru­sive spot­light on their com­fy space is of zero impor­tance as it argues the fol­low­ing contradictorily.»»»>
“SSL has an online sys­tem that all clients can use to track their port­fo­lio per­for­mance. In fact, this sys­tem is con­sid­ered one of the best in the world and accu­rate­ly shows clients’ port­fo­lio hold­ings. Unfortunately, it is com­mon to the affect­ed clients that they did not use the online sys­tem, but rather, relied on state­ments gen­er­at­ed by the for­mer employ­ee, which undoubt­ed­ly was the like­ly rea­son they were tar­get­ed. In her con­fes­sion, the employ­ee indi­cat­ed that she con­duct­ed trans­ac­tions for clients out­side of SSL’s sys­tems, she con­tin­ued to make pay­ments to those clients from the pool of funds which she her­self had per­son­al­ly accumulated.
How good can SSL sys­tem be if an employ­ee can con­duct busi­ness out­side of the com­pa­ny’s sys­tems, as stat­ed in the lengthy canard that the board ren­dered obvi­ous­ly to shift blame from itself?

.

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Mike Beckles is a for­mer Police Detective, busi­ness­man, free­lance writer, black achiev­er hon­oree, and cre­ator of the blog mike​beck​les​.com.