Significant investment fraud uncovered at SSL Jamaica

20th January 2023

Financial regulators in Jamaica have issued enhanced oversight directives after massive employee fraud was allegedly uncovered at Stock and Securities Limited (SSL).

“The directions impose strict reporting requirements on the entity and prevent the entity from disposing of any assets. Based on the FSC directions, SSL is barred from issuing funds to clients or accepting new deposits until permitted by the FSC,” reported the Jamaica Observer.

The move comes after an initial internal investigation by the popular investment firm unearthed irregularities believed to be fraud by at least one now former employee.

SSL said that it referred its findings to the relevant law enforcement authorities “to facilitate a thorough and complete examination of all aspects of the matter,” adding that the company would cooperate fully with the investigation and “ensure that the responsible party faces the full consequence of the law”.

“To ensure this, we have taken steps to secure those assets and strengthened internal protocols to detect suspicious activity in the shortest time possible,” said SSL in a press release.

According to some reports, a wealth advisor in the company is the focus of the investigation after she allegedly siphoned off money from investors’ accounts. She has reportedly been under investigation since August 2022, with SSL allegedly initially trying to resolve the matter internally before discovering the scale of the fraud.

While the exact value of the scheme is not known, the Jamaica Gleaner reported that more than US$10mn was missing from the accounts of more than 20 high-value clients including retired sprint legend Usain Bolt.

The article cast doubt about whether the fraud was a one-person job. “A single individual could not have done this. The skill set and knowledge required were immense,” a source told the newspaper, adding that “the complexity of the scheme included the bypassing of controls through forgery, manipulation of SSL’s IT systems and email addresses, and interception of disbursements for accounts in commercial banks”.

Usain Bolt’s Manager said that the Olympic 100 metre word record holder had been receiving what now appears to be fraudulent statements from SSL on his reported US$12.7mn investments with the company showing that his portfolio was intact. In a letter to SSL, Bolt’s attorneys confirmed that he lost over US$12mn in stocks and bonds to the fraud. The letter gave the company 10 days to return the money in order to avoid civil and criminal proceedings.

There was speculation that Prime Minister Andrew Holness may have been affected given comments in 2016 about using fund from his accounts at SSL to purchase land on which his house is now built.  The Gleaner reported that his declaration of income and assets for 2020 lists securities valued at JM$16mn (US$104,746), but it is unclear as to whether he still maintains accounts with the company.

SSL has issued a statement directly to its clients informing them that only a small percentage of accounts had been affected by the fraud and that those affected would be contacted individually. “We understand that you are anxious to receive more information and assure you that we are closely monitoring the matter,” said the communication.

The FSC, which is the country’s regulator of non-deposit taking financial institutions, initially appointed Kenneth Tomlinson of Business Recovery Services Limited as special auditor to examine SSL’s operations, before widening his role to temporary manager, as the regulator moved to assume control of the company.

The company is no stranger to being in the crosshairs of the regulator. In 2013, the FSC revealed that it had limited some activities of SSL following the approved sale of the company’s repo business to JN Fund Managers earlier in that year. In 2020, the Jamaica Observer reported that the regulator prevented SSL from accepting new investments from customers as punishment for what the FSC called “unsafe and unsound” practices. The company said that they were being addressed and that it had nothing to hide.

With the use of investment companies and money managers becoming more commonplace in Jamaican society, some analysts are contending that news of the fraud may increase investor hesitancy and ultimately bode well for deposit-taking financial institutions like banks and credit unions.

In 2019, a report from the Bank of Jamaica, FSC and the Financial Investigations Division put the asset base for the securities dealers sector at JM$650.6bn (US$4.3bn) with funds under management for the 39 licensees at the time totalling JM$1.9tn (US$12.4bn).

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