FSC praised for decisive action to prevent SSL from winding up company

By Warren Bertram/Prince Moore  

 

Following news that Stocks and Securities Limited (SSL) was attempting to wind up the company, development economist and financial commentator Dr. Chris Stokes has expressed support for the decisive action taken by the Financial Services Commission (FSC) to prevent that move.

 

A statement from the Ministry of Finance late Wednesday said the FSC filed court orders to block SSL, the purported trustee and its directors from undertaking the winding up.

 

The injunction is to remain in place until February 17.

 

The statement said the court order was obtained to prevent SSL from disposing of, dealing with assets and liabilities in the company's name or its clients' names and withdrawing.

 

It also restrained SSL from transferring or otherwise dissipating any funds from accounts in its name wherever held; from interfering with the acts of servants or agents of the FSC and the Temporary Manager; and instructed the investment firm to cooperate with the directions of the Commission.

 

The injunction also blocked SSL from reorganising the company or its operations and from winding up or dissolving the company and liquidating its assets.  

 

Five defendants were listed on the court order. They are Stocks and Securities Limited, Caydion Campbell, Hugh Croskery, Laurence Adamson and Peter Knibb.

 

Speaking on TVJ's All Angles Wednesday evening, Dr. Chris Stokes said SSL's move to wind up the company was ill-advised and would have negatively affected the outcome of the ongoing investigations into fraud at the investment firm.

 

He questioned why the company or its director would have thought the move was a good idea at this time considering the circumstances, but he praised the finance minister who he said "moved quickly on it". 

 

"We are at the front end of a process, so that [winding up] would only serve to muddy things up. I think things need to be sorted out before we get to that stage. So [the court order] is a necessary action in my view," he said. 

 

Financial analyst Ralston Hyman agreed that the move by the FSC was "spot on", noting that SSL's attempt to wind up the company was inappropriate.

 

"That should not be allowed, simple.... The Ministry of Finance has sent in a temporary manager, and that's where we are going to go at this particular point in time. So the action is totally inappropriate."

 

Opposition Spokesperson on Finance Julian Robinson similarly questioned the rationale behind the decision by SSL's principals to seek to wind up the company.

 

He said it is unclear what their intentions were at a time when so much attention is focused on the company. 

 

With the level of scrutiny and the fact that a temporary manager has assumed control of the entity, Mr. Robinson suggested the SSL's move was "a very brazen attempt" which calls into question the motives of its directors. 

 

He was also speaking Wednesday evening on TVJ's All Angles.

 

 

Financial analyst Ralston Hyman has agreed with the government after Prime Minister Andrew Holness announced that financial institutions in crisis will not benefit from a bailed out.  

 

In expressing support for government's position, Mr. Hyman said a bail out of SSL or any other entity in that position would be detrimental given the existing demands on the country's budget.

 

He said historically, a bail out has never worked in the country's favour, adding that it would be "moral hazard" to allow people responsible for the fraud to escape repercussions for their actions.

 

"You are going to be rewarding people for bad behavior.... So if you give them the assurance that they can conduct themselves in this way and then the government will backstop it, then it is not a disincentive to continue with that behaviour," he reasoned. 

 

Mr. Hyman cited the 1990s crisis, noting that the country "paid out $140 billion and nobody went to prison". 

 

He said Jamaica could not relive that situation as there are other "pressing fiscal needs" such as health care, security and infrastructure that must be addressed.