By Warren Bertram
Finance Minister Dr Nigel Clarke has disclosed more information from a 2019 report by the Financial Services Commission on the fraud-hit investment firm, Stocks and Securities Limited.
The report revealed, among other things, that SSL was mixing client funds with money used to cover its daily operations.
He explained that his reason for doing so was in the interest of continued transparency.
In its report, the FSC's rating of SSL showed that the company's future financial viability was in serious doubt.
The report raised concerns about whether there were enough securities, stocks and bonds to cover clients' obligations.
It also underscored the operational risks the entity faced due to poor record keeping and inadequate oversight by the management team
Additionally, the FSC questioned the integrity of some financial reports submitted by SSL.
The FSC stressed that the violations and concerns noted in 2019 were similar to those found back in 2016 which again suggested inadequate management and board oversight.
In 2019 there was a change in the operating software used by SSL , which the Commission believed was poorly handled by the board and management team.
The FSC noted that five months later there were serious operational issues with the system.
After monitoring the company's financials from March 2019 to May 2019, The FSC said it found significant shortfalls which suggested that the clients' funds held in cash by the SSL were being used to finance its daily operations.
The report outlined that after a query with the SSL, the entity said the liquid funds on the balance sheet for March, April and May were incorrect due to issues with the same new operating system.
But the FSC noted that the change to the new system occurred in January 2019 and the financial reports for January and February did not show similar issues.
The Commission, in the conclusion of the 2019 report, urged the SSL to hold a meeting with its board of directors within one month to immediately address the financial crisis at the entity.
The FSC also recommended, among other things, that SSL should not conduct any new securities business with its clients and prospective clients until the Commission was satisfied that the issues had been addressed.
The FSC noted that a follow-up would have been conducted with the company within six months of the external audited report.
It said if the SSL failed to address the issues raised by the auditor, the Commission would take appropriate action.
Dr. Clarke noted that by April 25, 2020, the FSC report indicated that the SSL was compliant or largely complaint with five of the six directions.
He said however that, to the best of his knowledge, despite several interventions from the Financial Services Commission, the fraud at SSL went undetected for 13 years.
