The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A BISX-listed firm’s broker/dealer subsidiary has filed a Judicial Review action against the Securities Commission of the Bahamas, over the regulator’s demand that it cease taking on new business and submit to a “solvency review”.

The ongoing legal battle between Alliance Investment Management, the Benchmark (Bahamas) affiliate, and the Bahamian capital markets regulator was revealed in the Supreme Court report produced by the liquidators for the former’s main client.

PricewaterhouseCoopers (PwC) Bahamas accountants, Kevin Cambridge and Kevin Seymour, disclosed in their report on BC Capital Group’s liquidation that the Securities Commission had “issued a regulatory Order” to Alliance on April 11, 2013.

This demanded that it “cease taking on any new business for a period of 15 days, and subject itself to an independent solvency review to be conducted by KrYs Global”, the accounting firm.

The response by Alliance and Benchmark (Bahamas), was swift.

The PwC duo revealed: “On April 15, 2013, the management of Alliance requested and obtained an Order from the Supreme Court, staying the Securities Commission’s regulatory Order and granting the company leave to apply for Judicial Review of the Securities Commission of the Bahamas’ regulatory Order.

“The Securities Commission of the Bahamas has informed the joint official liquidators that the Judicial Review took place on August 2, 2013, in the Supreme Court, focusing on the Securities Commission’s authority to enter a cease order and whether a hearing was necessary prior to entering the regulatory Order against Alliance.

“As per the Securities Commission of the Bahamas, the urgency of the matter was impressed upon the Chief Justice and it was indicated that a ruling will be given soon.”

Messrs Cambridge and Seymour also disclosed that the Securities Commission had, on June 13, 2013, “requested the joint official liquidators’ analysis of [BC Capital’s] subscription to Alliance’s preference shares”.

These details, they added, were provided on June 18,2013.

Despite all these developments impacting Benchmark (Bahamas) and its main broker/dealer subsidiary over the past six months, virtually nothing has been disclosed to the former’s 735 Bahamian shareholders, even though as a publicly-listed company it is obliged to give timely reports on material events.

Hillary Deveaux, the Securities Commission’s acting executive director, recently admitted regulators had been “lax” in ensuring public companies met their ‘information disclosure’ obligations, and said: “It’s something we have to tighten up on.”

Mr Deveaux, speaking at a recent presentation given by the Bahamas International Securities Exchange’s (BISX) chief executive, Keith Davies, described the ‘timely disclosure of material information’ by listed companies as a “major challenge” for both the Commission and the exchange.

“I think that’s been one of the major challenges for regulators in this jurisdiction, and by regulators I mean BISX and the Securities Commission,” Mr Deveaux said.

“We have to educate the listed companies, the public companies, about their obligations in law. We see so many [errors] in that area.”

“The have contravened provisions in the [Securities Industry] Act,” Mr Deveaux emphasised. “We should get them on the phone and bring them back in line.

“We have to some extent been lax in dealing with it, and it’s something we have to tighten up on.”

Meanwhile, the PwC accountants also disclosed in their report that they had successfully resisted efforts by a British Virgin Islands-domiciled hedge fund, in which BC Capital was invested, to remove them and re-appoint fellow accountant James Gomez (the initial voluntary liquidator).

Messrs Seymour and Cambridge moved to strike this out, and have their costs borne by Baycourt Chambers, the law firm of Raynard Rigby.

Ultimately, all sides reached an agreement to withdraw their respective filings, and the matter ended.