By NEIL HARTNELL
Tribune Business Editor
A Bahamas-based broker/dealer yesterday said it had implemented multiple reforms to address legal breaches that resulted in a $120,000 fine from local regulators.
Guy Gentile, pictured, head of Bay Street-based Swiss-America Securities, told Tribune Business that "many changes" have been made to the company's compliance regime after the Securities Commission identified failings in its customer due diligence processes and record-keeping procedures.
"The firm and myself take SCB (Securities Commission of the Bahamas) regulations very seriously, and have made many changes to further our compliance goals," Mr Gentile said in an e-mailed response to Tribune Business's inquiries. "This settlement is from an audit nearly three years ago. It made sense to settle at $120,000. We are happy with the outcome."
However, the four-page settlement agreement with the Securities Commission, dated August 30, 2018, said Swiss-America's initial March 22 response to the findings of the regulator's investigation was to describe the alleged breaches as "unfounded". It also called for reductions in the penalties proposed by the capital markets and investment funds regulator.
Mr Gentile's company subsequently met with the Securities Commission on July 25, 2018, and "agreed to accept sanctions imposed". Swiss-America Securities also submitted a letter five days' later setting out how it planned to come into compliance and address its deficiencies.
"During May 2016 the Commission conducted an inspection for cause and discovered breaches further outlined in the report," the settlement agreement said.
"The issues revealed in the report primarily concerned Swiss-America Securities' operations and the failure to ensure full compliance with the provisions of the Act, including KYC (Know Your Customer) issues, maintenance of books and records, and failing to notify the Commission of material changes."
The Securities Commission's report was based on its examination of Swiss-America Securities' records, and interviews with its employees. The regulator said the violations of Bahamian securities laws were "contrary to the public interest", and that Mr Gentile's company "accepts responsibility for its non-compliance."
The fines were spread over 10 failings, which included not verifying client accounts; not conducting KYC and risk monitoring of clients; failing to provide details on insurance coverage and an outsourcing agreement; and not notifying the Securities Commission of its name change and Mr Gentile's involvement as defendant in a criminal case in the US.
That case was dismissed because it was time or "statute" barred. Mr Gentile has enjoyed a somewhat colourful stay in the Bahamas, with Tribune Business reporting in 2016 how he and his broker/dealer, based in the Elizabeth on Bay Plaza on Bay Street, were allegedly used as "bait" by the Federal Bureau of Investigations (FBI) to help snare numerous international securities fraudsters.
Mr Gentile claimed that he and his Bahamian businesses were "forced" to play key roles in undercover 'sting' operations targeting criminals earning millions of dollars from market manipulation scams.
Their participation even extended to the 'bugging', both by video and sound, of Swiss-America's Bahamian head office in a successful bid to gain evidence against a Canadian fraudster who subsequently pleaded guilty to the charges against him.
The allegations were contained in documents filed with the New Jersey federal courts as part of Mr Gentile's successful bid to have an eight-year old case against him dismissed.
The Swiss-America Securities principal alleged that US federal authorities have resuscitated the case matter after he refused to continue acting as a 'co-operating witness' or 'undercover agent' for them.
He said he had been forced to spend almost four years in such a role, going 'above and beyond' what was required of him in 2012 in return for supposedly having the reborn charges against him dropped back then.
Forced to act as a "co-operating witness", Mr Gentile essentially alleged that he became 'too good' in his new 'job', delivering evidence that resulted in numerous successful prosecutions, jail sentences and multi-million dollar fines against US targets.
As a result, he claimed the FBI and US federal prosecutors were reluctant to release him from this work, with his decision to walk away sparking the re-filing of charges against him.
Mr Gentile also attracted international media coverage after his Russian-born, model girlfriend, Kristina Kuchma, 24, in a fit of rage drove his Mercedes S400 hybrid into the pool at his Ocean Club home after he ended their 18-month relationship by text and allegedly reneged on a promise to provide $50,000 for one of her business ventures.