By NEIL HARTNELL
Tribune Business Editor
The principal of a Bay Street-based broker/dealer says he and his 60 Bahamian staff have “a complete defence” to the allegations levied against them by US federal regulators.
Guy Gentile, in legal filings submitted to the New Jersey district court this week, argued that he and MintBroker International (the former Swiss America Securities) had already been cleared by a major US securities watchdog of the purported conduct now being investigated by the Securities & Exchange Commission’s (SEC) Miami office.
He and his attorney, in effect, are arguing that the SEC’s right hand does not know what the left is doing, since the US capital markets regulator’s New Jersey office previously told the federal courts it had no evidence to show he and his Bahamian broker/dealer were soliciting American clients without the required approvals - the very behaviour the Miami division is now probing.
Disclosing that MintBroker had hired “no fewer than five attorneys” to ensure it could never be accused of directly targeting US clients for business via its website, Mr Gentile’s latest filings took comfort from the fact he had been previously cleared of such claims by the US self-regulatory body that oversees securities dealers.
He added that the Financial Industry Regulatory Authority (FINRA), together with the Internal Revenue Service (IRS), had also approved of another action complained of by the SEC - that of transferring customer funds to an account in the US.
Mr Gentile and, by extension, MintBroker, are seeking to obtain a court-ordered temporary injunction to halt the SEC Miami office’s probe while they battle to get it blocked permanently. The US federal regulator is alleging that the Bahamian broker/dealer violated US law by soliciting business from American clients without possessing the proper registration.
However, Mr Gentile said they had successfully fought-off similar claims from FINRA that were brought in 2013. This occurred at a time when he was still co-operating with the SEC and US criminal authorities as an undercover informant, helping them to catch multiple international securities fraudsters.
“Under the terms of his co-operation agreement, both the Department of Justice and SEC were immediately informed of FINRA’s formal inquiry, which raised the prospect of Gentile violating the securities laws during his co-operation,” his attorneys revealed in Monday’s legal filings.
“Both the Department of Justice and SEC asked Gentile numerous questions on this very topic and satisfied themselves that SureTrader (a division of MintBroker) and Gentile were in full compliance with all securities laws.”
Mr Gentile, in his reply to FINRA’s complaint, revealed that the Bahamian broker/dealer’s website employed a variety of measures such as pop-up blockers, warnings and revised account opening forms to ensure it did not actively solicit US clients. Any Americans wishing to do business were required to affirm that THEY were the ones reaching out to MintBroker.
Pointing out that there was nothing to stop unregistered brokers doing business with American clients if the latter reached out to them, rather than the other way around, Mr Gentile alleged: “These.... measures were designed and implemented with the assistance of no fewer than five lawyers.
“Again, both the Department of Justice and SEC were informed of the steps SureTrader took to ensure it could not be accused of soliciting US customers. These facts are a complete defence to any allegation that SureTrader violated (or is currently violating) [US law]. FINRA agreed, and on April 14, 2015, FINRA enforcement staff sent Gentile a letter” discontinuing its complaint.
Yet while the SEC had told the New Jersey federal court “as late as last year” that Mr Gentile had violated no US securities laws, the MintBroker principal is arguing that its Miami office is telling a completely “different story” before the Florida courts.
“Immediately after Gentile notified the government that FINRA had determined there was insufficient evidence to warrant an enforcement action alleging SureTrader was soliciting US customers, the Commission’s Miami office began issuing subpoenas to investigate the question of whether Gentile or SureTrader were soliciting US customers,” Monday’s flings alleged.
“Meanwhile, as this court is aware, the Commission has been simultaneously telling this court that it is not in possession of any information suggesting Gentile has engaged in any alleged violation of the securities laws.”
Mr Gentile has enjoyed a somewhat colourful career in the Bahamas, with Tribune Business reporting in 2016 how he and his broker/dealer were allegedly used as “bait” by the Federal Bureau of Investigations (FBI) to help snare numerous international securities fraudsters.
He claimed that he and his Bahamian businesses, including the now-closed Sur Club Sushi Bar, 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.
Mr Gentile also attracted international media coverage more recently 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.