By NEIL HARTNELL
Tribune Business Editor
The Securities Commission yesterday used its powers to temporarily suspend a controversial Bahamian broker/dealer’s registration for five days until next Tuesday.
The move was confirmed by SureTrader, the online broker owned by Guy Gentile, via a notice that was posted to the top of its website. It said: “The Securities Commission of The Bahamas has notified the firm that, pursuant to sections 133 (1)(b) and (f), and 133(3) of the Securities Industry Act 2011 (“the Act”), SASL’s continued registration under the Act is suspended for five days ending Tuesday September 24.”
SASL is Swiss America Securities, the parent company for Mr Gentile’s interests, which he has renamed MintBroker International. No explanation for the regulatory action was forthcoming from either the Securities Commission or Mr Gentile, who employs around 60 persons at his Bahamian brokerage houses that are based in the Elizabeth on Bay plaza off East Bay Street.
Christina Rolle, the Securities Commission’s executive director, who was travelling yesterday, declined to comment when reached via e-mail by Tribune Business. “I am not able to assist at this time. It is the policy of the commission not to comment with respect to ongoing investigations,” she said briefly.
Meanwhile Mr Gentile, who frequently comments on the various Securities Commission and US Securities & Exchange Commission (SEC) probes and actions against him, did not return Tribune Business’ phone or e-mail messages seeking comments.
The five-day suspension means that SureTrader will be unable to conduct securities trading on behalf of its clients or itself until this sanction expires. The Securities Industry Act sections referenced as the rationale for the Securities Commission’s move enable the regulator to take action “in the public interest”.
These allow it to “order a person, a class of persons or all persons to cease trading a security, class of security or all securities” and “impose conditions or restrictions on a registration, or suspend or revoke a registration”. The Securities Commission can implement this for up to 15 days without a hearing “if it considers it necessary and in the public interest to do so”.
While the motivation for the Bahamian regulator’s action remains unclear, one legal source with experience of the capital markets said the action could merely be “an opening salvo” potentially leading to more extended supervisory steps or an effort to provide time for more information to be gathered.
Mr Gentile and Swiss America Securities previously agreed to a $120,000 settlement with the Securities Commission in 2018 after failings were identified failings in their customer due diligence processes and record-keeping procedures.
“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.
Mr Gentile told Tribune Business at the time that all the breaches had been adequately addressed, but he has subsequently been engaged in a long-running battle with the SEC over multiple allegations that he and Swiss America/SureTrader violated US securities laws.
While the SEC’s first effort was defeated in the US courts, it quickly came back with claims that Swiss America and Mr Gentile were breaching securities laws by acting as an unregistered broker/dealer and soliciting US clients without the necessary registration and permissions.
This was vehemently denied by Mr Gentile, but the SEC has been making progress in its bid to obtain potential evidence via subpoenas issued to one of his former attorneys and a Florida-based business. The south Florida district court has said it is minded to grant the SEC’s subpoena enforcement requests despite resistance from the targets and Mr Gentile.
The SEC wants to compel a Florida-based company, Mintrade Technologies, and its principal, Nicholas Abadiotakis, to obey a subpoena and hand over information on Mr Gentile, his Bahamian broker/dealer and its affiliate, SureTrader.
“The Commission has been investigating Swiss America Securities, doing business as SureTrader and MintBroker International, a Bahamas-based broker/dealer registered with the Securities Commission of the Bahamas but not registered to act as a broker/dealer in the United States, and its owner, Guy Gentile, in connection with potential ongoing violations of the federal securities laws,” the SEC’s court filings have alleged.
“Issues central to the potential violations include whether Swiss America’s customers include United States residents, the solicitation of US customers, and the movement of customer funds. SureTrader, a Bahamian broker/dealer, is not registered as a broker/dealer in the United States. Nor is its chief executive, Guy Gentile.
“However, at least one-half of SureTrader’s clients are United States residents and it employs more than 50 ‘experienced employees’, servicing more than 20,000 clients and processing over 12,000 trades per day.” The SEC alleged that both Mintrade Technologies and Mr Abadiotakis were connected to Swiss America, the latter having worked for another of Mr Gentile’s affiliates.
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.