The Tribune

• Gave SEC key evidence against Guy Gentile’s firm

• Found US client ‘files’ lacking non-solicitation waiver

• But urged it to protect him via Securities Commission

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian whistleblower secretly recorded an executive meeting at a now-defunct Nassau broker/dealer whose principal continues to battle US federal regulators in the Florida courts.

Legal filings obtained by Tribune Business reveal how Philip Dorsett, ex-chief compliance officer at Guy Gentile’s Swiss America Securities, which subsequently operated under the names SureTrader and Mintbroker International, was covertly providing critical evidence to the Securities & Exchange Commission (SEC) to aid its case against his former employer and boss.

An e-mail chain covering the first two weeks in April 2016, which was filed with the south Florida federal district court, discloses how Mr Dorsett provided the US capital markets regulator with “files” for American clients who had seemingly failed to sign an agreement confirming they were not solicited as customers by Swiss America and Mr Gentile.

Such documents are likely critical to the SEC’s lawsuit against Mr Gentile and his former Bahamian broker/dealer, as the crux of its complaint is that they violated US securities laws by actively soliciting American clients while failing to register with it as a broker/dealer as required by law.

The e-mail exchanges between Mr Dorsett and Sajjad Matin, a Florida-based member of the SEC’s enforcement division, also show the two corresponding over when they could talk on the phone without arousing suspicions or alerting Mr Gentile and Sure Trader to what was afoot.

The latest revelations in Mr Gentile and Mintbroker’s more than two-and-a-half year court fight with the SEC comes as their battle heats up once again. The former Mintbroker chief, whose business was located in Bay Street’s Elizabeth on Bay Plaza, in his November 30, 2023, legal filings is renewing demands the south Florida court dismiss much of the evidence and testimony the SEC has obtained from Mr Dorsett.

“Since March 2016, Dorsett has worked in concert with - and at the direction of - the SEC to assist it in investigating Gentile. For example, Dorsett - while employed at SureTrader - fielded requests to search for and send particular company documents involving Gentile to the SEC, including at times documents containing sensitive personal information of SureTrader customers,” Mr Gentile is alleging.

“Dorsett also created at least one audio recording of SureTrader’s executive team, conveyed that he had done so to the SEC and offered to make further recordings.” The former Swiss America chief is demanding that his former compliance chief “should be precluded from testifying at trial” and that “the SEC should be precluded from relying on his deposition testimony on summary judgment”.

The case raises important issues surrounding whistleblower protections. Mr Dorsett aided the SEC without the protection of a Supreme Court Order authorising him to hand over confidential and sensitive documents belonging to his former employer, and nor did he appear to take his concerns to the Bahamian regulator, the Securities Commission, which has a legal pathway to co-operate with its US counterpart.

Mr Dorsett seemingly acknowledged this left him potentially exposed, and without protections offered under Bahamian law, telling the SEC’s Mr Matin in an April 1, 2016, e-mail that the latter needed to “officially request” the documents showing several US clients had failed to sign the non-solicitation agreement via the Securities Commission.

He also informed his SEC contact that it was difficult to talk at 3pm as this was when he was in office, with Mr Matin replying that neither himself nor the SEC could provide an opinion on the legality of taping meetings involving Mr Gentile and other Swiss America executives.

“The 3pm time is proving to be a little difficult for me to maintain,” Mr Dorsett wrote on April 11, 2016. “My regular lunch hour is at 2pm, and I’m usually home any time after 6.30pm. I started making recordings of the executive meetings (I made the first one today). We are currently attempting to move all relationships away from the US. We can discuss at length when we speak again.”

In response, Mr Matin replied two days later requesting if he knew of any accounts that Swiss America held with an Australian institution called Capital Security Bank. The SEC executive added: “I wanted to clarify that we are unable to provide any legal advice regarding the legality of making recordings under Bahamian law, and that we have not asked or required you to make any such recordings.”

Mr Dorsett replied: “I understand about the recordings. I will look into it. With regard to Australia, i haven’t heard of anything. Right now I’ve only heard of relationships (or setting up relationships) in Singapore, Canada and Mauritius.”

The e-mail thread shows that the previous week, the first in April, Mr Matin tasked Mr Dorsett with finding documents that listed Mr Gentile as the managing partner of an entity called ProTrade LP. “Do you know if ProTrade was officially registered or required to file with any Bahamian authority?” the SEC executive asked, also requesting that he review a letter the US regulator had obtained.

“I will provide the info[rmation] as best I can,” Mr Dorsett replied. “However I doubt I will be able to find any docs that shows Guy as the managing partner of Pro Trade. To my knowledge Pro Trade was never registered in the Bahamas (I doubt the regulators here knew anything about it).”

The former Swiss America compliance chief also referred to Mr Gentile having “started to clean the firm up”, adding that the letter provided by the SEC for himself to review was “not entirely correct and, in some cases, outright wrong”. He denied on-boarding US clients, adding that this task was performed by Swiss America’s new accounts department and “they don’t make special inquiries into US clients”.

“The only thing they do is check to see that all the requisite documents have been received. If a non-solicitation agreement was missing, then they would check to see if that client was from the US and, if they were, then one would be e-mailed to him,” Mr Dorsett wrote.

“The reality is that the vast majority of our clients have always been US clients, and the idea of giving them special scrutiny before their approval is far from correct. In fact, the way how our operations are stated in the letter is not accurate at all.”

The e-mail chain also referred to a 3pm phone call on April 1, 2016, where Mr Matin seemingly requested Mr Dorsett find proof that not all Swiss America’s US clients had signed the necessary forms affirming that they were not directly solicited by the Bahamian broker/dealer.

“Further to our conversation today, I found some US client files where there was no unsolicited acknowledgement agreement. I have attached them here. I also included the first page of their profit and loss account to show that they were active,” Mr Dorsett wrote. The clients in question were Arxcis Trading LLC; David Marquez; David Thomas; Robert Edelman; and Wesley Dalton.

He also volunteered to find a file on Gbox Trading, a firm in which he believed Mr Gentile had an ownership interest and operated as a “hyper trading/dark pool that opened an account and traded through us back in 2012”.

However, Mr Dorsett also indicated his concern about the personal liability and risk his co-operation with the SEC was creating. “If you do decide to use any of these files, please remember to officially request them from us through the SCB (Securities Commission of The Bahamas),” he told Mr Matin. It is unclear whether the SEC executive took any notice.

Mr Gentile enjoyed a colourful - and sometimes controversial - time in The Bahamas. His broker/dealer was used as “bait” by the Federal Bureau of Investigations (FBI) to allegedly help snare numerous international securities fraudsters, with his Bahamian offices ‘bugged’ to record video and sound. These activities resulted in several guilty pleas and convictions.

Mr Gentile and his company exited the Bahamas at end-2019 when faced with regulatory actions and investigations by the Securities Commission of The Bahamas. However, in so doing, he bought sufficient time to voluntarily wind-up he broker/dealer himself and remove all its assets from The Bahamas.

Tribune Business previously reported how Philip Davis KC, who was then-Opposition leader, acting on Mr Gentile’s behalf filed a successful Judicial Review challenge that thwarted the Securities Commission’s regulatory efforts for several months. There is no suggestion the now-prime minister did anything wrong.