FSC loses court battle to control SSL

Government regulator Financial Services Commission (FSC) has lost control of fraud-hit Stocks and Securities Limited (SSL) and must hand over the reins of the company to licensed trustee Caydion Campbell. 

Justice David Batts ruled this morning that the FSC's temporary management of the company through Kenneth Tomlinson must cease with "immediate effect".  

The court has also permitted Campbell to pursue the winding up of SSL under a court-supervised process. 

Approval must also be sought from the court before any criminal case against the SSL can proceed.

The FSC lost the lawsuit it brought against Campbell who won his counter lawsuit to be declared trustee and permitted to pursue the winding up and reorganisation process. 

The FSC sued SSL and Campbell last year, claiming that Campbell's appointment was in breach of directives and an attempt to frustrate investigation of the multibillion-dollar fraud. 

The FSC, which regulates investment houses, has also argued that SSL's solvency declaration was flawed because it did not accurately represent the company's financial status and did not account for the fraud reported at the agency on January 10, 2023. 

SSL directors appointed Campbell as trustee on January 16, 2023 to pursue a re-organisation of the company through voluntary winding up under the Companies Act. 

After it found out about the move, the FSC filed its lawsuit on January 25, 2023. 

A trustee is a person or firm that holds and administers property or assets for the benefit of a third party or beneficiary. Their work involves validating claims from creditors, customers and investors.

Campbell dismissed the FSC's arguments that the company was insolvent as at January 16, 2023 and pointed to a major capital injection that was under way. 

He also countered that the FSC was aware of efforts to restructure the SSL and appoint a trustee.

Campbell was represented by King's Counsel Caroline Hay while the FSC's case was led by Lisa White, a senior attorney in the Attorney General's Chambers.

SSL was represented by King's Counsel Carlene Larmond, whom the court appointed as an independent attorney for the entity after concerns were raised that the FSC, while suing the SSL, was exercising control over the entity's operations.  

Orders of Justice David Batts - May 31, 2024

1. Appointment of Caydion Campbell of Phoenix Restructuring Advisory and Insolvency Services Enterprise as trustee of SSL for the purposes of winding up and reorganisation is and was at all material times valid.

2. Injunction granted on January 25, 2023 discharged and the temporary management put in place by the SSL shall cease with immediate effect and discharged.

3. Defendants (SSL and Campbell) are at liberty to pursue recovery of damages pursuant to FSC's undertaking as to damages.

4. Winding up of SSL lawfully commenced on January 16, 2023 shall recommence but shall be subject to the supervision of the court with liberty to creditors, contributors and all relevant interested parties to apply to the court and be subject to such further or other conditions as the court may order.

5. Campbell shall continue to act as trustee in the winding up unless or until the creditors determine otherwise.

6. Temporary Manager and FSC shall provide the trustee with all reports and other pertinent information in their possession as well as all relevant information he may request  in furtherance of his duties.

7. Trustee shall in accordance with Section 282 of the Companies Act apply to the Supervisor of Insolvency for an assignment in accordance with the insolvency Act. 

8. Trustee is ordered and directed to invite all known potential and contingent claimants and/or creditor of SSL to submit proof of claims for adjudication and proving by the trustee and/or for their admission or voting at a meeting and/or ranking for distribution and/or payment or for the reorganisation of the business or otherwise. 

9. There is a stay of all pending or other proceedings against SSL and no suit, action, or other proceedings including criminal proceedings shall proceed with or commenced against SSL unless the permission of the court is obtained.

10. The trustee shall submit a report to the court within 90 days of the order and the court will convene on September 26, 2024 at 10 a.m. in open court to consider any applications. 

11. FSC to pay the legal costs of SSL and Campbell

- Jovan Johnson

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