Gov't to strengthen laws against Ponzi schemes

The Government of Jamaica plans to amend the financial laws to combat Ponzi schemes Finance Minister Audley Shaw told lawmakers on Tuesday.

Shaw said that amendments would be made to the Securities Act and the Financial Institutions Act, to combat illegal financial operations. He also said, in response to queries from Opposition Spokesperson on Finance Dr Peter Phillips, that certain civil remedies are being proposed.

"One of them, which would be a very good example, is that of giving the Financial Services Commission (FSC) the ability, upon sufficient evidence being garnered, to take control of the entity suspected operating a ponzi scheme. That would be an immediate civil remedy," the finance minister said in the House of Representatives.

"Secondly, the possibility of imposing monetary penalties on such illegal operations; and thirdly, the possibility of seeking to give the FSC the power, upon taking control, to capture whatever funds remain and be able to distribute those funds and give it back to the investors."

Shaw said one of the recommendations is for the FSC to be named as a complainant to the director of public prosecutions (DPP) in cases against perpetrators of ponzi schemes. Under the laws as they now exist, the FSC accepts complaints, prepares the files and send them to the DPP. That structure does not allow the FSC to assume the role of complainant, he said.

The FSC is an integrated regulator of financial services, brought into existence by the Financial Services Commission Act, August 2001. It administers the Insurance Act, Securities Act, Unit Trusts Act and Pensions (Superannuation Funds and Retirement Schemes) Act.

It is responsible for supervising and monitoring 1,980 licensees and registrants, as well as 522 pension funds and retirement schemes.

- JIS