FSC takes over Intertrade
Published:Friday | August 5, 2011 | 12:00 AM
The Financial Services Commission (FSC) took temporary control of Intertrade Finance Corporation Limited on Wednesday, as it moves to assess the company's true financial health.
The takeover extends to subsidiary Intertrade Investments Limited.
The FSC said in a statement that its authorised officers would be poring over the company's books both to ascertain its financial holdings and scrutinise the company's compliance with the terms of its securities dealer's licence.
The temporary management follows a cease-and-desist order that FSC had imposed on Intertrade in May and suspension of its licence since June 21.
The order prohibited the company from undertaking any new business, and its subsidiary, Intertrade Investments, to stop conducting securities trading.
Intertrade's principal activities include funds management in all major currencies, local and international trading in securities and foreign currency.
The cease-and-desist order extended to board members and senior managers which include Dr Gavin Chen; chief executive officer Joan Powell; vice-president for treasury and operations, Leroy Paul, and directors Herbert Phillips and Dr Courtney Haughton. It was made on the basis that the company was breaching its licence.
FSC said at the time the order was issued that the company failed to comply with Section 38 of the Securities Act, by misrepresenting to clients the nature of the securities in which their funds were invested.
Further, it failed to pay over sums to certain clients, in breach of its instructions, the regulator said.
Intertrade is being sued by at least one of its clients, COK Sodality Co-operative Credit Union, seeking to recover an undisclosed sum.
FSC also said it had concern for the licensee's liquidity, cash flow and capital, and the safety and soundness of its operations and financial condition.
Licence suspended
Prior to the cease-and-desist order, FSC had suspended Intertrade's licence in February, but the suspension was stayed pending the outcome of an appeal lodged by the company with the appeals tribunal set up under the Securities Act.
At that time, the company was free to continue operating as normal.
But within the following month, FSC served the company notice to stop transacting business.
The company subsequently surrendered its cambio licence voluntarily to the Bank of Jamaica.
Intertrade began operations in 1995, and according to data found online, had US$806.3 million in funds under management and assets of US$11.2 million at June 2007.
Companies Office records of Intertrade's 2009 annual returns list David Lazarus as the single largest individual shareholder, with 71 million shares, and Intertrade Capital Corporation as the largest owner with 285.68 million shares.
The company then disclosed debts of J$10 million.