FSC secures bankruptcy order against securities dealer
Published:Friday | April 29, 2011 | 12:00 AM
The Financial Services Commission (FSC), the regulatory body for non deposit-taking institutions, said the Supreme Court has granted it a provisional bankruptcy order against securities dealer Lorreston Bailey, whose principal must now plead a case on why his company should not be declared insolvent.
The provisional order granted by the Supreme Court, requires Bailey, whose whereabouts are unknown to the regulator, to respond by June to the bankruptcy petition filed by the FSC on February 2.
The FSC issued a cease-and-desist order on Bailey on June 30 last year, about a month before it assumed temporary management and control of the licensee's business.
According to a notice issued by the FSC last year, the cease-and-desist order was based on the company's failure to comply with several regulatory requirements, including a contravention of directions issued by the regulator.
The FSC, in a release on Wednesday, said the Supreme Court granted an order on April 1 appointing the Trustee in Bankruptcy as receiver/manager of Lorreston Bailey Licensed Securities Dealer with immediate effect.
At the same time, the regulator will be making further efforts to locate the head of the company.
"Due to the fact that the whereabouts of Lorreston Bailey are unknown to the FSC, in the interest of justice, the Supreme Court granted an order permitting the FSC to effect substituted service of the bankruptcy petition," it said.
"This means that the FSC is required to publish the bankruptcy petition, the provisional order issued on February 7, 2011, and the order appointing the trustee in bankruptcy as receiver and manager in the North American Weekly Gleaner and the UK Gleaner, the FSC said. As a result, Bailey has been given until June this year to respond to the petition.
Last year, the FSC disclosed that the potential client liability of the securities dealer totalled about J$685 million and asked investors to submit claims to the commission.
At the same time, it said it had recovered a small portion of the company's assets but just enough for investors to recoup about 1.3 per cent of their investment.
However, the FSC said then that it would continue to try and identify additional assets.
Lorreston Bailey was registered in 2005 as a securities dealer in the business of portfolio management and operated out of a Seymour Avenue, Kingston, address.