Olint, LewFam lose to FSC

[Joemaican]

Olint, LewFam lose to FSC
Court rules against Olint, LewFam
PAUL HENRY, Observer staff reporter [email protected]
Tuesday, December 25, 2007



Foreign exchange trading clubs Olint Corporation Ltd and LewFam Investments on Monday lost their battle against the Financial Services Commission (FSC) when the Supreme Court ruled that they were operating illegally.

The 112-page ruling handed down by Justice Norma McIntosh means that Olint and LewFam will now have to acquire the relevant securities licences if they are to legally continue their operations. Both cases were heard together as they are similar in substance.

Olint and LewFam had taken the FSC to court in March this year after the regulatory body issued cease and desist orders against them in March 2006.

The FSC said that its investigations had revealed that both Olint and LewFam were operating in breach of the Securities Act.

The cease and desist orders had blocked both entities from continuing their operations "unless and until they acquire the relevant licences, pursuant to Section 7 and 8 of the Securities Act".

During the FSC's investigation, agents from the Financial Investigations Department raided the New Kingston offices of both entities and seized several documents relating to their operations.

Olint and one of its directors, David Smith, had sued the FSC seeking US$5 million for wrongful intrusion at the club's offices. Olint had contended that it had not breached any laws, as its activities concerned foreign currency trading, "which is not a security", as defined in Section 2 of the Act. The claimants also challenged the legality of the warrants under which the authorities acted when they entered the premises and seized the documents.

LewFam claimed, among other things, that it was a private club and not a prescribed financial institution and as such does not come under the jurisdiction of the Securities Act.
Following several days of in-chambers hearing, judgement was reserved last June.

McIntosh said in her ruling yesterday that the FSC was correct in issuing the cease and desist orders.

"The evidence was sufficient to satisfy the commission that the [entities] ... were engaged in the activities described in the cease and desist orders, including the issuing and dealing in investment contracts and certificates of participation in a profit-sharing agreement and engaging in the business of investment advice," commented McIntosh.

Olint on Monday hinted at taking the matter to the Court of Appeal. It was not clear Monday whether LewFam would do the same.

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[CeaBee]

Re: Olint, LewFam lose to FSC

wonda if they lose the next appeal if they'll just move all operations to turks and caicos ? [img]/forums/images/%%GRAEMLIN_URL%%/70402-thinking.gif[/img]

and if so would they still be able to take money from jamaicans?

maybe he just wouldnt be able to "solicit or market" to jamaicans...and they would just have to wire the money over there.

[img]/forums/images/%%GRAEMLIN_URL%%/70402-thinking.gif[/img]

[Dr.Dudd]

Re: Olint, LewFam lose to FSC

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: coolbeans</div><div class="ubbcode-body">wonda if they lose the next appeal if they'll just move all operations to turks and caicos ? [img]/forums/images/%%GRAEMLIN_URL%%/70402-thinking.gif[/img]

and if so would they still be able to take money from jamaicans?

maybe he just wouldnt be able to "solicit or market" to jamaicans...and they would just have to wire the money over there.

[img]/forums/images/%%GRAEMLIN_URL%%/70402-thinking.gif[/img]</div></div>
'All' the operations are for all means and purpose evrywhere exept Jamaica checK Here. http://www.gotradejamaica.com
Names have been change tp rpotect the <s>innocent </s> 'investments'

[Dr.Dudd]

Re: Olint, LewFam lose to FSC

'Revisit forex laws' - Analyst suggests FSC change approach to investment clubs
published: Thursday | December 27, 2007

Edmond Campbell, News Coordinator

Financial Analyst Errol Gregory is suggesting that legislators revisit the laws governing financial institutions which trade in foreign currency with a view to accommodating new o investment schemes.

He said with investment clubs not considered a legal option by the Financial Services Commission (FSC), the regulatory body should now revisit the issue as several countries, including the United States, have recognised these entities as part of their financial network.

"This is maybe now the time for the FSC to look back at the legislation to see if they can't revisit the issue of investments clubs. I don't think this issue is going to go away," Gregory told The Gleaner last night.

"Some persons may want to exercise the option of forming investment clubs, and now may be the time for legislators to look at that again," he added.

Supreme court ruling

His comments come against the background of the Supreme Court's ruling on Monday in favour of the FSC in its court challenge from investment clubs Olint and LewFam.

"To my mind, what this ruling is saying is that it won't be business as usual for investments and for our financial services sector generally," he said.

Mr. Gregory said that the court's ruling now meant that the two investment clubs would now fall under the jurisdiction of the FSC in relation to trading in foreign exchange. Other similar entities would be impacted by the court's decision, he added.

"If they want to be regarded as legal instruments, then they now have to be registered," he explained.

Banks respond

The financial analyst noted that with the advent o investment schemes, banks and formal investment houses have moved to introduce new investment options in response to competition from the new investment schemes.

"The investment companies that currently exist will always have to be looking now at the returns and the range of instruments that they are offering to local investors," he said.

Mr. Gregory contended that the economy and financial services were being impacted by globalisation and these changes could not be reversed.

Meanwhile, at least two church leaders are urging the Government to take charge and recognise the significance of such schemes to the country.

Bishop Peter Morgan, of City Life Ministries, said the country would ultimately lose if these organisations were forced to cease their operations.

"I believe the Government should take full cognisance of what is happening and recognise that we are entering into a new day where investments are concerned," he said.

In the context of the Supreme Court ruling against Olint and LewFam, he said the FSC would now have to rise to the challenge of regulating high-risk investment schemes.

"We don't have a choice," he said. "If we have to change then we must," Bishop Morgan said as it relates to the court's ruling.

He cautioned that this change must not be to the disadvantage of the people. "Any change must be based on what is in the best interest of the people and must be done with integrity," he said.

In his remarks, Reverend Al Miller of Whole Life Ministries said no one could dismiss the FSC's attempt to safeguard the interest of all and to ensure transparency in the process.

However, he said the approach of the FSC, was wrong, noting that "if you scare people in your tactic then it's going to be difficult to create compliance because you destroy that element of trust and motive behind your actions".

"Any regulation must be of such that it allows people liberty to invest where they so choose once the adequate information is given," Reverend Miller said.

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