Swisscash at News This Week Part.1

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Investment clubs not exempt from licensing - FSC
published: Saturday | November 10, 2007

John Myers Jr., Business Reporter

The Financial Services Commission (FSC) has warned that those entities purporting to be 'investment clubs' rather than securities dealers were operating illegally as they too are required to have a licence to operate.

A number of high-yield investment schemes, which define themselves as clubs and not traders, have been claiming that their operations fall outside the ambit of the FSC.

But deputy executive director of the regulatory agency, George Roper, said Wednesday that investment clubs, based on the stipulations used in other jurisdictions, were limited by the number of members involved in the club and all members were required to participate in deciding in the type of investments entered into, counter to what obtains with local entities.

"If you have one or two persons who are making the investment decisions then those one or two persons will have to be licensed as investment advisers," Roper advised at the latest 'Think Before You Invest' public forum hosted in Kingston by the regulator.

"The important thing to note is that there is no exemption from licensing for 'investment clubs' in Jamaica," he stressed.

healthy portion of investments

Addressing the concern of the likely impact high-yielding investment schemes would have of the island's financial sector should they crash, the FSC executive said the legitimate financial sector was still handling a healthy portion of investments in Jamaica and therefore the fallout would not lead to a financial meltdown as the case was in Albania.

The formal sector is valued at about $1.2 trillion, whereas loose estimates of the high-investment scheme funds have been placed at about $150 billion.

Olint and Cash Plus are said to command the larger portion of those investments.

Roper said the FSC did not have knowledge of how much money was invested in these schemes when asked about the 25 per cent of GDP estimate that is bandied.

The agency, however, estimated that there were at least 15 schemes offering high-return investment to Jamaicans at this time.

Returns range as high as 18 per cent per month offered by Cash Plus and 25 per cent per month on offer from SwissCash before it disappeared from the radar in July.

taking action

As to whether the FSC will intervene in any of the operations, Roper said: "We wouldn't discuss plans to intervene with the public." But: "At anytime that we will be taking action, the public will be advised - at the appropriate time."

The FSC is in litigation with Olint to determine whether it has jurisdiction over the foreign exchange trader's operations.

john.myers@gleanerjm.com

TAKEN FROM THE FINANCIAL GLEANER, FRIDAY, NOVEMBER 9, 2007

Source : http://www.jamaica-gleaner.com/gleaner/20071110/business/business2.html

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Billionaire Disclaims Ties with Worldwise, FSC Issues Alert.
published: Wednesday | October 24, 2007

Billionaire investor Michael Lee Chin has disclaimed any association with investment clubs. - File

The Financial Services Commission (FSC) is again warning Jamaican investors about another high-yield scheme operating from Ruthven Road in Kingston, saying neither World Wise Partners Limited nor its products are registered to "legally" transact business.

The regulator offered similar caution in relation to Higgins Warner Music Entertainment Limited in press advertisements on the weekend.

The companies are not associated, the FSC later told Wednesday Business.

The notice follows a statement Friday from billionaire investor Michael Lee Chin issued to dispel rumours that he is a director of Worldwise Investment, a company whose website entices visitors with the promise of "wealth creation."

It's a phrase that Lee Chin popularised when he entered Jamaica in 2001 after his 76 per cent acquisition of struggling National Commercial Bank Jamaica Limited, a banking group with interests in investment and securities and insurance.

Constrained

The Jamaican/Canadian investor, in a statement issued under the banner of Portland Holdings Inc, the company in which all his investments are pooled, said that as a financier whose actions affect his more than 30 businesses (see insert), he was constrained to deny involvement with such schemes.

"I am not and have never been affiliated with Worldwise nor any other investment club," said Lee Chin.

"I find it necessary to address this publicly as I have a responsibility to investors who hold my associations in high regard, and as a result, take my affiliations into account when making their own investment decisions."

Worldwise is the latest high-yield investment scheme to have cropped up in Jamaica. The company claims to have been around since September 2003, but just started transacting business this year.

The company's chairman, Noel Strachan, having spoken to Wednesday Business on Monday, did not follow through on promised responses to queries about Worldwise's claim to a track record in investment and an explanation of why it remains unregistered as a business with the Companies Office of Jamaica, as stated on its own website.

The company, which offers 12 per cent monthly returns, or 144 per cent per annum, on investments of US$1,500 or more - 6 per cent on principal below that - accepts minimum investment of US$300.

It claims that 80 per cent of funds under management are held in escrow at RBTT Bank Limited. Strachan also did not comment on how he was able to generate sufficient returns from 20 per cent of funds under his management to pay investors their monthly 12 per cent, nor how the funds were invested or traded.

"Invest at your own risk," the site warns. Regulator Brian Wynter said last month that the high-risk schemes remain one of his biggest challenges - one that is likely to be inherited by his successor when he departs the FSC in December to take up a new posting in Barbados.

Without the legal authority to police the schemes, the regulator is unable to ascertain whether they are sustainable operations or pyramid schemes that rely on a constant stream of new investments to finance returns to existing clients.

For now the FSC's course of action is limited to warnings and educational seminars.

The regulator has in the past few months been issuing alerts to the public about similar schemes, including SwissCash, an online scheme out of New York that disappeared from the internet in July.

New site

One Jamaican investor said that while she has heard reports that some persons have been getting SMS messages about a new site, she has not been able to confirm its existence and up to Monday was unable to access her account.

SwissCash offers returns of 25 per cent per month.

Cash Plus, which operates from New Kingston, is now offering up to 18 per cent per month, having recently adjusted its schedule.

The forerunner, foreign exchange trader Olint Corporation, which offers 10 per cent per month, to popularise high risk schemes, remains locked in legal battle with the FSC.

A ruling is pending in the case heard by the Supreme Court in June, on whether the FSC has jurisdiction over the operations of Olint, which is owned by David Smith.

The FSC is reportedly awaiting the results of that case to map its strategy for dealing with high-risk schemes.

lavern.clarke@gleanerjm.com

Michael Lee Chin's holdings

Portland Holdings Inc. has investment interests in more than 30 diversified companies, each operating within a distinct sector:

Advantage General Insurance Company Limited

(formerly United General Insurance Company Limited)

AIC Finance Limited

AIC Financial Group Ltd (T'dad)

AIC International Investments Limited

AIC Investment Services Inc.

AIC Limited

AIC Securities Limited

Cable Bahamas Limited

Columbus International Inc

Copernican Capital Corp

CVM Communications Group

Flow (Jamaica)

Flow (Trinidad)

Markland Street Asset Management Inc.

Medical Associates Limited

National Commercial Bank Jamaica Limited

NCB Capital Markets

NCB (Cayman) Limited

NCB Insurance Company Limited

New World Network

Reggae Beach

Senvia Money Services Inc

Trident Villas & Hotel Jamaica

West Indies Trust Company Limited

*Indicates companies in which Lee Chin does not have majority interest.

Source : http://www.jamaica-gleaner.com/gleaner/20071024/business/business4.html