David Smith, CEO, Olint Corp. - File

Olint TCI Corporation has advised that it is in discussions with the "highest levels" of government regarding the regulation of its activities, but was sparse on the details.

The investment club, in a circular issued Friday under the name of CEO David Smith, also acknowledged problems with payment of returns, but blamed it on reluctant bankers.

Last night, the Finance Ministry neither confirmed nor denied the talks. Instead, Minister Audley Shaw referred queries to regulators.

Earlier in the day, the Financial Services Commission (FSC), which is in a legal fight with the club, said it was not involved.

"I personally have not been a part of such discussions, so I am unable to comment," acting executive director George Roper told Wednesday Business, when asked about the tone of the discussions.

Roper said none of the investment schemes had applied to register securities or to licence as dealers or investment advisers. But he confirmed that World Wise had written to the FSC advising of its intention to apply for a dealer's licence.

High-level discussions

Olint chief executive officer, David Smith, did not specifically state that the investment club - which is fighting a Supreme Court ruling - was seeking to be licensed or registered; it was merely inferred.

"With regard to our club's activities being regulated, we are pleased to report to you that over the past months, we have been having discussions at the highest levels with the Government of Jamaica," said Smith. "We are very confident we will reach mutually beneficial conclusions in a very short time."

The assurance comes amid delays in the payment of returns to club members, which Olint has blamed on the banks, as well as higher-volume requests for cash by increasingly nervous investors.

The court ruling was handed down on December 24. That event, said the Olint CEO, atop other developments in the 'alternative investment scheme' sector, have resulted in a bottleneck in the club's operations and affected service delivery.

"During the past few weeks, you have been experiencing delays in getting your encashment cheques as well as wire transfers," said Smith. "These problems, as we had communicated to you, were as a result of processing delays at the banks as well as an increase in the number of factors, viz the Christmas holidays, and nervousness on the part of some club members. It appears that some club members, being aware of the impending closure of our local bank accounts, have become jittery."

On Monday, Olint got a 10-day reprieve with a court injunction barring National Commercial Bank (NCB) from closing down its accounts. The order goes even further and bars NCB from destroying correspondence generated in 2007, both inhouse and between itself and other banks, regarding Olint Corporation.

Smith, in an earlier email to club members on December 27, three days after the Supreme Court threw out Olint's lawsuit against the FSC, assured investors that they would be unaffected and that they were members of Olint TCI operating "legally within the Turks and Caicos jurisdiction", and not Olint Corporation Limited, the Jamaican entity.

Highlights riskiness

But even that circular suggested that the company was not yet fully compliant with TCI's requirements.

Appended to the email was a new 'Private club member agreement' that essentially requires investors to sign up as clients of Hallmark Bank and Trust Limited, a bank incorporated in The Turks and Caicos Islands.

By signing the agreement, Olint's club members become Hallmark 'customers' with Olint as the 'investment manager'. Acceptance is conditional on adequate 'know your customer' disclosures by club members.

Both Olint and Hallmark have their registered offices at Tropicana Plaza, Leeward Highway, Providenciales. The document specifies, however, that Hallmark would have no say in how Olint operates.

Some members who have received the document say they are concerned that there is no indication in the new contract guaranteeing their returns. Instead, it highlights the riskiness of the investment which is to be borne "entirely" by the investor.

Other members say they believe the measure to be temporary the email from Smith makes no such claim.

The submission of the original signed agreements will "complete all of our compliance obligations in Turks and Caicos Islands," the Olint CEO said.

lavern.clarke@gleanerjm.com