Are we on the brink of another SSL? Another investment broker could be in some serious money issues.

Now, before you start panic selling your investments, I’m not suggesting that there is another fraud, embezzling, or thieving scandal at an investment firm. 

But recently, one of our Analysts, journalist David Rose explained that an investment firm is in capital deficit based on the Jamaica Stock Exchange’s requirements. 

Essentially, there’s is an investment firm that does not have enough cash to cushion itself, if something disastrous were to happen. And that’s a scary place to be because the people who are going to be affected are the investors.

And the thing is… we don’t know which one of the brokers it is. David found this information through his own digging and comparisons.

And if you’re having a sense of deja vu, that’s because this is very similar to what happened with SSL. It wasn’t until the fraud scandal broke out and people started digging that we found out SSL had been in breach of regulations multiple times through the years and was never suspended. 

A key difference here is that SSL wasn’t listed on the JSE, so they were in breach of regulations from the Financial Services Commission, FSC. At the time, the FSC was the regulator for investment firms. 

According to David, this other broker is in breach of JSE regulations. However, they could be in the clear from the FSC because the two agencies may have different benchmarks for capital.

But even so, not having enough free capital by the JSE’s standards still shows that this broker is having a problem. 

I’m not sure if we’ll ever find out which broker was in breach, even though after the SSL scandal, the government said that all investment brokers would be required to publish their financials. 

But they could also be holding back because they don’t want the market to panic.