Jamaica’s alternative Investment Schemes would be illegal in the USA
by David Mullings
I attended a Jamaica Investment Symposium yesterday in South Florida and one panel included George Roper, Deputy Director of the Financial Services Commission (FSC) and Antoinette McKain, CEO of the Jamaica Deposit Insurance Company (JDIC).
The audience wasted no time during the Q&A segment to ask the questions many want answers to. The first question was roughly:“I don’t like the word ’schemes’ to describe these, I call them ‘opportunities’. Are these ‘opportunities’ operating illegally and if so, then shut them down, if not, leave them alone.” The answer was very clear - The FSC pointed out that it describes Credit Unions as “collective investment schemes”, there is no negative connotation with the word “scheme” when they describe any financial company.
More importantly, he pointed out that those schemes that have not applied for licenses are operating illegally based on present Jamaican law and even would be in violation in the USA. He explained that the USA has a law stating that investment clubs are defined based on a maximum participation of people where every person is involved in the decisions regarding investments.
The exact definition, according the to SEC section on their website - Investment Clubs and the SEC is below:An investment club is a group of people who pool their money to make investments. Usually, investment clubs are organized as partnerships and, after the members study different investments, the group decides to buy or sell based on a majority vote of the members.
An investment club must register with the SEC as an investment company under the Investment Company Act of 1940 if all of the following three conditions apply:1. the club invests in securities,2. The club issues membership interests that are securities (see above), and3. The club is not able to rely on an exclusion from the definition of investment company.
For example, a “private investment company” may not need to register with the SEC. To qualify, an investment club* must not make, nor propose to make, a public offering of its securities, and* must not have more than 100 members.He also pointed out that Jamaica in fact has no such exemption related to the size of the club. Clearly an “investment club” like OLINT, with far more than 100 members and no voting on investment decisions, would be required to register with the SEC in the USA and there is no difference for operations in Jamaica.
He made sure to point out that the FSC did in fact issue a cease and desist letter and that the matter was appealed and they await the court ruling in early December. They only have the power to issue the letter and turn over the matter to the Director of Public Prosecutions (DPP). The FSC cannot simply “shut them down”.He also went on to explain why other “extremely high yield” schemes like Cash Plus had only three options to be in compliance with the law. Any company or entity that is selling a security has to be licensed and the people selling that security to the public also have to be licensed.
In the FSC new release on Cash Plus on May 4, 2007 - http://www.fscjamaica.org/publicinfo_files/bulletins/News release Cash Plus.pdf - the FSC defined “securities”
“Securities” include stocks, bonds, promissory notes, certificates of participation in profit sharing agreements, investment contracts and documents commonly known as securities.Cash Plus and others have 3 options* Register and use licensed securities dealers (or have dealers licensed)* Sell their securities through a licensed 3rd party* Shut downIt is interesting that those who seek to say that the FSC is “badmind” or that the financial institutions are conspiring against these schemes are the least knowledgeable on the subject and have not sought to educate themselves about Jamaican law, or even understand how the US’s SEC would treat these schemes.Maybe the information above will have some material impact on the discussion.
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Great article, worthy for the Financial Gleaner and other local papers.
a) Copy Copying
I notice that you use http://cashplusinvestment.com/webnews/ as a reference in photos, articles etc regularly . I notice on that site they use articles from websites e.g Jamaica Observer, Jamaica Gleaner, Sunday Herald etc in their entirety.
Is it okay to use the entire copy of an article on my site without permission from the owners/publishers of the copy?
Would it be okay for me to use this entire article on my website without your permission?
b) Possible Domain name dispute/ cyber-squatting or typo-squatting?
The domain name is interesting and it raises a few questions cashplusinvestment.com(registered by a Jamaican living in Jamaica). Given that Cash Plus should be a registered company in Jamaica is involved in investments, Cash Plus Investments, could the owner run in to legal issues here?
Similarly to Google could there be issues if I was to register say Googleinvestments.com (actually registered not to Google and for sale) or GraceKennedyInvestments.com to bring it into a Jamaica perspective, would I run the risk of possible legal action?
John you make good points.
Regarding your first point.
1.Copy Copying. Cashplusinvestments.com is an aggregator or news and articles. To do that without the risk of litigation, is to credit the source and do not alter the article PLUS gettin permission to aggregate as well, especially if your site has a revenue model. I make reference to that site as it is the only site where you can find all that information in a single place.
2.Possible Domain Name dispute. Now this is a great point. As right away I thought it was a subsidiary of cash plus the conglomerate.
I will psas this on to the site owner. That aside I know he’s working to clean up the site, make it more orderly. Let’s see what he does.
Thank you for the response “John Doe” and the article is actually the ‘Letter of the Day’ in the Jamaica Gleaner today - http://jamaica-gleaner.com/gleaner/20071203/letters/letters1.html
Great article.
That question has been asked to me many times as to whether or not there can be legal implications with regards to the domain name.
For one cash plus ltd does not offer “investment” well neither does C+I for that matter
I have made it clear in the disclaimer that i am in no way affiliated with cash plus ltd or any of the investment clubs.
http://cashplusinvestment.com/about/
Also i tried using http://cash+investments.com but i dont think domain name nomenclature works like that.
Its a clever play on words i must say but the site is clearly cash + investment unlike google and grace kennedy, cash plus ltd chose a name that uses a conjunction in their name. So it would be really hard for us to stop using a conjunction because someone else is using it.
As to the matter of using entire articles on the site….i tried just providing direct links with snippets but people tend not to read them so i provided direct links to every article if they are not original as well as source and publication date…. as Ingrid pointed out we aggregate news.
I will be taking the steps as suggested by Ingrid, i am still in the beginner phase so im learning as i go along. And will be doing over the site this week and will take all things said into consideration…Until then happy reading.
One new feature that i will be adding is the ability for people to add their own article (once it is moderated) and all links and contact request will be pointed to them.
cheers
I have successfully upgraded the site now and made a few changes to the news…the name stays the same however
Please tell me why is one trying to run Jamaica with the laws of America. The banking industries showed a substantial profit, has any check to see that some of the money being banked locally are that from what is deemed a “scheme”.
I am a die hard investor in variables, stocks mutual funds, yes C+I may be an ivestment company however the contributors are making loans & most of the loaners are clueless where the money even goes, but it has provided 3000 jobs for the sufferers. I did a poll and almost everyone is happy. Everything is working and everyone is making a profit why try to break something if it ain’t broke. The Govt need to make this happen stop being so selfish and let the 3000 people keep their jobs and help C+I to grow - taking away 3000 or even 2000 jobs only help poverty & crime. Wake up and try to lead the country and not be a copycat of America. Make something good of the “scheme” turn it into a multibillion company. Educate the people of making their dollars grow.
I missed this forum but your recap was great. Thanks for providing this information.
George Roper, Deputy Director of the Financial Services Commission (FSC), ought to resign due to his lack of comprehension of what he read and inaccurately interpreted to the public that investment clubs that concentrates solely on international FX/ foreign currencies trading would be illegal in the USA.
The facts are as follows:
OBSERVATION:
“An investment club must register with the SEC as an investment company under the Investment Company Act of 1940 if all of the following three conditions apply:
1) The club invests in securities; (That is:-“Securities” include stocks, bonds, promissory notes, certificates of participation in profit sharing agreements, investment contracts and documents commonly known as securities.)
2. The club issues membership interests that are securities (see above), and
3. The club is not able to rely on an exclusion from the definition of investment company.
CONCLUSION:
Clearly, securities do NOT include international FOREX EXCHANGE /foreign currency trading.
Therefore, an investment club like OLINT, which concentrates solely on international FX/foreign currencies trading would be legal in the USA.
Messrs. George Roper and Brian Wynter must cease and desist from giving information that is not accurate.
To continue their analogy, in the USA, their nomination to their FSC positions would have been rejected after they would have been interviewed, questioned, and grilled by the United States Senate and found to demonsrtate inadequate knowledge, education, training, and mentorship and a lack of comprehension as to what constitutes securities and what do not.
Acknowledged.
The FSC’s definition of “security”, which is based on the English definition, did not say that Forex trading is a “security”, it said quite clearly that the investment clubs were issuing securities.
Why are the investment clubs “issuing securities”? Because they are engaging in “investment contracts”.
George Roper need not resign for stating a fact based on the reading of the definition.
As for using US laws to run Jamaica, we aren’t, but you must admit that their system is far more developed than ours and if EVEN they would be regulating these schemes, then we should as well.
As for Cash Plus and the 2000-odd jobs, those jobs are mostly made up of the workers of the companies Cash Plus has bought. Cash Plus did not create those jobs, other entrepreneurs did, and they will remain if the companies change hands, so fear-mongering is unwarranted.
Lastly, anyone who is knowledgeable about the Albania schemes and the result would want regulation and transparency among financial institutions in their country.
Why is it that when all the Government asks for is transparency and honesty, people start to complain but as soon as the stuff crashes they blame the Govt. for not trying hard enough to protect the people?
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