Daraine Luton, Sunday Gleaner Reporter

FINANCE Ministers Audley Shaw and Don Wehby will tomorrow report to Cabinet on the outcome of a meeting held on the weekend, which could help determine the fate o investment schemes.

Shaw, who is in charge of the finance and public service ministry, and Wehby, minister without portfolio in that ministry, along with Justice Minister and Attorney General Dorothy Lightbourne, were mandated by Prime Minister Bruce Golding to meet with representatives of the Financial Services Com-mission (FSC) to develop guidelines to address concerns abou investment schemes..

However, Shaw has been tight-lipped about the outcome of the meeting that took place on Friday.

"I cannot discuss anything from the meeting without first reporting to the Prime Minister," Shaw told The Sunday Gleaner.

Arising out of what Golding called "the growing concerns relating to the unregistered schemes," the group was asked to examine deficiencies in the existing statutory (regulatory) process that would need to be adjusted, as well as initiatives that could be taken in relation to assets held by operators of the schemes, should the need arise. The Prime Minister said the priority was to protect the integrity of the country's financial system and establish the requisite legislative framework for dealing with other investment schemes that might develop in the future.

The FSC - the securities regulatory body - recently issued Cash Plus with a cease-and-desist order on the grounds that it was offering securities without a licence. Furthermore, the FSC has claimed that based on its unaudited financial statements, the club could be insolvent.

Relocated overnight

Another investment club, Higgins Warner, relocated its Jamaican operations overnight, last week. Investors, many of whom advanced between US$5,000 ($350,000) and US$300,000 ($21 million) in the foreign exchange trading company, turned up at its Bay West Shopping Centre offices in Montego Bay, St. James, to find the doors chained and notices posted stating: "Higgins Warner no longer has an office in Jamaica."

In reacting yesterday to govern-ment's latest moves to address the operations of th investment schemes, Dr. Omar Davies, Opposition spokesman on Finance, said: "It is a very serious issue and it is not something that we are going to try and seek political points on. This matter has gone way out of line because there has not been a consistent position."

Dr. Davies said that the People's National Party (PNP) had always held the position that "institutions seeking to do business with the public, whether it is to manage securities or to take deposits, must be duly regulated by the relevant institution".

Need for regulation

The Jamaica Labour Party's position echoes the PNP's. "Our position has always been that the various schemes should subject themselves to the regulatory authorities," Shaw states. "Those who are so-called investors or club members should be aware that those (clubs) which do not register with the regulatory authorities, we have no responsibility to them at all because there can be no oversight, there is no transparency, there is no ability to know the true state of their affairs because they are not subjecting themselves to regulations. "

The need for regulation also has been underscored by Shirley-Ann Eaton, former secretary of the Bankers' Association.

"The existence of a free-market system does not mean that there should be no rules to protect the public. All sectors of a free-market economy are regulated to protect the public," Eaton told The Sunday Gleaner.

Attempts have been made to categorise schemes as 'investment clubs' and 'members' clubs'.

But Eaton, an attorney-at-law, said this was not unique to Jamaica and noted that these 'clubs' "were usually required to be registered and operate within certain regulatory parameters".

She said that "the Jamaican authorities must now decide whether there is a need to introduce new regulatory provisions to accommodate the establishment and operations of genuine investment and members' clubs".