The Financial Services Commission (FSC) yesterday issued cease-and-desist orders on th investment scheme Cash Plus, its Chief Executive Officer (CEO) Carlos Hill and Kahlil Harris.

The order has come days after a ruling by the Supreme Court against other investment schemes - Olint and LewFam - which stated that their activities were seen as the business of investment under the ambit of the law and as such the FSC had the power to oversee their operations.

Far-reaching implications

This ruling had implications for other investment schemes, as the FSC could proceed against others which were deemed to be resistant to its offer to register their activities.

The FSC said that its decision taken against Cash Plus was based on investigations it conducted.

According to a statement from the FSC, based on its own investigations, the principals of Cash Plus "have been engaged in securities activities in breach of sections 7 and 10 of the Securities Act. Section 7 of the act prohibits the carrying on of a securities business without being licensed as a securities dealer by the FSC".

Section 10 of the act prohibits an individual from carrying out the functions of a dealer's representative without first being registered for that purpose by the FSC.

The Securities Act requires persons who issue securities to be registered. The act also requires that persons who deal in securities be licensed as securities dealers.

Yesterday's cease-and-desist order issued by the FSC demands that "Cash Plus Ltd. et al immediately stop conducting securities business, including soliciting and accepting loans with members of the public until Cash Plus is licensed by the FSC".

A demand was also made for Kahlil Harris to stop carrying out functions as a dealer's representative or holding himself out as a dealer's representative unless and until he is registered with the FSC.

The FSC said that failure to stop these activities is an offence under section 68(7) of the act and is punishable upon conviction by a fine or imprisonment or both.

Cash Plus has been at the centre of much controversy recently, as it came under intense pressure from financial regulatory authorities and commercial banks.

Just last month, the FSC wrote to the company demanding financial information, including the location of its assets. After some delay, a report was submitted by Cash Plus, however FSC officials said it failed to provide much of the information that was requested.

Suspicious funds

It was also reported that some financial institutions had taken an apparent decision to report as suspicious, all funds that came to them through what they described as "unregistered schemes" as allowed under the Money Laundering Act.

In November, at least one bank issued circulars to its employees warning that they should be on the lookout for customer transactions involving such organisations.

It was argued by investors of Cash Plus that financial institutions were conspiring to "get rid of the competition".

Cash Plus is among the most visible of a slew of institutions, that have sprung up in Jamaica in recent years, inviting people to put cash with them, and offering returns of up to 200 per cent a year.