Why did the JSE suspend two companies?

The Jamaica Stock Exchange just suspended TWO companies! At the same time.  What’s going on?

Well after all the drama in 2023 with SSL and iCreate, the JSE has come out swinging in 2024. They just suspended two companies from trading with immediate effect. 

Equityline Mortgage Investments’ preference shares and EduFocal’s ordinary shares were both suspended on June 4, pending the submission of their 2023 audited financial statements. 

EduFocal is an online learning and exam preparation platform that listed on the Junior Market in 2022. While Equityline, a Canadian mortgage financier, listed its preference shares on the main market in 2019. 

Both Junior and Main Market rules stipulate that companies have up to 90 days after the end of their financial year to submit the audited results. 

Equityline and Edufocal’s financial years both ended on December 31. That was six months ago.

As I’m recording this on June 5, neither company has released a statement about the suspension yet. But based on announcements on the JSE’s website, both companies have delayed the publication of their audited statements, several times.

In the case of Equityline, they delayed filing four times and promised to submit the report by May 29.  According to this letter from the CEO, they were missing a crucial third-party document that their auditors needed to complete the report. 

Meanwhile, Founder and CEO of EduFocal, Gordon Swaby, went on social media to explain that the company was given an extension until June 3rd but when they couldn’t meet that deadline, a further delay was rejected by the JSE.

 Their first quarter results for the period that ended in March, have also been delayed. 

As I said both suspensions had immediate effect and the companies will remain suspended until they submit their reports.

Edufocal closed trading at 81 cents on June 4, while Equityline closed at US$1.10.

Now, I know we’re all a little skittish when we see companies getting suspended, and you’re wondering, “is there some shady business happening?”  Well, I can’t swear for anyone but I don’t think this is anything to worry about… yet. 

Hear me out. We were warned months ago that auditors were backed up and that would lead to mass delays in audited statements. 

There are over 100 companies listed on the JSE, across the markets and every single one of them has to be audited every quarter and then every year. Also, keep in mind that these audits are very comprehensive. The auditors comb through every transaction and make sure the books are balanced. 

And in the case of Equityline, they were transparent in saying a third party was holding up their auditor. 

Plus, last year, Managing Director of the JSE, Dr Marlene Street Forrest said that a shortage of accountants in the country and extra lines of defence by audit firms to control audit quality, have exasperated the problem.

Like I said, I’m not putting my head on the block for any company. I’m just saying there could be an explanation. 

Still, the JSE does have a duty to protect investors, especially since they’ve been accused of being slow to act before. The fact is, if we can’t see the company’s numbers, we don’t know what we’re investing in.

And that’s the bottom line.