Yaneek Page | Financial fraud: what entrepreneurs can learn from Bolt’s missing millions

“When your neighbour’s house is on fire, you better wet yours.” This proverb has never been more relevant regarding Usain Bolt’s ordeal in trying to recover his missing millions from a financial investment firm that was licensed and regulated by the Financial Services Commission and subject to oversight by the Jamaica Stock Exchange (JSE) as one of its member-brokers.

His public legal battle, and recent utterances, should be a national wake-up call. There is undeniable tragedy in how a man known for outrunning time is now at the mercy of it, waiting alongside several other Jamaicans who have lost their money.

Bolt’s fame may have drawn attention to the issue, but this is not just about one ‘big’ man. If this can happen to someone as influential, famous, and well-loved as a celebrated Ambassador-at-Large, and a living national treasure, then what of other investors who don’t have the clout, or importantly, the financial means to initiate legal proceedings to recover their stolen or missing funds?

This investment fraud nightmare and subsequent fight for justice should be a warning for every entrepreneur and citizen alike. We need to wet our homes - now.

There are fundamental concerns that go beyond commiserating with the Honourable Usain St Leo Bolt, OJ, and all the other investors embroiled in the current predicament involving Stocks and Securities Limited. Every person who entrusts a financial institution with their savings and investment funds must now face the frightening fragility and gaps in the regulatory oversight of our financial industry.

The JSE provides investors with limited protection through its statutory trust known as the Compensation Fund while the Jamaica Deposit Insurance Corporation (JDIC) only offers protection for savings held by deposit-taking institutions that are supervised by the Bank of Jamaica through these five account ownership categories: individual, joint account, business account, trust account, and nominee account.

Readers may visit www.jdic.org to use its ‘deposit insurance calculator’ to generate a report on the extent of their financial protection. This information may be helpful to determine the level of exposure or loss that falls outside this important national protection scheme. These limited safety nets are precisely why investors rely heavily on regulatory oversight.

To date, there is no clarity on what the affected investors could have done differently to avoid this situation. And if the regulators agree that the affected investors did everything right, then we are in a very precarious situation. Jamaicans, therefore, can’t afford to sit quietly on the sidelines. Entrepreneurs and business owners who follow this column must see this as an opportunity for risk evaluation and mitigation.

Preparing for the worst

Earlier, I used the analogy of ‘wetting our homes’ as a proactive way to evaluate clear risks and identify mitigation strategies. Her is how do this:

1. Demand accountability: This saga should implore us to advocate for greater accountability and transparency. Questions must be asked of every agency and institution that had regulatory oversight of SSL. Some of these questions would include:

• How effective was the regulatory oversight?

• Were red flags missed or ignored?

• Who is to be held accountable for oversight failure and how?

We need answers. As Bolt wrote on X last week: “Broken words, not broken records.. Trust in financial institutions and the regulatory framework that begets public trust are taking a hit, because of the SSL case, and are in urgent need of repair.

2. Understand the extent of your exposure: This is the time to determine the extent of your exposure to loss based on the insurance coverage and protections in place for each account type and institution.

3. Due diligence and regular reviews: Entrepreneurs can’t blindly put their faith in a financial institution because it is licensed by the Financial Services Commission or listed on the Jamaica Stock Exchange. They may need to implement other strategies such as

• Reviewing financial records and reports, for all accounts, and reconciling the records of the firm with your own.

• Where possible evaluate the financial records of the investment firm or entity you do business with, and probe beyond what is shared publicly; and

• Consulting independent financial advisers. There are only a handful of licensed independent financial advisers who are not aligned to a financial institution, so this one will be a challenge. At the same time, some advisers are well connected and have their ears to the ground. They can sometimes tell you where the sparks are long before the fire is known.

4. Diversify our investments: Entrepreneurs, especially those dependent on stable financial backing, must ask themselves tough questions such as: If my investments are not secure, and I can’t trust that regulatory oversight will shield us, how should we diversify? Should we spread funds across multiple institutions? Should we move to different investment classes? These are issues that must be resolved internally.

Where there is smoke, there is fire. This is a time to rally behind all the victims of this financial débâcle not just for justice in this case, but to prevent this from happening again. It is also a signal for us to scrutinise our financial strategies and hold institutions accountable.

Only through proactive measures can we safeguard our personal and business interests from similar devastation and help restore trust in the system that we desperately need to work.

One love!

Yaneek Page is the programme lead for Market Entry USA, and a certified trainer in entrepreneurship.yaneek.page@gmail.com