FSC suffers blow in SSL lawsuit

The Financial Services Commission (FSC) has lost a bid to amend a lawsuit against Stocks and Securities Limited (SSL) to include a claim that two former directors signed a declaration of solvency after resigning in January 2023.

Justice David Batts, who is presiding over the trial, made his ruling on Monday following an application by FSC lawyers.

"I would want an authority from you that a resignation once tendered must take effect," he told Lisa White, a senior lawyer from the Attorney General's Chambers who is leading the case for the regulator.

"You haven't been able to show me," the judge concluded after earlier stating that it was "the only way to succeed".

The FSC filed the application on March 1, seeking to add a third ground to its suit against SSL, the private investment firm at the centre of a $5-billion fraud whose victims include sports legend Usain Bolt.

The case is essentially about who has control of SSL - whether it is the FSC which took temporary management on January 17, 2023 or the trustee Caydion Campbell, whom SSL directors appointed the day before to lead a winding up and reorganisation of the firm.

The FSC claims Campbell's appointment breached directives it gave SSL on January 12, 2023 and further that the company was wrong to declare solvency, a key decision that enabled SSL to pursue winding up under the trustee.

The declaration was signed on January 15, 2023 by directors including Laurence Adamson and Peter Knibb, whom the FSC sought to argue in court submitted their resignation on January 12, 2023 and January 2, 2023, respectively.

White insisted in court on Monday that the regulator "is not imputing any intention" for why Adamson and Knibb signed despite records indicating the submission of their resignation prior to January 15.

She said the FSC's main argument was that at the time they signed "they didn't have the authority to do so".

But Batts argued that without any legal authorities to support a view that resignations take effect on the date they are submitted and cannot be suspended on agreement between the parties, the FSC was asking the court to enquire into the honesty of the men without providing any evidence.

"How are you going to prove that they are lying?" questioned Batts.

He also pointed to affidavits from the men which suggested that they had communication with SSL officials, including then chairman Jeffrey Cobham, which resulted in a delay to their resignation taking effect.

White had earlier argued that: "A conversation with the chairman of the board or the chief financial officer is insufficient to reinstate a director who has submitted a resignation”.

However Batts said the fact that the men signed the declaration could be viewed as an indication that their resignations did not take effect and the FSC would have to show evidence to the contrary.

White responded again that the FSC did not bring a claim of fraud against the men but Batts countered that "you are asking the court to come to a conclusion as to the conduct of these directors in order to conclude that the document is invalid".

The defendants are SSL, which is represented by court-appointed independent lawyer King's Counsel (KC) Carlene Larmond and the trustee, the second defendant, who is represented by KC Caroline Hay.

They had argued last week, when the issue was first raised, that the FSC's move was an effort to “change the case”.

“What I see from this development last evening is that the shape of the case is intended to be changed to challenge whether they should have signed on the date they signed. …The FSC, as claimant, has proceeded for a year and more on the basis that these men were directors at the time they signed," Larmond said last Thursday.

Hay supported the argument.

The FSC initially named Adamson and Knibb as defendants in the lawsuit but later dropped its case against them as well as SSL founder Hugh Croskery.

The trial enters its seventh day on Tuesday, with the defence opening its case.

jovan.johnson@gleanerjm.com