The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian broker/dealer facing two US lawsuits has been waiting over five months for the Securities Commission of the Bahamas to approve its liquidation plan.

Documents filed in the New York southern district court on Wednesday reveal that Gibraltar Global Securities submitted its liquidation plan to the Bahamian regulator on April 4 this year, but is still waiting on its approval to put it into effect.

Describing its principal, Warren Davis, as its sole owner, the Bahamian broker/dealer said: “Gibraltar ceased operations on January 31, 2013.

“Gibraltar’s directors have passed a resolution to place Gibraltar into voluntary liquidation, appoint a liquidator and submit a dissolution plan to the Bahamas’ Securities Commission. On April 4, 2013, Gibraltar submitted a dissolution plan to the Bahamas Securities Commission and is awaiting approval. Gibraltar is currently under the control of the liquidator.”

The filing came as part of the discovery process for one of the Securities & Exchange Commission (SEC)) lawsuits filed against Mr Davis and Gibraltar in the New York courts.

The documents also revealed that much of the case against the Bahamian defendants may have come from information they provided to the Securities Commission, which had received a request for regulatory assistance from the SEC.

And they also divulge that Gibraltar has retained documents relating to its 1,200 clients and over 100,000 transactions, plus e-mails dating back to 2009.

“Gibraltar has retained on its server and in hard copy form documents pertaining to its approximately 1,200 customers and over 100,000 transactions as required by Bahamian law,” the Bahamian broker/dealer informed the SEC and New York court.

“These materials are being preserved. Gibraltar also maintains an e-mail server containing e-mails dating to approximately 2009. These materials are also being preserved.”

It warned the SEC, though, that it could not violate the Bahamian Banks and Trust Companies Regulation Act, meaning that all requests for discovery information had to first be sent to the Securities Commission of the Bahamas.

“As the Securities and Exchange Commission is already aware, Bahamian law includes procedures for making ‘inter-regulator requests’ whereby foreign regulators can submit requests for information from broker-dealers to the Bahamas Securities Commission,” the Bahamian defrendants said.

“For example, we understand that as part of the SEC’s investigation in this matter, it submitted a request to the Bahamas Securities Commission for certain documents from Gibraltar and Mr Davis. The Bahamas Securities Commission acceded to the request and conveyed it to Gibraltar and Mr Davis, who thereafter complied with the request.

“We understand from Bahamian counsel that the SEC can make additional inter-regulator requests to the Bahamas Securities Commission for documents and information pertaining to Gibraltar’s customers. Once the Bahamas Securities Commission accedes to any such request and conveys it to Gibraltar and Mr Davis, they may thereafter comply with the request without subjecting themselves to liability.”

Gibraltar and Mr Davis are currently facing the ‘double whammy’ of two SEC lawsuits. In the case relating to this particular filing, they have been accused of operatinfg “unlawfully” in the US in selling $100 million worth of stocks.

And the SEC also charged them with participating in an alleged “illegal unregistered offering and sale” for Magnum d’Or, a small, thinly-traded company.

Some 10 million shares were allegedly sold by Gibraltar on behalf of US customers, netting proceeds of more than $11.384 million.

As for the other action, the SEC alleged they were “knowing” participants in an alleged $11 million multinational fraud, and charged them with falsifying affidavits and documents.

The charges relate to an alleged fraud involving two thinly-traded microcap stocks, Pacific Blue Energy Corporation and Tradeshow Marketing Company.

A group of Canadian stock promoters, John and Benjamin Kirk, Dylan Boyle and James Hinton, are alleged to have “used false and misleading promotions” to artificially pump up the prices of the two stocks, prior to dumping the large blocks of shares they controlled on the market, and profiting at the expense of unwitting investors.

The SEC, in its lawsuit, is alleging that Gibraltar facilitated the scheme by “providing false affidavits and misleading statements” that allowed Benjamin Kirk to “secretly sell” his shares in the two companies. Mr Davis was charged individually because he allegedly “signed misleading representations”.

Both Mr Davis and Gibraltar have vehemently denied the allegations against them, and are defending both lawsuits.