The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian broker/dealer has vehemently denied it is “intentionally stalling” its legal action against the Securities Commission, while effectively accusing its US counterpart of ‘ambushing’ it in New York court proceedings.

US attorneys for Gibraltar Global Securities and its principal, Warren Davis, alleged that the Securities & Exchange Commission (SEC) served them with the Bahamian regulator’s accusations minutes before they were due to appear before a New York judge.

The SEC produced an affidavit, sworn by Securities Commission executive director, Christina Rolle, to support its opposition to Gibraltar and Mr Davis’s request that the southern New York court grant them two protective orders.

The Bahamian duo, who have been accused of breaching US securities laws by the SEC, are asking the New York court to grant them relief from the US regulator’s separate demands that they produce documents held in this nation and give deposition testimony in the US.

Their US attorney, Philip Patterson, is encouraging the New York court to disregard the Securities Commission affidavit, arguing that it contains “hearsay statements” and that Ms Rolle has ‘no legal expertise’.

Mr Patterson, in a March 27, 2015, letter to the judge, said Gibraltar’s attorneys in the Bahamas had submitted an affidavit refuting the Securities Commission’s claims.

And he described the Bahamian regulator’s suggestion that Gibraltar may face “criminal charges” for going into voluntary liquidation without permission as “inaccurate”.

Mr Patterson wrote: “Gibraltar is not intentionally delaying its action against the Securities Commission of the Bahamas.

“The Securities Commission of the Bahamas - without any explanation -has thwarted Gibraltar’s efforts to proceed in an orderly fashion into liquidation, leaving Gibraltar in legal limbo.

“Indeed, the Securities Commission’s failure to accept the surrender of Gibraltar’s registration is a basis of Gibraltar’s action against the Securities Commission of the Bahamas.”

Meanwhile, documents filed with the New York courts to support Mr Patterson’s letter show the Securities Commission’s fear that the Gibraltar action against it “interferes” with its “ability to carry out its statutory duties freely” with respect to ALL its regulatory activities.

A September 24, 2014, letter sent to Gibraltar’s Bahamian attorney, Raynard Rigby, by Neville Smith, the Securities Commission’s outside counsel, said: “The continuation of the action against the Commission interferes with the ability of the Commission to carry out its statutory duties freely.

“Some of these duties relate to the plaintiff [Gibraltar], and you will agree that the court will not allow itself to be used to prejudice the legitimate functioning of the defendant [Securities Commission], just as it would not permit the defendant to act unreasonably with the plaintiff.”

Mr Patterson, in urging the New York court not to rely on the Securities Commission’s affidavit in making its decision on the protective order applications, reiterated: “The Securities Commission of the Bahamas affidavit essentially accuses Gibraltar of delaying its action against the Securities Commission of the Bahamas by initiating it with the slowest possible procedural method, and thereafter intentionally stalling the action.

“We note that the Securities Commission of the Bahamas affidavit appears to consist of hearsay statements as to information provided by counsel for the Securities Commission of the Bahamas.”

Mr Patterson argued that the Bahamian regulator should be treated as an “adversary” given its legal battle with Gibraltar, and alleged that its executive director “does not profess to have any expertise in Bahamian civil procedure”.

He added that Gibraltar’s affidavit showed it had used “the proper procedural device” for initiating the action against the Securities Commission, and had also requested a ‘case management conference’ in September 2014.

The affidavit, sworn by Indira Deal, an associate at Mr Rigby’s Baycourt Chambers, alleged that the Supreme Court registrar was asked to set a date for the ‘case management conference’ on September 29, 2014.

While admitting there was an “oversight” in seeking Mr Smith’s availability for this hearing, Ms Deal argued that the Securities Commission’s complaint over Gibraltar initiating the action by Writ of Summons - not an Originating Summons - was “curable” via Supreme Court rules.

While Mr Smith, in his September 24, 2014, letter warned that the Securities Commission would seek to have Gibraltar’s action “struck out for want of prosecution”, Mr Rigby replied five days later to inform him of the ‘case management conference’ plan and suggest such action “will not be necessary”.

“The exchange of letters clearly shows that the plaintiff [Gibraltar] had no intent (and has no interest) to delay the matter, but was seeking a hearing date for the case management conference,” Ms Deal alleged.

“The assertion that the plaintiff intentionally applied to proceed by Writ of Summons so as to delay any action by the defendant [Securities Commission] is without merit.

“The plaintiff’s election to proceed by writ was in line with the Rules of the Supreme Court, which mandates that where there are likely to be serious disputes surrounding the facts of a matter, the action should be commenced by Writ of Summons.

“The plaintiff was under the strong belief that there would be serious and fundamental disputes as to facts relating to the relief sought in the Writ of Summons.”

Ms Deal also alleged that the Securities Commission was granted a date to hear its November 22, 2014, strike out summons without Gibraltar’s attorneys first being consulted.

Tribune Business revealed yesterday how the Securities Commission fears the US government will treat it as “powerless and ineffective” because Gibraltar’s alleged legal “stalling” tactics are preventing it from assisting the SEC and its foreign counterparts.

By not prosecuting the action, Ms Rolle and the Securities Commission alleged that Gibraltar was thus able to “hold off” the SEC and its demands for documents deemed relevant to the two New York actions.

In effect, Ms Rolle is alleging that Gibraltar’s legal action against the Securities Commission is merely designed to create an obstacle preventing it from passing documents to the SEC, with the ultimate goal of frustrating the New York court proceedings against it.

The documents sought by the SEC relate to a New York lawsuit it has filed against Mr Davis and Gibraltar, in which it alleges that they participated in an alleged “illegal unregistered [share] 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.

The Bahamian duo were also alleged to have operated as an unlicensed broker by using their website to solicit US clients, facilitating the sale of $100 million worth of securities.

In the second case, Gibraltar was alleged to have participated in another unregistered share offering for two companies, Pacific Blue and Tradeshow, which netted $11 million