The Tribune

• Crowd-fund platform blasts ‘never-ending’ probe

• Key hearing today after 15-day suspension ends

• Commission slams chair’s ‘outright fabrications’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ first-ever crowd funding platform last night pledged to “go all the way to the Privy Council” if the Securities Commission moves to shut it down over “solvency” concerns following a key hearing today.

D’Arcy Rahming senior, ArawakX’s chairman and chief executive, told Tribune Business the capital markets regulator has “shut down our ability to function” through what he branded a “slow walking” and “never ending” 11-month probe into the crowd-funding platform’s operations and business. This culminated in the 15-day suspension of ArawakX’s registration on August 30, and the meeting today that will give it a chance to respond to the Securities Commission concerns.

After barring ArawakX and its parent, Mdollaz Ltd, from facilitating new capital raises by a 28-strong waiting list of Bahamian companies since October 2022, Mr Rahming said the Securities Commission has also yet to approve new shareholders and funding sources that the crowd-funding platform has been seeking to access since June this year.

As a result, he added that ArawakX has been forced to terminate some 14 staff, and is now functioning with just a five-member executive team as it bids to head-off further regulatory action that could potentially result in the platform potentially being wound-up just over two years after launching its first crowd-funding raise via Red Lobster Bahamas. Its closure, the ArawakX chair argued, would be “a real loss” for The Bahamas, its capital markets, companies and investors.

However, Christina Rolle, the Securities Commission’s executive director, slammed Mr Rahming’s comments to Tribune Business as “inaccurate” and “misrepresentations of the facts”. She declined to comment further, citing a confidentiality clause and the fact that the regulator’s ArawakX investigation is still ongoing.

However, the regulator, in a subsequent statement, confirmed both the 15-day licence/registration suspension and that its probe relates to concerns over “the trading platform’s solvency”. It also blasted a letter that Mr Rahming released to the media yesterday afternoon as containing “inflammatory” statements and “outright fabrications”, some of which it branded as defamatory.

“The Commission finds it most unfortunate that, instead of addressing the Commission’s substantive and very serious issues, Mr Rahming has chosen to make inflammatory misrepresentations and outright fabrications of the Commission’s concerns in a public forum,” the Securities Commission said. 

“The Securities Commission has exercised both patience and restraint in dealing with MDollaz, trading as ArawakX, and we continue to exercise our professionalism in this regard. However, the Commission will not tolerate wild, misleading and potentially libellous accusations of the nature made in the referenced communication.

“The Commission seeks only to resolve its regulatory concerns with the principals of MDollaz trading as ArawakX in the interest of the investing public. As always, the Commission remains committed to its professionalism and hopeful that these matters can come to a productive end.”

Mr Rahming, in exposing ArawakX’s woes publicly, linked its difficulties to a highly-publicised battle for control of the crowd-funding platform with one-time Colina Insurance Company president, James Campbell. Tribune Business disclosed in June how the fight with Mr Campbell, an ‘angel investor’ who provided ArawakX with a portion of its start-up funding, resulted in multiple bank accounts held with BISX-listed Bank of The Bahamas being temporarily frozen.

Justice Simone Fitzcharles, in a May 16, 2023, Order that also mentions Mr Campbell by name, ruled that Bank of The Bahamas “shall forthwith restore the claimant’s [ArawakX] access to, and operation of, all of the accounts” that had previously been frozen.

The Supreme Court judge also ordered that Mr Campbell, “and all persons claiming under, by and through Mr Campbell, shall not continue or subsequently prosecute” any claims against the BISX-listed institution as set out in “the Higgs and Johnson letter dated October 28, 2022”.

However, Mr Rahming, a former Bahamas International Securities Exchange (BISX) chief operating officer, yesterday blamed the battle with Mr Campbell for triggering the Securities Commission’s “investigation that is still ongoing, 11 months later”. He subsequently described it as “an 11-month ‘examination’ without end”, with the regulator placing “impositions formal and informal” on ArawakX that threaten to “starve” it of capital and drive the platform into voluntary liquidation.

Given what transpired between Arawak X and Mr Campbell, father of newly-promoted minister of agriculture and fisheries, Jomo Campbell, any financial regulator would be drawn to examine the financial implications for the crowd-funding platform, its corporate issuers and wider Bahamian investors.

This was acknowledged by Mr Rahming, who told Tribune Business: “The Commission has a right to investigate its financial institutions at any time. We’re not disputing that. They look at all the processes, all your finances, everything you’re doing to run an exchange. This is a normal thing. 

“What is not normal is that it has taken so long, and when you give them the same information over and again, they seem to be slow walking their investigation. They’ve also imposed impositions on our ability to trade and access funding through bringing in new shareholders. They’ve blocked our ability to raise and crowd fund new companies.

“We have a number of investors that are awaiting approval from the Commission to invest in ArawakX. They have invested, and we have sent to the Commission their names for approval, but we don’t have any confidence in the leadership of the Commission.” Mr Rahming said the regulator had imposed “informal” measures on ArawakX from October 2022, halting further crowd-fund raises via the platform, with more “formal” steps taken this year.

The ArawakX chief added that the timing of the prohibition on new capital raises “interrupted” the already-launched bid by Nassau Gas to raise up to $3m from Bahamian investors. “We fortunately got them over the line, but applied for an extension that we never got,” he added of Nassau Gas. “They have investors and shareholders and we feel they never got a fair shake.”

Mr Rahming said the Securities Commission’s scrutiny of ArawakX then intensified further after the battle for control with Mr Campbell became public. “After we had announced the problems with Jimmy and Bank of The Bahamas, we reported this to them [the Commission] because Bank of The Bahamas was erroneously reporting information to them on our fiduciary accounts,” he added. “We noticed those accounts had been changed” after they were unfrozen.

“You would think at that point in time a regulator would take this under advisement,” Mr Rahming continued. “They never mentioned it to us again, and came back even harder with impositions. They have shut down our ability to function. There’s a hearing tomorrow [today] which we did not have enough time to prepare for. It appears to have changed from ‘slow walking’ to a sudden demand that ArawakX be wound up.

“They suspended our licence for 15 days, which finishes tomorrow. During this suspension they didn’t want us to talk to anybody or do anything. They gave us a list of questions to answer, which we are answering, and we have our attorney reviewing the answers at this time. They gave us 15 days to answer.”

Mr Rahming said the Securities Commission had “used those exact terms”, when asked if it had warned ArawakX about the possibility of being placed into voluntary or court-supervised liquidation. Should the regulator decide this is necessary, he pledged that the crowd-funding platform would immediately initiate legal action to obtain an injunction that would - at least temporarily - block it while maintaining the status quo.

“We’re still weighing all the options,” Mr Rahming said. “We will be looking for legal recourse all the way to the Privy Council if necessary. The most frightful part of this is so many good, young people worked for us in earnest and we were not able to keep them on because we did not have the funds and market to do so.

“There are also a lot of experts, people who put in their time and made this work. They came in and assisted us. We were creating jobs and wealth for Bahamians. That’s the saddest part of this; we have had to let 14 people go. Only the executive team is left.” Besides Mr Rahming and his son, D’Arcy junior, those remaining include former Bahamas Chamber of Commerce president, Winston Rolle, and ex-RND Holdings and Colina Real Estate Fund chief, Ken Donathan.

ArawakX was originally created to fill a void in the Bahamian capital markets, which previously lacked a platform allowing start-ups and entrepreneurs to raise up to $5m in equity financing within a regulated market. It was also designed to give Bahamian investors access to greater and more diversified ownership opportunities, thereby helping to increase and spread the wealth.

Asked about the potential fall-out if ArawakX was to disappear, Mr Rahming said companies that have completed their crowd-fund raises - such as Red Lobster and Tropical Gyros - will feel no impact and neither will their investors.

However, he added: “The impact, first of all, will be that the market we have developed and all the thousands of people able to benefit from the market no longer have this option to raise funds. We are the only ones in the region able to successfully pull this off because technology, marketing, investor relations - all the skills that are needed to run a successful market, no one in the region is able to do it except us.

“We were doing it quite successfully, time after time, and developing quite a rhythm to it. We took time to educate and make sure investors and issuers are properly monitored. The impact is this will be a real loss for The Bahamas. The issuer companies increased their scale, increased their locations and hired people. It will be a loss; a loss to The Bahamas.”

Mr Rahming also suggested that any move to wind-up ArawakX now would interfere with its upcoming Supreme Court action seeking damages from Bank of The Bahamas for the freezing of its accounts, which is due to be heard this October.

 Mr Campbell, who was ousted from his Colina Insurance Company post some 15 years ago after losing a corporate battle with then-business partners, now AF Holdings principals, Emanuel Alexiou and Tony Ferguson, could not be reached for comment before press time last night.

ArawakX’s woes have been evident for some time. Besides the battle with Mr Campbell, this newspaper revealed last month how its landlord, Sandyport Development Company, had placed an eviction notice on its offices and changed the locks due to the platform falling into arrears on rental payments.

ArawakX said at the time that it had moved to its own building off Joe Farrington Road, attributing the lease default to legal issues being ironed out with one of its financiers. Referring to the battle with Mr Campbell, Mr Rahming said: “During this time we haven’t been able to generate any revenues or put any funds into the company.

“We recognise the impact of our Sandyport offices as a Community Investor Education Centre and we intend to be reopening that shortly as well. We fell behind in our bill because during this takeover, audit and examination period we haven’t been able to generate any revenue or inject any funds, including our own into the company.”