The Tribune

• Says ex-Nassau broker chief 'threatening his livelihood'

• And slams 'sharp litigation tactics' by SureTrader's Gentile

• E-mails with PM before election at centre of latest battle

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

US regulators have accused the principal of a now-defunct Nassau broker/dealer of seeking to intimidate a Bahamian whistleblower and "threaten his livelihood".

The Securities & Exchange Commission (SEC), in filings with the south Florida federal court, slammed Guy Gentile, head of Swiss America Securities, for "continued sharp litigation tactics" in seeking to prevent 11,000 e-mails possessed by his former chief compliance officer, Philip Dorsett, from being used as evidence against him.

The ex-chief of Swiss America Securities, which subsequently operated under the names SureTrader and Mintbroker International, has now made a second bid to dismiss this evidence centred on a "small" group of e-mails that Mr Dorsett incorrectly stated were "deleted" when he was cross-examined last year.

The e-mails in question involve communications with Mr Gentile and SureTrader's lawyers that are attorney/client privileged, meaning they cannot be used as evidence at trial or before a court. Among the e-mails involved in the dispute are those sent to, and received from, Philip Davis KC, who acted as the former broker/dealer's Bahamian attorney prior to becoming Prime Minister.

Tribune Business previously reported how Mr Davis, who was then-Opposition leader, acting on Mr Gentile’s behalf filed a successful Judicial Review challenge that thwarted the Securities Commission’s efforts to take regulatory action against SureTrader for several months. There is no suggestion Mr Davis did anything wrong, and the SEC asked Mr Dorsett to separate out all communications involving him and others.

Alleging that Mr Gentile was seeking to exploit the appointment of a new judge by filing an-almost identical motion to the one that the south Florida court dismissed last year, the SEC argued that he is seeking to "short circuit" and prevent their dispute from ever reaching a full trial on the merits.

"In his latest attempt to smear the name of a non-party witness (Mr Dorsett) and the SEC, Gentile has again filed a factually and legally baseless motion for sanctions claiming spoliation of evidence...even though the subject Electronically Stored Information (ESI) - a small subset of e-mails voluntarily produced by a non-party located in The Bahamas - were not deleted and have been produced," the US regulator blasted.

"The genesis of this dispute is Gentile’s objection to Mr Dorsett’s voluntary production of his SureTrader e-mails to the SEC, approximately 11,000 minus e-mail communications with SureTrader’s attorneys, in April 2022.

"Instead of working with the SEC to create protocols for the review, Gentile filed a motion for sanctions, which this court denied. On January 9, 2023, this court ruled that the SEC could commence review of the 11,000 emails it received from Mr Dorsett and provide same to Gentile’s counsel."

However, Mr Dorsett admitted in a June 13, 2023, affidavit that he "misspoke" when stating during a February 8, 2023, deposition that he had "deleted" all the e-mails in his possession relating to the former Bahamian broker/dealer's communications with Mr Davis and another Bahamian attorney, Michael Miller, as well as the latter's colleague, Bettina Albury.

The ex-chief compliance officer, who worked for Mr Gentile from November 2011 to August 2017, sought to clarify that "the more accurate explanation is that the e-mails with SureTrader's attorneys were" separated and segregated into a different file from the one containing all the other communications that were sent to the SEC.

The US capital markets regulator, in January 5, 2024, court filings said the segregated attorney e-mails were located by Mr Dorsett and produced to it, with the same being passed to Mr Gentile to disprove the latter's allegations that this evidence had been "spoiled".

Now, seven months later, the SEC is alleging that the former SureTrader principal has filed a nearly-identical bid to have all the e-mails in Mr Dorsett's care struck out as evidence. And it claimed that the latest filing was another attempt to intimidate Mr Dorsett and undermine his continued career in Bahamian financial services.

"The renewed motion is replete with inaccuracies and assumptions, and is nothing more than an obvious attempt to make inflammatory and baseless accusations against Mr Dorsett," the SEC blasted. "Tellingly, Gentile used the same intimidation tactic he employed when he filed his original motion" by placing it on the court record accessible to the public and thus "potentially threatening Mr Dorsett’s livelihood".

"This is consistent with Gentile’s repeated unfounded accusations that Mr Dorsett and another former SureTrader employee, who have both testified that Gentile and SureTrader violated US securities laws by soliciting US customers, 'stole' SureTrader records and violated the law in voluntarily providing information about the violations to the SEC.....

"The two former employees voluntarily reached out to the SEC (separately and at different times) because of their significant concerns that Gentile and SureTrader violated US securities laws. To be clear, these former employees reached out to the SEC, a regulatory agency, to provide information related to potentially illegal activity, as they are protected under US law to do."

The second employee referenced is Yaniv Franz, SureTrader's former chief operating officer. The crux of the SEC's case is that Mr Gentile and his Nassau-based company violated US securities laws by actively soliciting American clients while failing to register with it as a broker/dealer as required by law.

"It is worth noting that Gentile has repeatedly rushed to file motions for sanctions in this case in an effort to short-circuit this court’s consideration of this case on the merits, each time accusing the SEC and non-party witnesses of purported misconduct without any basis," the SEC added in its January 5 filings.

"Each motion for sanctions was rejected by this court. The instant motion should be met with the same scepticism and result. Gentile’s continued sharp litigation tactics should not be condoned, and his renewed motion should be denied......

"Gentile has taken one moment in time - when Mr Dorsett misstated during his deposition that he “deleted” the e-mails he searched for and segregated with SureTrader’s counsel - and has attempted to convert it into a vehicle to undermine a former employee’s testimony about Gentile and SureTrader’s violations of US securities laws, and to secure an advantage in this litigation by preventing Mr Dorsett from testifying at trial or precluding the use of his deposition testimony at summary judgment."

The case raises important issues surrounding whistleblower protections. Mr Dorsett aided the SEC without the protection of a Supreme Court Order authorising him to hand over confidential and sensitive documents belonging to his former employer, and nor did he appear to take his concerns to the Bahamian regulator, the Securities Commission, which has a legal pathway to co-operate with its US counterpart.

Mr Gentile, whose business was located in Bay Street’s Elizabeth on Bay Plaza, enjoyed a colourful - and sometimes controversial - time in The Bahamas. His broker/dealer was used as “bait” by the Federal Bureau of Investigations (FBI) to allegedly help snare numerous international securities fraudsters, with his Bahamian offices ‘bugged’ to record video and sound.

These activities resulted in several guilty pleas and convictions. Mr Gentile and his company exited the Bahamas at end-2019 when faced with regulatory actions and investigations by the Securities Commission of The Bahamas. However, in so doing, he bought sufficient time to voluntarily wind-up he broker/dealer himself and remove all its assets from The Bahamas.