Cayman police investigate unregistered brokerage
By Rick Catlin
GEORGE TOWN, Cayman Islands, Oct 20 (Reuters) - Police in the Cayman Islands are investigating a stock brokerage that closed abruptly earlier this month, amid calls for increased supervision of brokers in the Caribbean offshore banking center.
Detective Chief Inspector Mike Needham of the Royal Cayman Islands Police fraud squad, confirmed on Tuesday that police were investigating the Cayman Financial Brokerage House.
Police seized company records and computers but have made no arrests and would not reveal the focus of the probe.
The company was opened in September 1998 by Greek businessman Edoardos Stamatioy. It closed abruptly on October 1. Immigration records show Stamatioy left the Cayman Islands in June 1998 for an undisclosed destination and has not returned.
The Cayman Compass newspaper reported that the brokerage's customers may have lost up to US$30 million, although police declined to put a figure on potential losses.
The Cayman Islands, a British territory in the Caribbean northwest of Jamaica, are the world's fifth-largest banking center with more than $500 billion of assets under management at its institutions.
The Caymans have no taxes, an advantage that draws investors from around the globe. Like other offshore banking centers, the Caymans have come under increasing global pressure to combat money laundering and tax fraud.
While its banks and trust companies are heavily regulated, brokerage firms are not required to be licensed or regulated by the Cayman Islands Stock Exchange.
But CFBH is the second unregulated brokerage to close its doors in the past 18 months. Harris McLean Financial went into bankruptcy in April 1998 after one partner in the company was charged in Canada with insider trading. The firm collapsed, owing clients US$10 million.
Seven brokerages are licensed and regulated by the exchange. The closing of CFBH has renewed calls by those firms for mandatory licensing of all brokerages in the Caymans.
"The unregulated ones are just giving our industry and our islands a bad name around the world," a member of one of the regulated firms said.
21:58 10-20-99 |
