FSC moves against Cash Plus

FSC moves against Cash Plus Regulator orders alternative investment scheme to cease activities

PAUL HENRY, Observer staff reporter editorial@jamaicaobserver.com Saturday, December 29, 2007

Alternative investment scheme Cash Plus Limited was yesterday ordered by the Financial Services Commission (FSC) to immediately cease and desist its securities trading activities until it obtained the required licence.

The orders also requires that Cash Plus immediately stop soliciting and accepting loans.

The financial regulatory body made its move on Cash Plus following lengthy investigations which it said revealed that the unlicensed entity was trading in securities contrary to the Securities Act. Cash Plus chief Carlos Hill and Khalil Harris, the FSC said, have been engaged in securities activities that breached sections 7 and 10 of the Securities Act.

High-risk investors have no legal backing

High-risk investors have no legal backing
published: Sunday | December 2, 2007

Gareth Manning, Sunday Gleaner Reporter

Eaton

Investors in high-risk financial schemes stand to lose big, should the schemes crash, because participants will have no legal footing on which to recover their investments, according to attorney-at-law and University of the West Indies lecturer, Shirley-Ann Eaton.

In an interview with The Sunday Gleaner, Eaton, who is a former secretary of the Jamaica Bankers’ Association, says while money lent to investment schemes can normally be retrieved in a court of law, this is not so in the case of the current high-yielding schemes. This, she points out, is because the law does not cover schemes offering excessive interest on money loaned.

Under Section Three of the the Money Lending Act and Money Lending (Prescribed Rates of Interest) Order of 2007, there is only provision for the recovery of loans that carry an interest rate below 40 per cent per annum in a court of law. This is far below the super interest rates many of the current investment schemes have been offering to their lenders – between 118 per cent and 120 per cent per year on principal amounts that start from a minimum of $100,000.

Jamaica caught in a crisis of Utopia

Jamaica caught in a crisis of Utopia

Henley Morgan Thursday, December 20, 2007

If there is one thing that the rapid ascent of Olint, Lewfam and other such foreign exchange investment clubs tells us, it is the degree to which the middle class has been trampled by the economic policies of the last 25 years. I have long suspected it to be so, but each story of a life transformed or restored through involvement in one of these schemes confirms how unviable and financially depressed this group has been allowed to become.

Cash Plus, which is a different and more controversial type of alternative investment scheme than those involved purely in foreign exchange trading, gives further expression to the desperation. It attracts by the tens of thousands those the system has made into a permanent socio-economic underclass.

Have the alterenative investment schemes had an impact on this year’s Christmas spend?

Have the alterenative investment schemes had an impact on this year’s Christmas spend?

Friday, December 21, 2007

Across the spectrum of professions from retailers to university lecturers, the consensus is that the members of alternative investment schemes are waiting to exhale but views are mixed as to whether the current impasse between Cash Plus and the banks has resulted in a slowdown of spending for Christmas.

Michael Ammar Jr
Michael Ammar, Jr, proprietor of the Ammar’s and Amart department stores and past president of the Jamaica Chamber of Commerce, noted that while there may be a connection between Cash Plus’s current issues with its lenders and bankers, he believes that people have forgotten what the country has had to face since the summer.

“Business for us, at best, is lukewarm, especially in the downtown area. In our uptown stores, business is not bad, but it is not great. Now, I couldn’t comment about Cash Plus because I don’t know enough about the situation.” Ammar asserts that Christmas sales are slow because of events beginning in June.

“First, there was an eight -week political campaign. Then there was Hurricane Dean. Then we had another election campaign, followed by seven weeks of rain. And then a Parish Council campaign. So slow Christmas sales are definitely a hangover from that.”

Hayden Singh
Hayden Singh, chief executive officer of Courts Furniture, store says that his sales are slightly better than last Christmas, but is aware that many of his customers have been impacted by the challenges facing the alternative investment schemes.

“There is some connection between Cash Plus and our customers, but when we look at our credit portfolio, we haven’t seen any deterioration of the accounts.” Singh, like Ammar, attributes the perceived slowdown in Christmas sales to the crime issue more so than the alternative investment schemes.

“When people are afraid to come out and shop, it is because we haven’t handled the crime problem. And if we don’t improve crime, how will we attract more foreign direct investment (FDI)? We need the FDI to improve the economy.”

A banker
A banker, speaking anonymously, acknowledged that the Cash Plus situation has impacted clients. “This Cash Plus thing has dealt a blow. A couple of retailers I’ve spoken to have said that the revenue from Christmas shopping so far pales in comparison to last year and they are very concerned. I know a lot of people who have been hit hard, as they literally relied on Cash Plus to supplement a meagre income.”

And it is the fact that many people have relied on Cash Plus to supplement their income that has made its issues with the banks and possible impact on Christmas sales so topical.

A lecturer
University of the West Indies lecturer, also speaking anonymously, shared his views on the matter. “Cash Plus has been embraced by all levels of Jamaican society. Why? Some call it greed, but I see it as facilitating the Jamaican dream of economic empowerment. Poor people have said that ‘me a go down with Cash Plus’ because they cannot afford to do otherwise.

If they were to pull out, what in the traditional banking sector would provide a better option? For the educated middle class, they have been impoverished by economic conditions that they cannot control. Here at UWI, you will have lecturers taking home $150,000 a month. What is that? By the time you get to the supermarket and pay two bills, the money is finished. And for those who we consider rich in Jamaica, what they have are things, but cash flow is another matter. So the man with the big house and big SUV is using the funds from Cash Plus to pay his light bill and gas.”

The lecturer is aware that many persons from all quarters have warned against putting money in the many alternative investments schemes. “We all agree with the risks that the bankers say, but I tell you the alternative investment schemes are getting a lot more support than the bankers.

” I was in a bank recently and I got to understand that over 70 per cent of the staff had money in Cash Plus. It reminded me of when Digicel just came to Jamaica. When I worked at Cable & Wireless, all the staff there had Digicel phones but management dismissed Digicel as no threat. “

Days before Christmas will be crucial

Retailers Ammar and Singh agree that the last five days before Christmas will be crucial. Ammar stated, “Things have been improving today (Thursday), but we still have 5 days left and perhaps things will pick up.” And as to Cash Plus, Ammar stated, “Even if they do have 50,000 members, what about the 2.95 million people in Jamaica that are not in Cash Plus? It is their economic situation that will determine how Christmas sales pan out this year.”