Investment fund assets grow to $131.5 billion

The value of assets under administration by investment fund administrators in The Bahamas grew to $131.5 billion in 2020, the Securities Commission of The Bahamas (SCB) stated in its recently released annual report for 2020.

Between February 26 and May 22 this year, the SCB conducted a focused data collection exercise of investment funds administrators licensed in The Bahamas.

“The exercise was conducted to allow for the compilation and analysis of current information about the size of the investment funds industry and to better understand any developing trends. The preliminary findings of the survey are provided below. As at December 31, 2020, aggregate assets under administration (AUAs) by licensed investment fund administrators stood at US $131.496 billion,” the commission revealed.

This growth occurred even though last year 105 investment funds entered into liquidation or indicated the intention to surrender their licenses. Only 67 of those funds completed the process, which resulted in 712 licensed investment funds at the end of 2020.

“In 2020, the commission approved and licensed 69 investment funds. The commission licensed six of these and 63 were licensed by unrestricted investment fund administrators and filed with the commission,” the SCB stated.

As for securities, the year ended with 163 registered firms after nine new firms were approved. Five firms upgraded their license to conduct registrable securities business and 10 firms surrendered their license, the SCB noted.

“In 2020, 179 individuals were approved under the Securities Industry Act (SIA), while 195 individuals surrendered their license. As at December 31, 2020, there were 1,079 individuals registered under the SIA,” the commission noted in its report.

The SCB also opened two and settled another two litigation matters.

“Of the two new litigation matters, one matter concerned the supervisory winding up of Mediatrix Capital Fund Ltd., a fund that failed to meet its statutory obligations and whose principals were charged with fraud by a foreign regulator. The commission exercised its statutory authority, placing it in a court-supervised liquidation in April 2020. The court appointed PwC as the joint official liquidators (JOLs) to the fund. The liquidation remains ongoing. The second new matter concerned the commission filing a petition in March 2020 seeking the court supervised winding up of Swiss America Securities Ltd. (SASL), also known as Mintbroker International Ltd. The commission’s action emanated from the entity ceasing its business and surrendering its registration without the commission’s approval and its failure to remediate several breaches. Consequently, in an effort to secure the company’s assets, property and documents, the commission immediately sought an order for court-appointed provisional liquidators for SASL. The commission now awaits the hearing of its petition,” the report noted.

“Concerning the closed matters, on November 2, the Supreme Court gave an oral ruling concerning a judicial review application filed by SASL in September 2019 challenging the commission’s authority to suspend SASL’s registration for five days and investigate certain regulatory issues. In its oral ruling, the court confirmed that the commission had acted within its statutory remit and dismissed the judicial review application. Hence, the commission was able to close this matter involving SASL. The second closed matter involved Seton Securities International Ltd., which commenced during September 2018, when the commission discovered that Seton had been convicted and fined in Alberta, Canada for unregistered securities activities. The commission commenced a court-supervised winding up but subsequently agreed to a commission-supervised, voluntary winding up using a liquidator appointed by the commission – the first liquidation of this kind for SCB. Thereafter, the commission received the court’s leave to withdraw its petition in November 2018 and the winding up continued to the end of 2019, with the liquidator’s final report being issued around February 2020.”

There are still 12 enforcement matters that remain open with the SCB. The commission said nine of those matters involve litigation and three are administrative matters which primarily concern non-compliance with filing obligations and client files/records under the Securities Industry Act and Regulations.

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