The alternative investment schemes, Olint and Cash Plus, which pay 10 per cent per month have seemingly won the hearts and minds of many investors, but Brian Wynter, executive director of the Financial Services Commission (FSC), continues to insist that these firms should become regulated.

"As long as Olint remains unlicensed, it is not a question of 'if', but 'when' it will fail," Wynter states. He continues, "If you are a legitimate company, you are not likely to fail. A licence forces an audit, and no licence means that you don't have to have your books examined if you don't feel like it. How does David Smith, principal of Olint, now know if the people close to him are not robbing him blind?"

The crux of the matter between Olint, in particular, and the FSC is twofold but ultimately centres around the Securities Act.

Fit and proper
First, the Act requires a background check of the people who take your money. "Fundamentally, the Securities Act says that you must be licensed if you are taking money," Wynter explained. "You must be fit and proper, that is you must have nothing in your personal background that is dangerous. Is anyone who works for Olint dangerous? How would I know?" Wynter questions.
He continued, "You have to be fingerprinted by the police. I am not suggesting that Smith and his associates are not fit and proper. I just don't know if they are. We don't have that information."

Financial transparency
The next issue is one of financial transparency. Wynter doesn't know what is going on in the company, and he believes that neither do the investors who have entrusted their money to Olint. "What is a mystery to me is that people see nothing wrong with no transparency."

Wynter is determined to crack that mystery. "Has anyone seen the books? They could not tell you if it is a Ponzi scheme, and I am not saying it is. Imagine if a bank worked like that. The balance sheet and income statement matters.
Also, what is the investment strategy of Olint? They should be giving information that is materially relevant to the investor. Olint could face criminal sanctions if what they are doing is contrary to the law. And what is the capital base of Olint? If you are going to take money, the institution must be adequately capitalised. Every licensed company in Jamaica has professional indemnity insurance that covers fraud that takes customers' money.

"Plus, the Securities Act speaks to the issuance of investment contracts and certificates of participation as actions of a securities dealer. Olint issued such things, but changed the name to membership contract at one point. It is a dangerous world. The people you trust are the ones that can rip you off. But I am not saying that Olint is ripping anyone off."

Returns of 10 per cent per month
Based on media reports, the investing public seems more concerned about the returns of 10 per cent per month than the lack of transparency. "I am not against people making money. If David Smith has found the goose that laid the golden egg - Hallelujah. Bees will always fly to honey," Wynter states.

Yet Wynter questions whether there is really any money being made. "In 2006, hedge funds made an annual return of 12 per cent in the United Kingdom and that return is nearly twice the return earned in the United States. And I am told that in a great year, a hedge fund makes 30 per cent. I am not saying that Olint is making money. We just don't know, and in finance it is dangerous to not know."

And to the fact that there have been no losses by investors in these alternative schemes, Wynter suggests, "If you always make money then somebody must always lose money. There must be a bigger chump out there."

In fact, Wynter offers another interpretation of how Olint is making money. "Is Olint a conduit for money laundering? We don't know. And that brings us back to why Olint must be licensed."

Wynter notes, "Olint or their affiliated firm, LewFam, have never applied to the FSC. People come up to me all the time and tell me that they know that Olint has applied and we did not give them a licence. However, that is not the case and I know where the rumour is coming from." Wynter suggests a few reasons why Olint chose not to become licensed.

"Why isn't Smith licensed in Jamaica? The likely reasons are as follows:

1. Olint is not doing foreign exchange trading only. Perhaps they are engaged in real estate or other risky ventures.

2. Olint is doing foreign exchange trading. Smith
is sensationally successful and soon to be on Time Magazine."

There has been at least one public statement that the FSC has taken a wrong approach with Olint and has driven the company out of Jamaica. To that, Wynter said: "The regulators of Turks & Caicos, where Smith is supposed to be working from, don't care as long as Turks & Caicos citizens are not involved. It is my understanding that only Jamaican citizens are involved, therefore as far as I am concerned, he is not in Turks & Caicos even though he is sitting there.
Smith is still in Jamaica. What I see is that it is a bad sign that Olint doesn't have a physical presence in Jamaica."

Still, the argument comes back to the fact that investors are getting their funds every month. In fact, it has been suggested in casual circles that all you have to do is sit for 10 months with these alternative investment schemes and you will make back your initial investment.

"If the returns are not real, then that fundamental 10 months is somebody's inflow. It is a rob Peter to pay Paul principle," Wynter replies. Additionally, Wynter suggests that the Ministry of Finance may be looking at the Olint investors.

"Also, nobody is paying taxes. Is it possible that people are building up a large tax liability? Does Olint pay taxes?"
And Olint is not the only firm in the regulators' scope. In terms of Cash Plus, Wynter would not give a definitive statement. When asked if Cash Plus is under investigation, Wynter replies, "I didn't say they are under investigation." Then is Cash Plus not under investigation? Wynter states, "I didn't say that either. Cash Plus is another story altogether. Remember those advertisements that they put out a few months ago? Well, that raised a lot of questions, but everything in its time."