All that's left for Gibraltar Global Securities is to sit back and wait. The Bahamas-based investment firm, accused of operating without a licence in Canada and doing business with a convicted fraudster, submitted its final written arguments to the British Columbia Securities Commission (BCSC) shortly before the holidays.
With a ruling expected in the next couple of weeks, Christopher Lunn, the compliance director at Gibraltar, told Guardian Business the decision could have "far reaching implications" on how other Bahamian firms do business. "If the BCSC says we are in violation of the rules, I guess they could continue to cherry pick who they want to go after," he said. "But it also sends a message in terms of other firms continuing to do business in Canada and elsewhere. You might have to move out. You might be next on the list."
The case against Gibraltar stretches back to August of last year, when the BCSC froze $2.2 million of the firm's assets. It claimed Gibraltar was uncooperative when it asked for information on its Canadian clients, prompting the Securities Commission of The Bahamas to carry out an unannounced inspection of the offices.
According to the BCSC report, the dollar value of trading by Gibraltar involving accounts in British Columbia between July 2010 and June 2011 totaled $14,238,824.05. As of October of last year, a grand jury in the U.S. announced eight more offshore banks are being criminally investigated, although the grand jury's report failed to provide the countries of origin.
Lunn said Gibraltar continues to fight all allegations made against it, arguing that operating through a local, licensed agent afforded them sufficient cause to operate in the jurisdiction.
"We had been doing our business there for quite a while, so we continue to not understand the allegations. There are plenty of other firms doing what we were doing. That's the norm," he added.
Pointing out that The Bahamas doesn't allow a physical operation in another jurisdiction unless specific approvals are in place, he felt operating accounts through foreign entities was a common and accepted practice. He added that Gibraltar never solicited business in Canada. In November, lawyers from Gibraltar presented oral arguments and cross-examined witnesses from the BCSC. And before the holidays, written submissions were submitted to the disciplinary committee.
The worse case scenario, according to Lunn, is the BCSC could impose a fine and bar Gibraltar from further activities in the justification. The best case scenario is Gibraltar is found to be in compliance, and life goes on as normal. While the firm is hopeful and confident in the latter, it is also prepared for the former, noting that it would "send a very strong message to others".
"We are not operating in a vacuum. We operate like everyone else. And what we are doing is consistent with other firms," he said.
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