Miami link revealed, as Jersey regulator works with Guernsey in Providence case

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As Jersey’s Financial Services Commission revealed yesterday that it has been “working closely” with Guernsey’s regulator on an investigation into a Guernsey-based Brazilian debt fund that went into administration last week, it has emerged that the Guernsey-based fund manager was in fact an arm of a Miami-based company, known as Providence Financial Investments, which filed for  bankruptcy on 28 July.

The Chapter 7 bankruptcy filing by Providence Financial Investments and Providence Fixed Income Fund LLC in the United States Bankruptcy Court for the Southern District of Florida, “following actions by the US Securities and Exchange Commission to shut it down”, according to an article in the Miami Herald  newspaper on Wednesday.

It noted that Providence Financial Investments had taken “the life savings of hundreds of US investors” in an investment scheme involving Brazilian “factoring”. A US Chapter 7 bankruptcy provides for the liquidation of the company in question and for the distribution of the proceeds to its creditors.

An earlier Miami Herald story, on 3 August, noted that “hundreds of investors” stood to lose “millions”, and that an undated informational packet as showing that the company had  “24 offices around the world, including Shanghai, Dubai, Istanbul, London and Sao Paulo”.

It made reference to a  US Securities & Exchange Commission action  taken against the two entities in Minneapolis, “one of the places Providence had an office”, in June.

The Miami Herald article noted the fact that the Guernsey Financial Services Commission,  as reported here Wednesday, had moved to put Guernsey-based and regulated Providence Investment Funds PCC and its manager, Providence Investment Management International Ltd, into administration.

“Guernsey, a resort area and financial centre, is one of the British Channel Islands where Providence operations were based, and where it was actively soliciting investors until late July,” the Miami Herald article went on.

It told its readers that the Guernsey court had acted on the “urgent” request of the Guernsey Financial Services Commission, in the wake of the Guernsey-based fund’s suspension and the resignations of Providence’s directors there on 4 and 5 August, which had happened “less than a week after the company’s US Miami-based unit declared bankruptcy”.

Providence’s Miami-based CEO Antonio Buzaneli had announced the opening of the company’s “European headquarters” in Guernsey in 2014, the Miami Herald article said.

Referring to the mention of 24 Providence Financial offices “from Shanghai to Sao Paulo”, the newspaper suggested that the news that a Guernsey Providence Financial office was to close down, it concluded by saying that it might “not be the last” such report.

According to a website set up for Providence trustees, a meeting of Providence creditors has been set for 29 August at the Claude Pepper Federal Building in Miami.

Jersey action

In a statement posted on the JFSC’s website on Thursday, meanwhile, JFSC director general John Harris  said the Jersey regulator’s attention had been drawn to a regulated Jersey financial adviser, Lumiere Wealth, as it had been investigating “the sale of the Providence Investment Funds PCC to Jersey residents”.

Lumiere, Harris said,  had been “part of the Providence Group” of Guernsey, and had sold Providence investments to Jersey residents. He didn’t say how many residents, or how much money they had invested in the company.

“The JFSC has been working closely with the GFSC on this case,” Harris said.

“As this is an ongoing investigation, no further statements will nor can be made at this stage.”

According to the SEC filing, Providence Financial and the Providence Fixed Income Fund raised more than US$64m from more than 400 investors throughout the US and Puerto Rico, “through the unregistered sale of promissory notes that pay annual returns generally ranging from 12% to 13%”.