Gibraltar-based STM Group (STM) has advised the London Stock Exchange, where it is listed, that it intends to appeal to the Gibraltar Supreme Court to stay the appointment of inspectors by the regulator to oversee the company’s alleged failures in compliance and governance, allegations that STM says are entirely “without merit”.
The move comes following this week’s announcement that chief executive Alan Kentish, pictured left, had been released without charge following his arrest, along with a second employee, pertaining to a money-laundering investigation into an STM client.
As reported, Royal Gibraltar Police confirmed two weeks ago to International Investment that “two employees of the financial group were arrested by officers of the Money Laundering and Investigation Unit (MLIU) on Thursday 19 October 2017 on suspicion of Failure to Disclose”.
Again as reported, shares were suspended in STM Group on Monday of this week, while at the same time it was announced that the company had acquired Malta-based Harbour Pensions. However, trading of STM’s shares was reinstated at midday on Tuesday, though the pension provider saw its shares plunge following the recent adverse publicity.
In a statement on Tuesday of this week, STM said that it would challenge the Gibraltar Financial Services Commission (GFSC) decision to appoint inspectors to oversee the company under Section 8(1) of the Financial Services (Information Gathering and Co-Operation) Act 2013 relating to STM subsidiaries.
It said that the GFSC had carried out a “number of site visits to the premises of the subsidiaries” in September and/or October 2016, providing initial feedback in April of this year, with final feedback provided in June.
“In addition,” the company said, “in March 2017, the GFSC conducted a one-day site visit specifically to review the centralised compliance function in Gibraltar.”
As a result of these site visits, it went on, the GFSC said that it had “some concerns” relating to aspects of compliance, governance and controls, and the provision of professional and trustee services.
Seeking resolution through dialogue as well as the courts
In its updated statement released today, STM said that the regulator had agreed a “voluntary stay” in appointing inspectors until the appeal against those appointments by STM could be heard by the Court.
That appeal has now been set for hearing on 22 January 2018.
STM said that its subsidiaries, as advised by their lawyers, “believe that there are strong grounds for the Appeal”.
It held out the possibility of moving forward through cooperation with the regulator, saying that its subsidiaries “are hoping to establish a collaborative way forward through dialogue with the GFSC”.
For its part, the GFSC said that any decision to appeal decisions by the regulator was the company in question’s “prerogative and a decision for them”.
However, a spokeswoman for the regulator appeared to welcome STM’s hint at possible resolution through dialogue, saying that the GFSC’s “preference is always to work together with any company to find a solution for the benefit of shareholders, staff and consumers”.