Appeals court rejects challenge against CIMA

The Court of Appeal has upheld an order obtained by the Cayman Islands Monetary Authority for an international stock trading platform to produce internal records for an ongoing investigation in Australia – records the entity claims to not have.

The Australian Securities and Investments Commission has been trying to obtain information from the stock trading platform – a group of companies known as the Vantage Group – for an ongoing investigation into alleged market manipulation it has been conducting since March 2015, according to information from CIMA and court documents.

Cayman authorities became involved in the matter earlier this year when the Australian regulator requested information from CIMA about Select Vantage, a Vantage Group company that is domiciled here.

In March, CIMA obtained a Grand Court order for Select Vantage to turn over the telephone numbers, addresses, and trader identification numbers of each Vantage Group trader involved in the investigation in Australia.

Select Vantage, however, has argued that Select is only a subsidiary company that holds stock trading capital, and therefore does not hold information about traders. The company that actually employs traders is domiciled in Anguilla and operates in Costa Rica, according to Select Vantage.

At the Court of Appeal hearing in October, Select also argued that the company should have access to evidence that was presented during the ex parte hearing – the Grand Court granted CIMA the order in March without Select Vantage having the chance to argue against it. Not having access to that material is “unfair and contrary to the rules of natural justice,” the company argued.

“[The Grand Court decision] seems to be emboldened by what was presented at the ex parte hearing … He had something in mind that we weren’t allowed to learn,” stated Select Vantage’s attorney, Tom Lowe, at the October hearing.

For CIMA’s part, attorney Neil Timms argued at the hearing that the regulator made its application ex parte and sought to keep the evidence from Select Vantage because “we weren’t confident that we could keep the material confidential.”

Mr. Timms added that none of the evidence that Grand Court Justice Raj Parker reviewed would have tainted his judgment on the technical issue of whether Select Vantage could comply with the court order.

Before the hearing ended, Mr. Lowe disputed any suggestion that Select Vantage records might “dissipate” if the company had more information about why the regulators were seeking the company’s records.

The Cayman Islands Court of Appeal sided with CIMA, rejecting Select Vantage’s arguments that it should have access to all the material the Grand Court relied on in its decision to order the company to produce internal records.

Justice of Appeal Richard Field stated that there is a strong public interest in keeping information shared between Cayman and overseas regulators confidential, according to CIMA’s press release.

CIMA Managing Director Cindy Scotland touted the decision as one that will further buttress Cayman’s reputation as a well-regulated jurisdiction.

“The outcome of this case is very significant for CIMA and the Cayman Islands, as it is another testament of CIMA’s continued commitment to promote good governance, engage with various international regulatory bodies, while maintaining a sound financial system within and outside of the Cayman Islands,” she stated.

Select Vantage President Daniel Schlaepfer, for his part, stated, “We are naturally very disappointed by the ruling and [Select Vantage] intends to petition the Privy Council for permission to appeal the CICA decision.”

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