By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Security staff at the Harbour Bay Shopping Centre last night said they knew nothing of a group now subject to an "extraordinary precautionary warning" from the Securities Commission.

A Tribune Business reporter, visiting the East Bay Street shopping plaza, was also unable to locate a physical office for the Sovereign Friendly Society or any of its alleged affiliates despite its website listing the location as its address. Inquiries with security personnel established they had never heard of the business or its principal, Kendell Lang.

The group, which purports to offer financial services products to entities in the "legal medical marijuana" industry, is now the subject of multiple advisories and investor warnings from regulators in both The Bahamas and US.

A Central Bank of The Bahamas warning on May 4 last year, which said a Sovereign Friendly Society affiliate, Fusion Bank, was not licensed or registered to conduct business from this nation, was followed three days later by a similar advisory issued by a California regulator.

That state's Department of Business Oversight issued a "cease and desist" order against Fusion Bank and Mr Lang on the basis that they were offering banking services to US consumers despite lacking the permits and approvals to engage in such business.

They were ordered to stop holding themselves out as a bank, or take customer deposits, until they cured their breach of California law and regulations. The Order, which has been seen by Tribune Business, alleged that these activities had been going on since at least January 2018, with Fusion Bank's address listed as the Harbour Bay Shopping Plaza.

The group's activities have now come to light following the latest advisory from the Securities Commission of The Bahamas, which was issued on July 23, 2019. The regulator warned that Fusion Bank, Sovereign Friendly Society and other group entities were violating Bahamian law because they were conducting financial services business despite not being registered with it.

Identifying Fusion Friendly Society, Canna Friendly Society and Fusion Financial as other aliases used by the group, the Securities Commission alleged: "Kendell R. Lang and Derek Scallet are offering to the public financial services, investment funds and investment services that are registrable activities within this jurisdiction.

"The web pages indicate that these organisations are operating in or from the Harbour Bay Shopping Plaza, Nassau, Bahamas. One of the services offered by this organisation appears to target individuals and/or companies involved, or interested in becoming involved, in the cannabis (marijuana) industry."

Mr Lang has not responded for two days to Tribune Business inquiries and messages seeking comment. The contact number listed on Sovereign Friendly Society is a toll free area code, used in the US and Canada, and not a Bahamian number. Once called, this newspaper was directed to a voice mail box for Mr Lang.

The Sovereign Friendly Society's website describes it as a "a private, protected Friendly Society located in The Bahamas for the sole purpose of serving the financial needs of our member community".

That "member community" is described as the licensed, regulated medical marijuana community. The Sovereign Friendly Society's website purports to offer a variety of banking, insurance and investment products to this market, including a version of The Bahamas' innovative SMART fund product.

"A Friendly Society is fully licensed by the Bahamas government to lawfully and legally engage in the above-described activities," the website said, alleging that such entities did not have to report to the US tax authorities under the Foreign Account Tax Compliance Act (FATCA).

However, the Securities Commission said checks with the Registrar General's Department has established that while an entity called Sovereign Friendly Society was registered with it, there was no link to Mr Lang or any of the other Fusion-related entities.

"There is no established link between the mentioned registered organisation and the subject of this Notice," the Securities Commission said. "In addition, and for further clarity, based on information received by the Commission none of the subject entities are registered and or otherwise incorporated with the Registrar General's Department.

"The Commission further advises that anyone desirous of conducting securities or financial services business with these organisations, their agents or consultants should be cognisant that they are doing so with entities and/or individuals that are not registered with the Commission to operate within or from The Bahamas.

"Therefore, the Commission urges the public to exercise extraordinary precautionary measures before engaging in any business activities with any of the subject entities."

Even though Sovereign Friendly Society, Fusion Bank and their affiliates appear to have no physical presence at the Harbour Bay Shopping Centre, and possibly not even in the jurisdiction, the episode again highlights how vigilant The Bahamas needs to be when protecting its international financial services reputation.

It also shows that this nation will have to take careful, measured steps in developing a legalised medical marijuana industry given the likelihood that such a development will attract some fringe, marginal operators eager to exploit an unfamiliar landscape among all the legitimate, bond fide firms.