By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian broker/dealer yesterday said it was caught in "a perfect storm" after becoming embroiled in a scheme that has allegedly cost thousands of small investors a collective $4m-$5m.

Anthony Stubbs, IX Capital Group's chief executive, told Tribune Business the company was blameless for the losses because it only acted in an "execution" capacity for the UK-based firm, GS3 Trades, that introduced the investors to its Infinox trading platform.

He explained that the broker/dealer was only following orders from GS3 Trades over how client monies were managed, and had been "completely transparent" over what had happened - even going so far as alerting the Securities Commission of The Bahamas to the problems when they were discovered.

Christina Rolle, the Securities Commission's executive director, yesterday told Tribune Business that the regulator was "looking into" the GS3 Trades affair but declined to go as far as saying it had launched a formal investigation.

"I can confirm to you that we recently became aware of the issues and we're looking into it," she said of a case that has received extensive coverage in UK newspapers such as the Financial Times and the Daily Mail. The episode again threatens potential damage to the reputation and name of The Bahamas' and its financial services industry at a time when it can ill-afford this.

GS3 Trades and its principal, so-called "rich kid of Instagram" Gurvan Singh, are now being investigated by the City of London Police's National Fraud Intelligence Bureau following multiple complaints from investors whose holdings were virtually wiped out over the Christmas period.

Mr Singh, who UK regulators have confirmed was operating illegally as an unauthorised broker, is said to have duped as many as 1,250 investors to part with their family's money, wages and student loans through promising returns as high as $300 per day from foreign exchange trading.

A medical student, Mr Singh allegedly attracted persons to his scheme by showing off his purported lavish lifestyle of high-end luxury goods and vehicles, including a gold-wrapped Maserati, and boasts that he was personally earning £110,000 per month from his own trading activities.

The investor monies received by GS3 Trades were sent to The Bahamas to be placed by IX Capital Group via its Infinox trading platform, However, after initially doing well, the value of investor accounts crashed in the run-up to Christmas leaving many with zero to minimal balances.

Mr Stubbs told Tribune Business that IX Capital Group, formerly known as Infinox Capital Bahamas, was conducting its own investigation into what had gone wrong. He directed the blame towards GS3 Trades, which he explained had been responsible for directing the trading strategy and telling the Bahamian broker/dealer what to do.

"We are an execution-only broker," he said. "Infinox is the trading platform we trade under. GS3 is the introducing broker who introduced all the clients to the platform. We were just executing on their behalf. We only execute the trades.

"Apparently the trades had been operating at a loss prior to Christmas, and it all went belly up on Christmas Day. Everything was going well and then they started to lose money. They were betting on gold, and gold went south, and then it crashed."

Mr Stubbs said the timing of the crash, right at the Christmas season peak, made it very difficult to react or intervene in time to protect investors and minimise their losses. "We're still actually investigating what happened," he told Tribune Business. "Clients were probably misled by GS3.

"Once we got wind of what took place we started to get the facts together, and produced a fact sheet on what had happened. We have put a communication in to the Securities Commission appraising them of what took place over the holiday week and let them know the facts.

"We were completely transparent. We took the initiative to let them know what had gone on and of any event that can have an substantive impact. We provided a communication to them last week along with all of the fact sheets and all of the agreements. We haven't received any communication back from them at all."

Mr Stubbs, who is also president of the Bahamas Investments and Securities Business Association, added that IX Capital Group had also made itself available to answer the concerns and queries of GS3 clients by providing three different levels of response.

Besides checking their accounts, the Bahamian broker/dealer, which is based at 109 Church Street in Sandyport's Marina Village, also gave them the "fact sheet" on what had happened. In addition, all complaints were sent to the company's compliance e-mail where they were logged, and further information was provided on what took place.

"We were in a perfect storm, right in the middle of it," Mr Stubbs told Tribune Business. He added that all IX Capital's introducing brokers, such as GS3 Trades, have to sign an agreement with it and "abide by certain rules", with the Bahamian entity receiving a commission for executing trades.

"All the clients were apprised of the risk, had access to their account balances and were able to withdraw at any time," he added. Clients also signed a "limited power of attorney" with IX Capital Group.

However, GS3 clients cited in UK newspaper reports are alleging that they were misled into thinking their funds would be managed in the UK and remain within the ambit of that country's regulator, the Financial Conduct Authority (FCA).

They believed the monies would be managed by a UK-based broker that shares the Infinox name, instead of being transferred to The Bahamas. The investors claim that they failed to notice "The Bahamas" name in the small print of what they signed, and were not alerted to the potential risks.

Mr Singh, too, has sought to pin the blame on IX Capital Group and Infinox Bahamas by arguing that they "carried out the trading on the client's behalf" - an explanation totally different to that given by Mr Stubbs.

Jay Mawji, managing director of Infinox Capital Ltd, was quoted by the Daily Mail as saying his UK firm has a "brand relationship'" with Infinox in the Bahamas but they are completely separate companies.

He said: 'I don't know this person [Gurvan Singh] at all, he is not a client of ours. Infinox Bahamas is allowed to carry our brand name but it's a separate legal entity and it's not the same company. It has nothing to do with our FCA-registered business."

However, the links between the two Infinox entities in the UK and The Bahamas appear stronger than Mr Mawji wants to let on. Research by Tribune Business found Infinox Bahamas' "about us" website page carrying a photo of Robert Berkeley, the UK firm's chief executive, who was quoted as saying: "Expanding Infinox into The Bahamas allows us to reach a new audience of active traders that's looking for a reliable and credible solution outside of the FCA."

This newspaper also found a web page for another broker, Gemini Cap, which lists IX Capital Group's Mr Stubbs as its commercial director. And the broker's head of operations, Alex Praill, is also a senior executive with Infinox UK working alongside Mr Berkeley.