09202019 BUSINESS

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FRIDAY, SEPTEMBER 20, 2019

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Accounting firm’s work ‘misused’ to hide fraud

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

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BAHAMIAN accounting firm’s work was “misrepresented” to conceal an alleged fraud that has placed $125m of investor monies “at risk”, US federal regulators have alleged.

The Securities & Exchange Commission (SEC), in legal documents obtained by Tribune Business, said the principals behind Mediatrix Capital falsely branded Grant Thornton (Bahamas) “accuracy checks” on its trading performance as an audit that was conducted to international standards.

This, the US regulator claims, was designed to reassure investors Mediatrix was

• $125m scheme portrayed ‘accuracy checks’ as audit • Falsehood unknown to Grant Thornton (Bahamas) • Firm’s principal ‘not concerned about exposure’ • Says it was fired for ‘qualifying’ fund audit

delivering promised returns of up to 150 percent and disguise the “misappropriation” of $41m to finance its principals’ lavish lifestyles and personal expenses.

Paul “Andy” Gomez, Grant Thornton (Bahamas) managing partner, yesterday described the SEC’s assessment of its role as “accurate” and said he had no fear it would cause any repercussions for the accounting firm.

Revealing that Grant Thornton (Bahamas) had co-operated with both the SEC and local capital markets regulator, the Securities Commission of The

Bahamas, in the Mediatrix Capital investigation, Mr Gomez said the accounting firm was even fired as the auditor for one of the group’s investment funds after it gave a “qualified” opinion on the financials.

The Bahamas’ former ambassador to China added that Grant Thornton (Bahamas) reports “clearly indicated it was not an independent audit” that was performed by the firm, and its work was not to be disclosed outside Mediatrix’s management - something that the latter appears to have breached.

There is nothing to suggest Mr Gomez, Grant Thornton (Bahamas) or any of its executives or staff have done anything wrong in relation to the Mediatrix Capital affair, which has multiple Bahamian connections (see other article on Page 1B). He said the accounting firm’s task had been to “clarify” trading data supplied by Mediatrix Capital’s brokers, Blue Isle Markets Inc and Blue Isle Markets Ltd. The former, described

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Strong Bahamas ties to $125m fraud play

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net TWO purported Nassau residents are alleged to be principals in a $125m fraud that involves high-end Paradise Island real estate and a $3.5m Bahamian investment fund.

Michael Stewart, 56, and Bryant Sewall, 52, have been accused by the Securities & Exchange Commission (SEC) of playing key roles in a “Ponzi-like” scheme that has “misappropriated” between $35m to $41m of investor monies to finance their personal expenses and lavish lifestyles.

The two, both US citizens, were said by the SEC to “claim to reside in Nassau, The Bahamas”,

where many of the corporate entities involved in the Mediatrix Capital structure are domiciled.

It is also where two of the seven properties allegedly purchased with a combined $14m of diverted investor monies are said to be located. Jeffrey Felder, the SECs senior attorney, alleged that the Mediatrix Capital principals have invested more than $3m in acquiring two high-end Paradise Island properties.

The first purchase, 15 Mira Mar Villas, was set in motion when Stewart wired $119,250 to an unnamed Bahamian law firm on November 16, 2017, which was acting as an escrow agent. It was described as the first of six instalments, and five matching payments

Dorian may push Lucayan sale to ‘just before xmas’

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Grand Lucayan’s chairman yesterday revealed that Hurricane Dorian might delay the resort’s sale until “just before Christmas”, but pledged: “We’ll get it done.”

Michael Scott told Tribune Business that while the category five storm’s impact may push back the targeted early October closing, both Royal Caribbean Cruise Lines and its ITM Group partner had “resolved to press forward more than ever”.

“There may be a slight delay,” he disclosed of

MICHAEL SCOTT progress on the Grand Lucayan’s $65m sale. “We were hoping to get it done by early October, but it may now be just before Christmas. We’ll get it done. I promise you that.

“Speaking to Royal

SEE PAGE 6

‘Dinosaur practices’ slammed by small business advocate

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A SMALL business advocate yesterday branded the continued reliance on guaranteed bank loans to finance the sector as “dinosaur practices”, as he urged entrepreneurs: “Think globally.”

Mark A Turnquest, principal of Mark A Turnquest Consulting, told Tribune Business that Bahamian entrepreneurs would be better able to access more innovative financing mechanisms, such as crowdfunding, if they looked beyond the immediate

400,000 strong local market.

Speaking after he addressed the University of The Bahamas’ business school on the need to finally pass the Small and Medium-Sized Business Development Bill into law following a 12-year wait, Mr Turnquest argued that this was vital to providing a legal foundation and structure to the government’s efforts in this area.

While the Small Business Development Centre (SBDC) was doing everything envisaged by the initial Bill, acting as a hub for preparing entrepreneurs’

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were made by February 5, 2018. The “final” $168,158 disbursement was made on March 5, taking the price to almost $900,000.

“I have reviewed multiple documents confirming that Mira Mar Villas No.15 is an address that belongs to Stewart,” Mr Felder alleged. “These documents include information submitted to the New Zealand Companies Office (a subdivision of the Government of New Zealand) on February 28, 2019, by Stewart’s colleague, identifying Mira Mar Villas No.15 as Stewart’s address, and a utility bill from The Bahamas Telecommunications Company for service provided to Stewart at Mira Mar Villas No.15, dated September 28, 2018.”

The SEC alleged that Sewall, too, has taken up residence on Paradise Island - this time at 704 Ocean Place Condominiums - and again using monies obtained from Mediatrix investors. It added that five wire transfers totalling $2.198m were made to acquire the property over a year-long period from January 1, 2018, to January 8, 2019.

The funds purportedly came from accounts with Mediatrix’s brokers, and Mr Felder alleged: “The wire transfers contained notations indicating they were for the purchase of the property, and that the property was being purchased for Sewall.

“All but one of the wire

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Bahamian broker in five-day suspension

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Securities Commission yesterday used its powers to temporarily suspend a controversial Bahamian broker/dealer’s registration for five days until next Tuesday.

The move was confirmed

by SureTrader, the online broker owned by Guy Gentile, via a notice that was posted to the top of its website. It said: “The Securities Commission of The Bahamas has notified the firm that, pursuant to sections 133 (1)(b) and (f), and 133(3) of the Securities Industry Act 2011 (“the Act”), SASL’s continued registration under the Act is suspended for five days ending Tuesday September 24.”

SASL is Swiss America Securities, the parent company for Mr Gentile’s interests, which he has renamed MintBroker International. No explanation for the regulatory action was forthcoming from either the Securities Commission or Mr Gentile, who employs around 60 persons at his Bahamian brokerage houses that are based in the Elizabeth on Bay plaza off East Bay Street.

Christina Rolle, the Securities Commission’s executive director, who was travelling yesterday, declined to comment when reached via e-mail by Tribune Business. “I am not able to assist at this time. It is the policy of the commission not to comment with respect to ongoing investigations,” she said briefly.

Meanwhile Mr Gentile, who frequently comments on the various Securities Commission and US Securities & Exchange Commission (SEC) probes and actions against him, did not return Tribune Business’ phone or e-mail messages

seeking comments.

The five-day suspension means that SureTrader will be unable to conduct securities trading on behalf of its clients or itself until this sanction expires. The Securities Industry Act sections referenced as the rationale for the Securities Commission’s move enable the regulator to take action “in the public interest”.

These allow it to “order a person, a class of persons or all persons to cease trading a security, class of security or all securities” and “impose conditions or restrictions on a registration, or suspend or revoke a registration”. The Securities Commission can implement this for up to 15 days without a hearing “if it considers it necessary and in the public interest to do so”.

While the motivation for the Bahamian regulator’s action remains unclear, one legal source with experience of the capital markets said the action could merely be “an opening salvo” potentially leading to more extended supervisory steps or an effort to provide time for more information to be gathered.

Mr Gentile and Swiss America Securities previously agreed to a $120,000 settlement with the Securities Commission in 2018 after failings were identified failings in their customer due diligence processes and record-keeping procedures.

“During May 2016 the commission conducted an inspection for cause and discovered breaches further outlined in the report,” the settlement agreement said.

“The issues revealed in the report primarily concerned Swiss-America Securities’ operations and the failure to ensure full compliance with the provisions of the Act, including KYC (Know Your Customer) issues,

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PAGE 2, Friday, September 20, 2019

Chamber elects new chairman and Board THE Bahamas Chamber of Commerce and Employers Confederation (BCCEC) has elected Khrystle L. Rutherford- Ferguson as its first female chairman.

The non-profit organisation, which serves as the voice of the business community, announced the appointment as part of electing its board of directors for the 2019-2021 term.

Mrs Rutherford-Ferguson said: “It is indeed an honour to have been elected chairman of the BCCEC, and to be the first female to serve in this capacity. With so many pressing issues facing the business community and, by extension, the country, undoubtedly there is a lot of work to be done.

“Our members elected an impressive calibre of directors, steeped in experience and passion to serve.

Together, I look forward to advocating on behalf of the business community and continuing the legacy that the BCCEC has established.”

While Mrs RutherfordFerguson is the first woman to hold the position of chairman, Tanya Wright was the first female chamber head when she held the president’s post.

Other elected 20192021 board members include: Timothy Ingraham, vice-chairman; Anthony Ferguson, secretary; and Hubert Edwards, treasurer. Davinia Blair-Grant; Debby Deal; Royann Dean; Leslie Fraser; Peter Goudie; Sean Moree; Tara Morley-Nolan; Odetta Morton; Christel SandsFeaste; and Vernice Walkine were all named as directors.

Mrs Rutherford-Ferguson thanked her predecessor and executive committee member, Mike Maura Jr., the 2017-2019 chairman, and all outgoing directors for their years of service.

PM’S ‘RED TAPE’ WORRY ON DORIAN REBUILDING THE prime minister has emphasised to the private sector that “red tape” needs to be removed so that the rebuilding process on Abaco and Grand Bahama proceeds as quickly as possible.

Dr Hubert Minnis was speaking at a meeting with

the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) where the rebuilding of islands affected by Hurricane Dorian was discussed.

Jeffrey Beckles, the chamber’s chief executive, assured the prime minister

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of its commitment to work with the government to rebuild the devastated areas of Abaco and Grand Bahama.

Ken Hutton, the Abaco Chamber of Commerce’s president, informed the Prime Minister that close to 200 Abaco business owners attended a meeting on Wednesday to discuss the rebuilding effort.

He added that all were committed and eager to return to the island to begin the rebuilding process.

Pictured from left: Hubert Edwards, Chamber treasurer; Jeffrey Beckles, Chamber chief executive; Khrystle Rutherford-Ferguson, chamber chairperson; Dr Minnis; Kenneth Hutton, president, Abaco Chamber

of Commerce; Nicole Campbell, permanent secretary, co-chair of the Disaster Relief and Recovery Committee; John Michael Clarke, co-chair of the Disaster Relief and Recovery Committee; and Captain Stephen Russell, director, National Emergency Management Agency (NEMA) PHOTO: Yontalay Bowe

CIBC UNVEILS DORIAN DONATION AND RELIEF CIBC FirstCaribbean International Bank made a $100,000 donation to the Bahamas Red Cross, and unveiled financial concessions, as its contribution to Hurricane Dorian relief efforts.

Colette Delaney, CIBC FirstCaribbean chief executive and chair of the bank’s charitable arm, the FirstCaribbean International ComTrust Foundation, detailed a series of initiatives the bank has undertaken to aid Dorian recovery during the donation to the Bahamas Red Cross.

“We have an unwavering commitment to our staff and clients in the Caribbean, and we’re determined to do all we can to facilitate them as they rebuild their lives, homes and businesses,” Ms Delaney said.

“To this end, we’ve put together a suite of special loans, deferred payments and other concessions aimed at helping our staff, retail and corporate clients, credit

HURRICANE Dorian Relief - CIBC FirstCaribbean has donated $100,000 to the Bahamas Red Cross for Hurricane Dorian relief. The funds were part of a larger contribution of $150,000. From left: Marie Rodland-Allen; Terez Curry; and Colette Delaney.

Photo: Azaleta Ishmael-Newry card holders, and other Bahamians who qualify to receive this special financial assistance.

“We’ve also partnered with the University of the West Indies, Cave Hill

Campus, to offer immediate support to 17 students from the Abaco islands and Grand Bahama whose lives were upended by the storm, but who will still travel to the campus in Barbados to

commence their studies.”

The announcement came as Ms Delaney presented a cheque for $100,000 to aid Hurricane Dorian relief efforts to Bahamas Red Cross president, Terez Curry.

Ms Delaney added that the donation was part of a larger contribution of $150,000 made by CIBC as a whole.

“Your pain and loss here is equally ours because we’re a part of this community, and we remain deeply committed to The Bahamas. Together, we will rebuild and heal.

Rest assured, Bahamas, that we’re with you and we’re with you for the long haul,” she said.

Ms Curry said: “CIBC FirstCaribbean has been a corporate partner with the Red Cross over the years, and has come to our aid with donations for the many hurricanes we’ve had in previous years.

“We’ve all seen the heartbreaking devastation on the islands of Abaco and Grand Bahama, in which we’ve seen lives lost, homes destroyed, and people’s daily lives completely disrupted. However, we are a resilient people, and those affected islands will be back up and running in short time.”

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MINISTER TARGETS ‘NORMALCY’ FOR FARMERS AND FISHERMEN

By YOURI KEMP MAJOR international agencies are helping The Bahamas with efforts to transform the agriculture and fisheries sectors to a post-Dorian “state of normalcy”, a Cabinet minister said yesterday.

Michael Pintard, minister of agriculture and fisheries, told Tribune Business: “We want to transform the farmers and fisher-folk back to a state of normalcy. There is a need to determine exactly

what damage was done to buildings and equipment and transportation, and also exactly what damage there was to the land that was being used - particularly for those farmers who deal in livestock and crop farming.

“We’re doing a complete inventory of what exactly we did lose. Then we will look at what income was lost and the potential future loss between the length of time of Hurricane Dorian’s passage and what time they can be back on their feet.”

Mr Pintard said the Department of Agriculture was working with its international partners on such an assessment that is already underway.

He added: “One of our partners is the Food and Agriculture Organisation (FAO), which is on Grand Bahama at the moment for both farmers and fishermen.

“They have already met with the team in New Providence, and will be in Abaco tomorrow. We are also receiving assistance

from the Inter-American Institute for Cooperation on Agriculture (IICA), who as you know is a partner organisation with the Organisation of American States (OAS), and we also have the Caribbean Agricultural Research and Development Institute (CARDI) involved in conducting research on behalf of the Government. “ Mr Pintard continued: “We want to make sure we are using the appropriate, up-to-date, analytical tools

Friday, September 20, 2019, PAGE 3

to make our determinations on what happened in Abaco and Grand Bahama, and how we can move forward.

“We want to determine the state of affairs of our team members in Abaco and Grand Bahama; we want to make sure they are OK and address their direct needs. We are in the

MICHAEL PINTARD

process of doing just that” This follows a recent advertising campaign by the Ministry of Agriculture in which it asks for farmers and fishermen to contact either the Department of Agriculture or the Department of Marine Resources to find out more about how both departments can offer assistance to them post-Dorian.

DPM PLEDGES RELIEF CORNER BANK HANDS $100K TO RED CROSS PACKAGES FOR DORIAN THE government will create relief packages to assist persons whose lives have been devastated by Hurricane Dorian, the deputy prime minister has revealed.

KP Turnquest said this will enable persons to rebuild their lives and communities, as he addressed the National Prayer Service on Wednesday, September 18, at St John’s Jubilee Cathedral.

Assistance and incentives will be offered, he added, as he pledged that the government will do its bid.

“Though we as a people, though we as an island may be down on one knee, we’re not out, we’re not finished. We will bounce back, we will rebuild and we will make Grand Bahama, Abaco and The Bahamas great again,” Mr Turnquest said.

“Though we lost much on those fateful days; we’ve lost property, incomes, businesses and, most sadly, loved ones. But I’m here

KP TURNQUEST to say that despite all our losses and what it may look like and what it may feel like, God is still in control.”

Mr Turnquest added: “Ladies and gentlemen, we must stand. We must stand for those who are missing.

We must stand for those who are confirmed dead.

We must stand for those who lost shelter and basic needs. We must stand for those who feel like giving in and throwing in the towel, giving up on Grand Bahama and Abaco. We must stand for our island, neighbours, friends and family in Abaco.”

Bahamian broker in five-day suspension

A GRAB of SureTrader’s website with SCB suspension notice.

FROM PAGE ONE maintenance of books and records, and failing to notify the commission of material changes.”

The Securities Commission’s report was based on its examination of Swiss-America Securities’ records, and interviews with its employees. The regulator said the violations of Bahamian securities laws were “contrary to the public interest”, and that Mr Gentile’s company “accepts responsibility for its non-compliance”.

The fines were spread over ten failings, which included not verifying client accounts; not conducting KYC and risk monitoring of clients; failing to provide details on insurance coverage and an outsourcing agreement; and not notifying the Securities Commission of its name change.

Mr Gentile told Tribune Business at the time that all the breaches had been adequately addressed, but he has subsequently been engaged in a long-running battle with the SEC over multiple allegations that he and Swiss America/SureTrader violated US securities laws.

While the SEC’s first effort was defeated in the US courts, it quickly came back with claims that Swiss America and Mr Gentile were breaching securities laws by acting as an unregistered broker/dealer

and soliciting US clients without the necessary registration and permissions.

This was vehemently denied by Mr Gentile, but the SEC has been making progress in its bid to obtain potential evidence via subpoenas issued to one of his former attorneys and a Florida-based business.

The South Florida district court has said it is minded to grant the SEC’s subpoena enforcement requests despite resistance from the targets and Mr Gentile.

The SEC wants to compel a Florida-based company, Mintrade Technologies, and its principal, Nicholas Abadiotakis, to obey a subpoena and hand over information on Mr Gentile, his Bahamian broker/dealer and its affiliate, SureTrader.

“The commission has been investigating Swiss America Securities, doing business as SureTrader and MintBroker International, a Bahamas-based broker/ dealer registered with the Securities Commission of The Bahamas but not registered to act as a broker/ dealer in the United States, and its owner, Guy Gentile, in connection with potential ongoing violations of the federal securities laws,” the SEC’s court filings have alleged.

“Issues central to the potential violations include whether Swiss America’s

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A BAHAMAS-based financial institution has donated $100,000 to The Bahamas Red Cross to assist with Hurricane Dorian relief efforts.

Cornèr Bank (Overseas), which earlier this year became the first to launch a round-the-clock trading platform for Bahamian residents to invest in foreign stock markets, has answered the call of the Bahamas Financial Services Board (BFSB) and Association of International Banks and Trusts (AIBT) to donate in collaboration with the Financial Services Cares initiative.

“For many residents of Abaco and Grand Bahama in the northern Bahamas, life from now on will be defined as before Hurricane Dorian and after Hurricane Dorian,” said chief executive Christine Russell.

“Wish as we might, there is nothing we can do to change what happened before Dorian, but as corporate citizens, we can bring our compassion and our financial resources to shaping what comes after. And that is exactly what we are here to demonstrate today as we present a cheque to the Bahamas Red Cross on behalf of our head office in Lugano, Switzerland.

“Our chairman and directors have been to The Bahamas on many occasions, and Cornèr has been a part of the Bahamian financial landscape for 23 years. So while the headquarters of

FROM left: Tanya McCartney; Terez Curry; Christine Russell, Mauro Casu and Birgit Ludig-Dridi.

Photo: Cay Focus Photography/DPA Cornèr Bank are in Switzerland, all of Cornèr Bank’s hearts are right here in the community in which we live and operate. We hope others in private banking and financial services will feel the same and support all relief and rebuilding efforts at this critical time.”

Terez Curry, the Bahamas Red Cross president, thanked the bank even as she explained the work the organisation was doing on the ground, including searching abandoned houses in Abaco and covering Grand Bahama with relief efforts.

“I would like to express our heartfelt thanks to Corner Bank for this generous donation, and to BFSB and AIBT for all your efforts to assist us in our efforts,” said Ms Curry.” We are in full hurricane relief mode - from providing relief to those on the islands to assisting those

here in Nassau, both in shelters and staying in private homes.”

Hurricane Dorian is the third time that the financial services industry has called on members to collaborate through donations to its Financial Services Cares Initiative.

“As was done in the wake of Hurricane Joaquin (2015) and Hurricane Matthew (2016), the Association of International Banks and Trust Companies and the Bahamas Financial Services Board are collaborating to facilitate donations to the Hurricane Dorian relief effort through our ‘Financial Services Cares’ Initiative,” the duo said in a joint statement.

“This initiative was established to provide a means by which member firms can contribute to restoration and recovery efforts when crises

impact our communities. We have set a goal of $1m in the wake of Hurricane Dorian, and we are encouraging member firms to please give generously.

“Cornèr Bank (Overseas) has responded to this call, and we are extremely grateful.

BFSB and The Association of International Banks and Trust Companies (AIBT) will contribute all funds raised to the support the provision of shelter as a priority in the national relief effort and, once immediate needs are met, we will move to support projects with a focus on youth and education.”

On hand for the cheque presentation at Bahamas Red Cross headquarters was Bahamas Financial Services Board chief executive, Tanya McCartney, who also represented the Association of International Banks and Trust Companies.

PAGE 4, Friday, September 20, 2019

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Strong Bahamas ties Accounting firm’s work to $125m fraud play ‘misused’ to hide fraud FROM PAGE ONE

FROM PAGE ONE transfers was sent to a law firm that acted as an escrow agent for the transaction. That law firm issued a letter, dated February 5, 2019, stating that the property was recently purchased by defendant DCC Islands Foundation, which the letter states is owned by Bryant and Hanna Sewall. The letter further states that they intend to use the property as their residence in The Bahamas.”

The SEC’s this week announced it had managed to obtain “a temporary restraining order and asset freeze” over both Mediatrix, Stewart, Sewall and their partner, Michael Young, in a bid to prevent investors suffering further harm in a scheme that seems to be centred on The Bahamas.

Mediatrix and one of its brokers is domiciled in this nation, together with several entities alleged to have facilitated the purported fraud by acting as conduits for funds sucked from the scheme.

They include the Mediatrix Capital Fund, a Bahamiandomiciled IBC alleged to be “registered with the Securities Commission of The Bahamas as a Bahamian Professional Fund”.

Said to contain around $3.5m in assets as at April 2019 from five to six investors, “all but one of which is a US investor”, the investment fund’s accounts are alleged to be held by Ansbacher (Bahamas). There

is nothing to suggest the Bahamian bank has done anything wrong in relation to the Mediatrix affair.

Other Bahamian entities mentioned by the SEC include the DCC Islands Foundation and The 1989 Foundation, both of which are alleged to hold real estate and other assets owned by Stewart and Sewall that have been funded with investor monies.

The extent of the ties to The Bahamas is again likely to raise questions about this nation’s vulnerability to being exploited by expatriates with allegedly dubious intentions.

“The SEC brings this emergency enforcement action to halt a fraudulent, ongoing international trading programme that has placed at risk more than $125m of investors’ funds,” its lawsuit in the Colorado federal court alleges.

“From March 2016 to the present, Young, Stewart and Sewall, through Mediatrix Capital [and its brokers], raised more than $125m from investors in unregistered securities offerings by representing to investors that their money would be pooled and invested using defendants’ allegedly highly profitable algorithmic trading strategy.

“Defendants falsely claimed to investors that from December 2013 through at least March 2019, their trading strategy had never had an unprofitable month and had returned

more than 1,600 percent,” the SEC continued.

“Defendants further claimed that their highly successful trading strategy had enabled Mediatrix Capital to accumulate assets under management of $225m as of the end of 2018. None of this was true.

“In reality, since mid2016, defendants have misappropriated more than $35m of investors’ money by transferring it out of the entity defendants’ bank and brokerage accounts rather than using the money for trading. Defendants used investors’ money to purchase luxury properties and vehicles, and diverted more than $5m of additional investors’ funds for other improper expenditures to perpetuate the fraud.

“Even when defendants used the remaining portion of investors’ money for trading, defendants’ trading consistently lost money – losing more than $18m from its trading in 2018 alone,” the lawsuit added. “Because of defendants’ massive misappropriation and trading losses, Mediatrix Capital’s assets under management are nowhere close to the amounts represented by defendants.

“For example, at yearend 2018, defendants represented that Mediatrix Capital had $225m under management, when in reality, the firm had approximately $35.3m in assets under management (less than 16 percent of the amount claimed).”

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as a St Vincent and Grenadines-domiciled International Business Company (IBC) with its “principal place of business in Nassau”, and Blue Isle Markets are both alleged by the SEC to be controlled by Mediatrix Capital’s three principals - two of whom are said to live in The Bahamas.

Jeffrey Felder, the SEC’s senior attorney, alleged in an affidavit that Mediatrix Capital used Grant Thornton (Bahamas) work to help cover up trading losses and its alleged fraudulent scheme in the statements that were issued to investors.

“To confirm that the account statements defendants prepared and provided to investors included false gains rather than the actual losses suffered by the Blue Isle brokerage accounts, I obtained periodic statements from investors and a summary of all investor statements from March 2016 to June 2018 that was prepared

by Grant Thornton (Bahamas), an affiliate of a large international accounting firm, at Mediatrix Capital’s request,” Mr Felder said.

“The SEC staff also received the account statements that Grant Thornton (Bahamas) relied on to prepare [its] report. The account statements were generated by Blue Isle and Mediatrix Capital, as evidenced by the fact that the statements provided to Grant Thornton (Bahamas) say either ‘Blue Isle Markets Inc’ or ‘Mediatrix Capital’.”

The SEC compared these with the account statements received from the offices of Mediatrix’s prime broker in London and Armenia, with the discrepancies between the two confirming Mr Felder’s suspicions that the group and its principals had been “concealing losing trades from investors and facilitating the fraud”.

Of the $124.5m received from third-party investors into Blue Isle’s bank accounts between March 2016 and May 2019, the SEC said only $75.1m went Mediatrix’s prime brokers over the same period. It is alleging that “at least $41m of investor funds” were diverted for the benefit of Mediatrix’s principals and to pay-off early investors as part of a Ponzi-like scheme.

“Mediatrix Capital and the individual defendants made statements to investors and potential investors that the... trading results were audited, and made other misrepresentations concerning the services provided by Grant Thornton (Bahamas),” Mr Felder alleged in his September 12, 2019, legal filing.

He listed three such “misrepresentations”, including statements in Mediatrix investor prospectuses that “real live results audited from December of 2013 through the present day” were made available for its trading activities and that performance audits were available upon request.

The term “audit” was also wheeled out to back assertions that Mediatrix had achieved 54 months of straight trading gains and 150-plus percent returns, while it was alleged that “Grant Thornton does monitor and report on all deposits and withdrawals made in all accounts”.

Treating such promotion with derision, Mr Felder alleged: “These statements concerning audited performance results were false because the [scheme] was not audited. While Bahamian accounting firms were hired

by Mediatrix Capital, they were not hired to do an audit, but rather to perform mathematical accuracy checks on documents they received purporting to reflect the trading results.

“Additionally, the report from Grant Thornton (Bahamas) states that it is not an audit of the company in accordance with international standards. The statements in the questionnaire regarding Grant Thornton’s monitoring of Mediatrix Capital’s bank accounts is not true, and misleading, because Mediatrix Capital had no bank accounts.”

“The SEC’s conclusion of what we did appears to be accurate. We did not do an audit,” Mr Gomez told Tribune Business yesterday.

“What I will say to you is that we did not audit any of those structures.

“We did agreed upon procedures where we would have gotten information from the brokers, and it clearly stated those documents were for management, internal purposes only and could not be disclosed.”

Mr Gomez said Grant Thornton (Bahamas) had immediately contacted Mediatrix’s principals “once we got the call from the SEC” to ask whether the non-disclosure agreement had been breached, and received written reassurances it had not been.

However, the SEC’s allegations that the accounting firm’s work was “misrepresented” to investors to conceal the purported fraud and misuse of their monies suggests otherwise.

“We never performed an audit,” Mr Gomez asserted.

“We never would have done, and never audited the group.

Whatever the company [Mediatrix] did, and it was incorporated in The Bahamas, we have no knowledge of it.

“We would have gotten statements they gave to us, and they asked us to determine from statements that had a lot of activity to reclassify them based upon agreed procedures. I’m not concerned about any exposure because what we did in the case of Mediatrix, we never performed an audit. There’s no exposure in terms of agreed upon procedures.”

Mr Gomez disclosed to Tribune Business that Grant Thornton (Bahamas) was even fired by Mediatrix as the external auditor of one of its investment funds because it issued a “qualified opinion” on its financial statements.

“The fund we audited did not have that many assets,” he recalled. “The audit was qualified, and based on the qualification we were terminated. It had no more than $2m-$3m in it, and we qualified the opinion because of some information we received. Because of the qualification they deemed our report as useless, and our services were no longer required.”

Mr Gomez said Grant Thornton (Bahamas) had cooperated with the SEC probe, providing the information that the US capital markets regulator had requested.

“Both the SEC and the Securities Commission know the extent of the work we did” on Mediatrix, he added.

Christina Rolle, the Securities Commission’s executive director, was travelling yesterday and declined to comment on the Mediatrix probe when reached by e-mail.

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‘Dinosaur practices’ slammed by small business advocate FROM PAGE ONE business plans, connecting them with professional help and facilitating access to capital, he expressed concern that these efforts could be overturned on a whim if the government again changes hands at the next election.

And Mr Turnquest argued that the need for a proper legal framework to guide small business strategies had assumed increasing importance given upcoming efforts to revive commercial activity in Abaco and Grand Bahama.

Agreeing that the InterAmerican Development Bank’s (IDB) estimate of a $180m small business “financing gap” was not far off the mark, he told this newspaper: “The challenge is that there’s not a lot of projects that are going to be financed, opportunities that are going to be met for young entrepreneurs and the development of businesses because lenders are too risk averse to support it.

“I was talking about crowdfunding mechanisms as one concept to reduce the gap where investors put in equity, have skin in the game and you don’t have to rely too much on loans and debt. They can obtain seats on the Board.”

Yet Mr Turnquest said Bahamian entrepreneurs needed to look beyond this nation’s borders if they were to interest the global crowdfunding market in their ideas, meaning they had to think on a wider

YOUR

scale and/or develop export opportunities.

“The challenge is everyone’s thinking locally, and there’s only 400,000 persons here,” he told Tribune Business. “Right now we’re not looking at crowdfunding. Right now we’re looking at loans, and guaranteed loans.

That’s dinosaur practices with these guaranteed loans. These are safe mechanisms.”

The IDB, in documents detailing its $25m initiative to enhance credit availability for micro, small and medium-sized enterprises (MSMEs), said there was a “considerable” capital shortfall that must be “addressed by the financial system in The Bahamas”.

Pegging this at near $180m, it noted that Bahamian MSMEs reported the highest “rejection rates” in the Caribbean of 85 percent when they approached commercial banks for loans, meaning that over four out of every five applicants were turned away.

And 77 percent of credit extended by the Bahamian

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banking system is classified MARK as “perTURNQUEST sonal loans”, which are typically taken out to finance the purchase of vehicles and other consumer goods such as furniture, appliances and vacations.

Warning that the government’s small business strategies face the threat of being “mashed up” every time the government changes, Mr Turnquest argued that the only way to prevent this was to pass the Small Business Act. “Look what happened to the National Development Plan,” he told Tribune Business. “It was a good plan because it was bi-partisan, but look where it is now. We don’t want small businesses to die on the hill every election because every time something new comes.

“There’s no sustainability with small business development. Every time there’s an election it change. The PLP came up with SMEDA, the FNM came in and said: ‘Forget that. Here’s the SBDC.” Mr Turnquest added that he was making “a final push to legislate the Small Business Act so we can correct the challenges we are facing and be prepared for future natural disasters and changes in the business cycle like recessions, and be more proactive so there’s funding in place”.

Friday, September 20, 2019, PAGE 5

PAGE 6, Friday, September 20, 2019

THE TRIBUNE

Dorian may push Lucayan sale to ‘just before xmas’ FROM PAGE ONE Caribbean, ITM and their lawyers, everybody’s resolved, enthused and anxious to go. Royal Caribbean

and ITM have resolved to press forward now more than ever because they appreciate the urgency to give Freeport a financial shot in the arm, and rebuild

and regenerate the city in the wake of Hurricane Dorian.”

Mr Scott confirmed his initial assessment to Tribune Business that Freeport’s

THE GRAND LUCAYAN RESORT “anchor resort property” had fared much better than expected given the severity of Dorian’s winds and storm surge, and was in far better shape than in Hurricane Matthew’s October 2016 aftermath.

“I was up there touring the property on Monday,” the chairman of Lucayan Renewal Holdings, the government-owned vehicle that controls the Grand Lucayan, said. “Some of the offices, buildings and homes in Grand Bahama are in horrible shape.

“Compared to those we had damage to foliage, landscaping, and A/C chillers will have to be replaced, while there was some damage to roofs. The structure is fine and we fared very well through the storm.”

Mr Scott said the Grand Lucayan’s board had allowed Royal Caribbean to use the resort as a base for preparing and distributing the 15,000 meals it is providing daily to Grand Bahama residents. World Central Kitchen, the initiative by celebrity chef Jose Andres, is also cooking 25,000 meals a day on the property.

“We’ve allowed them [Royal Caribbean] to set up a kitchen at the property and are providing them with

logistical support for the meals they are providing to the disrupted and distressed in Freeport,” he told Tribune Business. “They’re doing 15,000 meals a day, and chef Jose Andres’ World Central Kitchen is doing 25,000 meals per day.”

Tribune Business reported earlier this year how the government was aiming to close the Grand Lucayan deal by September/October 2019, or before year-end in a worst case scenario. Dorian’s appearance, coupled with all the economic and social dislocation that has resulted, means that Freeport and wider Grand Bahama now need such a development more than ever.

The ITM/Royal Caribbean project was branded “a game changer” for Freeport’s economy when revealed by this newspaper earlier this year, as it promises a revival of the tourism industry that could - together with Carnival’s $100m cruise port - help drag the city out of a 15-year slump.

The Mexican port developer and cruise line have said the $130m first phase investment will cover a 24-month period, meaning that a revived Grand Lucayan - complete with

water-based theme park and associated retail, gaming and restaurant amenities - may only be ready to receive its first guests come winter 2021 if the current timeline holds.

The joint venture, if the deal closes, will pay $65m to acquire the Grand Lucayan as part of a development aiming to create 2,000 new jobs in its first phase. This will bring in an extra two million cruise passengers to Grand Bahama every year, transforming the area into “a world class destination”.

As previously detailed by Tribune Business, the proposal focuses on developing water-based adventure theme parks at both Freeport Harbour and around the resort. The Grand Lucayan will be upgraded to “five-star hotel accommodation”, and feature multiple gaming, entertainment and restaurant experiences.

Although few specifics have been released, the joint venture envisions combining Port Lucaya and Freeport Harbour into a “unique destination” that will set Grand Bahama apart from its competitors, not just Florida and other Caribbean nations, but Nassau/Paradise Island and the Family Islands.

Bahamian broker in five-day suspension FROM PAGE THREE

MARKET REPORT www.bisxbahamas.com

(242) 323-2330

THURSDAY, 19 SEPTEMBER 2019

(242) 323-2320

ALL SHARE INDEX: CLOSE: 2,166.28 | CHG: 0.05 | %CHG: 0.00 | YTD: 56.83 | YTD%: 2.69 BISX LISTED & TRADED SECURITIES 52WK HI 4.45 20.91 7.00 5.92 2.60 2.00 5.47 11.75 6.17 4.64 12.40 2.81 3.19 10.00 7.35 16.50 9.30 3.65 14.20

52WK LOW 3.50 19.17 4.90 4.46 1.00 0.19 2.00 9.17 6.15 3.60 6.75 2.35 1.76 7.51 6.10 12.10 6.20 3.01 13.00

SECURITY AML Foods Limited APD Limited Bahamas Property Fund Bahamas Waste Bank of Bahamas Benchmark Cable Bahamas CIBC FirstCaribbean Bank Colina Holdings Commonwealth Bank Commonwealth Brewery Consolidated Water BDRs Doctor's Hospital Emera Incorporated Famguard Fidelity Bank Finco Focol J. S. Johnson

SYMBOL AML APD BPF BWL BOB BBL CAB CIB CHL CBL CBB CWCB DHS EMAB FAM FBB FIN FCL JSJ

1000.00 1000.00 1000.00 1000.00

1000.00 1000.00 1000.00 1000.00

Cable Bahamas Series 6 Cable Bahamas Series 8 Cable Bahamas Series 9 Cable Bahamas Series 10 Colina Holdings Class A Fidelity Bank Class A Focol Class B

CAB6 CAB8 CAB9 CAB10 CHLA FBBA FCLB

PREFERENCE SHARES

1.00 10.00 1.00

1.00 10.00 1.00

CORPORATE DEBT - (percentage pricing) 52WK HI 100.00

52WK LOW 100.00

115.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

104.79 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

52WK HI 2.25 4.31 2.06 191.61 158.55 1.63 1.77 1.71 1.17 7.89 9.35 6.80 11.39 12.15 10.63 10.00 8.69 11.79

52WK LOW 1.67 3.04 1.68 164.74 116.70 1.56 1.68 1.65 1.09 6.41 7.62 5.66 8.65 10.54 9.57 9.88 8.45 11.20

SECURITY Fidelity Bank Note 22 (Series B) +

SYMBOL FBB22

Bahamas Note 6.95 (2029) BGS: 2015-1-3Y BGS: 2014-12-5Y BGS: 2015-1-5Y BGS: 2014-12-7Y BGS: 2015-1-7Y BGS: 2014-12-30Y BGS: 2015-1-30Y BGS: 2015-6-3Y BGS: 2015-6-5Y BGS: 2015-6-7Y BGS: 2015-6-30Y BGS: 2015-10-3Y BGS: 2015-10-5Y BGS: 2015-10-7Y

BAH29 BG0203 BG0105 BG0205 BG0107 BG0207 BG0130 BG0230 BG0303 BG0305 BG0307 BG0330 BG0403 BG0405 BG0407

BAHAMAS GOVERNMENT STOCK - (percentage pricing)

MUTUAL FUNDS

MARKET TERMS

LAST CLOSE 4.10 17.43 6.00 5.92 2.46 1.80 4.80 11.06 6.16 4.06 7.20 3.06 3.19 10.48 7.00 16.50 9.25 3.20 14.20

CLOSE 4.10 17.43 6.00 5.92 2.46 1.80 4.80 11.06 6.16 4.06 7.20 3.08 3.19 10.51 7.00 16.50 9.25 3.20 14.20

CHANGE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.02 0.00 0.03 0.00 0.00 0.00 0.00 0.00

1000.00 1000.00 1000.00 1000.00 1.00 10.00 1.00

1000.00 1000.00 1000.00 1000.00 1.00 10.00 1.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00

LAST SALE 100.00

CLOSE 100.00

CHANGE 0.00

107.31 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

107.31 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

FUND CFAL Bond Fund CFAL Balanced Fund CFAL Money Market Fund CFAL Global Bond Fund CFAL Global Equity Fund FG Financial Preferred Income Fund FG Financial Growth Fund FG Financial Diversified Fund FG Financial Global USD Bond Fund Royal Fidelity Bahamas Opportunities Fund - Secured Balanced Fund Royal Fidelity Bahamas Opportunities Fund - Targeted Equity Fund Royal Fidelity Bahamas Opportunities Fund - Prime Income Fund Royal Fidelity Int'l Fund - Equities Sub Fund Royal Fidelity Int'l Fund - High Yield Fund Royal Fidelity Int'l Fund - Alternative Strategies Fund Colonial Bahamas Fund Class D Colonial Bahamas Fund Class E Colonial Bahamas Fund Class F

BISX ALL SHARE INDEX - 19 Dec 02 = 1,000.00 52wk-Hi - Highest closing price in last 52 weeks 52wk-Low - Lowest closing price in last 52 weeks Previous Close - Previous day's weighted price for daily volume Today's Close - Current day's weighted price for daily volume Change - Change in closing price from day to day Daily Vol. - Number of total shares traded today DIV $ - Dividends per share paid in the last 12 months P/E - Closing price divided by the last 12 month earnings

VOLUME

800 1,100

100

VOLUME

NAV 2.25 4.31 2.06 191.61 158.33 1.63 1.77 1.71 1.17 7.89 9.35 6.80 11.39 12.15 10.63 9.92 8.68 11.38

EPS$ 0.239 0.932 1.760 0.369 0.070 0.000 -0.438 0.722 0.449 0.184 0.140 0.102 0.467 0.000 0.728 0.816 0.939 0.203 0.631

DIV$ 0.160 1.260 0.000 0.250 0.000 0.020 0.000 0.720 0.220 0.120 0.000 0.068 0.060 0.328 0.240 0.540 0.200 0.120 0.610

0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.000 0.000 0.000 0.000 0.000 0.000 0.000

P/E 17.2 18.7 N/M 16.0 N/M N/M -11.0 15.3 13.7 22.1 51.4 30.2 6.8 N/M 9.6 20.2 9.9 15.8 22.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0

YIELD 3.90% 7.23% 0.00% 4.22% 0.00% 1.11% 0.00% 6.51% 3.57% 2.96% 0.00% 2.21% 1.88% 3.12% 3.43% 3.27% 2.16% 3.75% 4.30% 0.00% 0.00% 0.00% 0.00% 6.25% 7.00% 6.50%

INTEREST Prime + 1.75%

MATURITY 19-Oct-2022

6.95% 4.00% 4.25% 4.25% 4.50% 4.50% 6.25% 6.25% 4.00% 4.25% 4.50% 6.25% 3.50% 3.88% 4.25%

20-Nov-2029 30-Jul-2018 16-Dec-2019 30-Jul-2020 15-Dec-2021 30-Jul-2022 15-Dec-2044 30-Jul-2045 26-Jun-2018 26-Jun-2020 26-Jun-2022 26-Jun-2045 15-Oct-2018 15-Oct-2020 15-Oct-2022

YTD%12 MTH% 2.15% 3.88% 1.61% 4.11% 1.53% 2.74% 3.85% 6.28% 7.12% 2.08% 1.91% 4.55% 1.45% 4.30% 1.67% 4.21% 4.75% 7.44% 5.53% 8.48% 8.12% 12.28% 3.03% 4.85% 9.83% 0.60% 3.92% 3.72% 2.47% 3.16% -0.71% 0.16% 7.40% 2.70% 10.20% 1.30%

NAV Date 31-Jul-2019 31-Jul-2019 26-Jul-2019 30-Jun-2019 30-Jun-2019 31-May-2019 31-May-2019 31-May-2019 31-May-2019 31-Jul-2019 31-Jul-2019 31-Jul-2019 31-Jul-2019 31-Jul-2019 31-Jul-2019 30-Mar-2019 30-Mar-2019 30-Mar-2019

YIELD - last 12 month dividends divided by closing price Bid $ - Buying price of Colina and Fidelity Ask $ - Selling price of Colina and fidelity Last Price - Last traded over-the-counter price Weekly Vol. - Trading volume of the prior week EPS $ - A company's reported earnings per share for the last 12 mths NAV - Net Asset Value N/M - Not Meaningful

TO TRADE CALL: CFAL 242-502-7010 | ROYALFIDELITY 242-356-7764 | COLONIAL 242-502-7525 | LENO 242-396-3225 | BENCHMARK 242-326-7333

customers include United States residents, the solicitation of US customers, and the movement of customer funds. SureTrader, a Bahamian broker/ dealer, is not registered as a broker/dealer in the United States. Nor is its chief executive, Guy Gentile.

“However, at least one-half of SureTrader’s clients are United States residents and it employs more than 50 ‘experienced employees’, servicing more than 20,000 clients and processing over 12,000 trades per day.” The SEC alleged that both Mintrade Technologies and Mr Abadiotakis were connected to Swiss America, the latter having worked for another of Mr Gentile’s affiliates.

Mr Gentile has enjoyed a somewhat colourful career in the Bahamas,

with Tribune Business reporting in 2016 how he and his broker/dealer were allegedly used as “bait” by the Federal Bureau of Investigations (FBI) to help snare numerous international securities fraudsters.

He claimed that he and his Bahamian businesses, including the now-closed Sur Club Sushi Bar, were “forced” to play key roles in undercover “sting” operations targeting criminals earning millions of dollars from market manipulation scams.

Their participation even extended to the “bugging”, both by video and sound, of Swiss-America’s Bahamian head office in a successful bid to gain evidence against a Canadian fraudster who subsequently pleaded guilty to the charges against him.

NOTICE NOTICE is hereby given that REGINAL DEVALLON of George Town, Exuma, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 20th day of September, 2019 to the Minister responsible for Nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

NOTICE

NOTICE is hereby given that JULIAN PHILIPPE of Pride Estates, Nassau, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 20th day of September, 2019 to the Minister responsible for Nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

THE TRIBUNE

Friday, September 20, 2019, PAGE 7

Senate tech critic to Facebook CEO: Sell WhatsApp, Instagram WASHINGTON Associated Press AS FACEBOOK CEO Mark Zuckerberg met yesterday with President Donald Trump and other critics of the tech industry, the Senate’s most vocal detractor offered a challenge: Sell your WhatsApp and Instagram properties to prove you’re serious about protecting data privacy.

It may have been more than Zuckerberg expected from his private meeting with Sen Josh Hawley, a conservative Republican from Missouri, in his Capitol Hill office. Zuckerberg left the hourlong meeting — one of several with lawmakers on Capitol Hill — without answering questions from a throng of reporters and photographers pursuing him down a hallway.

Hawley, though, had plenty to say. “The company talks a lot. I’d like to see some action,” he told reporters. “I will believe Facebook when I see some real action out of Facebook.”

Rather than moving users’ personal data from properties such as WhatsApp and Instagram to the core Facebook platform, the company should put a wall around the services or, better yet, sell them off, Hawley said he told Zuckerberg.

Zuckerberg, who requested the meeting, “did not think that was a great idea,” he said.

Zuckerberg “had a good, constructive meeting with President Trump at the White House today,” a Facebook spokesman said.

On Facebook and Twitter, Trump posted a photo with the caption, “Nice meeting with Mark Zuckerberg of Facebook in the Oval Office today”.

No details were given on the meeting, first reported by the Axios website.

Trump has persistently criticized social media companies like Facebook, Google, Amazon and his platform of choice, Twitter, embracing conservative critics’ accusations that they censor religious, antiabortion and politically conservative views. Trump has claimed, without evidence, that the companies are “against me” and even

FACEBOOK CEO Mark Zuckerberg testifies last year before a House Energy and Commerce hearing on Capitol Hill in Washington about the use of Facebook data to target American voters in the 2016 election and data privacy. Zuckerberg was in Washington yesterday, to meet with lawmakers and talk about internet regulation. The company said the meetings are not public and it did not give details on whom Zuckerberg is meeting with and what, exactly, he’ll discuss.

Photo: Andrew Harnik/AP suggested US regulators should sue them on grounds of anti-conservative bias.

A Facebook spokesman declined to comment on Hawley’s remarks concerning his meeting with Zuckerberg.

The popular services WhatsApp and Instagram are among some 70 companies that Facebook has acquired over the past 15 years or so, giving it what critics say is massive market power that has allowed it to snuff out competition.

Zuckerberg’s discussion with Hawley touched on industry competition, data privacy legislation, election security and accusations by conservatives that Facebook and other social media giants are biased against right-leaning content.

During his visit, Zuckerberg also met with other senators including Mark Warner, D-Va, vice chairman of the Senate Intelligence Committee, Mike Lee, R-Utah, a senior member of the Judiciary Committee, and John Cornyn, R-Texas, and Tom Cotton, R-Ark. He also declined to answer reporters’ questions when he left Lee’s office earlier in the afternoon.

Lee’s office said the two discussed bias against conservatives on Facebook’s platform, regulation of online services,

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enforcement of antitrust laws in the tech industry and data privacy issues.

Congress has been debating a privacy law that could sharply rein in the ability of companies like Facebook, Google, Amazon and Apple to collect and make money off users’ personal data. A national law, which would be the first of its kind in the US, could allow people to see or prohibit use of their data.

Acting preemptively, Zuckerberg last spring

called for tighter regulations to protect consumers’ data, control harmful online content and ensure election integrity and data portability. The internet “needs new rules,” he said.

It was Zuckerberg’s first public visit to Washington since he testified before Congress last spring about privacy, election interference and other issues.

Facebook, a social media giant based in Menlo Park, California, with nearly 2.5 billion users, is under heavy

scrutiny from lawmakers and regulators following a series of privacy scandals and amid accusations of abuse of its market power to squash competition.

The Justice Department, the Federal Trade Commission and the House Judiciary antitrust subcommittee are all conducting antitrust investigations of the big tech companies, and a bipartisan group of state attorneys general has opened a competition probe specifically of Facebook.

At Facebook’s request, Warner helped organise a dinner meeting in Washington on Wednesday night for Zuckerberg and a group of senators.

Warner told The Associated Press he wanted Zuckerberg to hear his Senate colleagues’ “enormous concerns about privacy and about protecting the integrity of our political system”.

Their message for the Facebook chief was “selfregulation is not going to be the answer,” Warner said.

“I think Zuckerberg understood that.”

Warner and Hawley have proposed legislation that would force the tech giants to tell users what data they’re collecting and how much it’s worth. The proposal goes to the heart of Big Tech’s hugely profitable business model of commerce in users’ personal data. The companies gather vast data on what users read and like, and leverage it to help advertisers target their messages to individuals they want to reach.

The tech companies view with particular alarm a separate legislative proposal from Hawley that would require them to prove to regulators that they’re not using political bias to filter content. Failing to secure a bias-free audit from the government would mean a social media platform loses its long-held immunity from legal action.