Says rights offering is a case of unjust enrichment

Cornerstone Financial Holdings, founded by Paul Simpson and the parent company of Barita, is being sued by Sagicor Jamaica for in excess of US$4 million.

The claim, filed in Barbados, relates to actions taken by the Board of Cornerstone Financial Holdings in connection with two recent Rights Issues by Cornerstone United Holdings Jamaica Limited.

READ: Cornerstone rejects claims in Sagicor lawsuit

Sagicor’s bone of contention is Cornerstone Financial Holdings issued shares valued at more than US$6.00 per share for a subscription price of less than US one cent per share to only those of its shareholders who had participated in July 2020 by its affiliated company Cornerstone United Jamaica Limited.

Sagicor, which has a stake in Cornerstone, did not participate in the Right Issues.

The claim filed in the Supreme Court of Barbados in the High Court of Justice is against Cornerstone Financial Holdings, Paul Simpson, Arnold Aiken, Hugh Coore, James Godfrey, Nigel Chen See and Mark Myers.

Sagicor is also seeking an order for an interim injunction restraining the aforementioned defendants and the company’s directors and officers from issuing further shares.

Part of the claim reads: “An order for compensatory damages pursuant to breach of duty/or unjust enrichment payable to the Claimant by the Second Defendant, Third Defendant, Fourth Defendant, Fifth Defendant, Sixth Defendant and Seventh Defendant, or by such of these defendants as may have voted in favour of the Rights Offering thereby breaching their duty of care to the Claimant on a joint and several basis in an amount of roughly US$4,058.576.66 plus applicable interest; costs of and incidental to this action; and such further and other relief as counsel may advise and this Honourable Court may deem just.”

Cornerstone United Holdings Jamaica Limited describes itself as “a privately held investment holding company whose shareholders are captains of industry across the Caribbean. Its principal focus is creating shareholder value through investing in high growth and undervalued companies, mergers and acquisitions”.

According to the company’s website: “Cornerstone is the brainchild of Paul Simpson, who is the founder, President and CEO of the group. Simpson is an investment banker with a decade of experience.”

Barita, its primary licensed securities dealer and investment house, has been very much in the news this year, posting spectacularly confounding profits. With an unprecedented marketing blitz, it has appealed to a new generation of investors eager for substantial returns.

Barita went back to the market in July, eight months after having secured J$13.5 billon, one of the largest APO’s listed on the Jamaica Stock Exchange.

Cornerstone, incorporated in St Lucia, acquired the majority shareholding of Barita (75 per cent) for over J$3 billion at J$9.20 per share and has gone on to make an absolute fortune from Barita in less than three years.

It has to be one of the best financial performances from a listed company in the history of Jamaica. Some say Paul Simpson is a sublime financial genius – “The Warren Buffett of the Caribbean!”

In September, Trinidad’s First Citizens Bank was one of three financial entities listed as having provided long-term loans to Cornerstone Financial Holdings. That same month it was announced that Cornerstone had purchased an additional 15 million shares in Barita Investments.

Of the 15 million shares acquired by Cornerstone, just over 12 million shares were sold by a company named Barita Finance.

In October, Trinidad’s Minister of Finance Colm Imbert lauded Barita’s performance and hailed it as one of the best finance institutions in the region, backed by some of Jamaica’s best and brightest business personalities.