Jersey’s finance watchdog has warned security issuers – including those involved in initial coin and token offerings – that it’s tightening enforcement after a rise in companies failing to comply with key regulatory conditions.
The Jersey Financial Services Commission said some issuers had launched securities without the necessary approvals.
Others were reported to have failed to file audited accounts or seek permission before making key leadership changes – both of which are legal requirements under Jersey’s financial regulations.
“We have identified several instances where security issuers have not complied with the conditions of the consents we issued,” the JFSC stated in a recent industry update.
“There has also been an increase in issuers not having the necessary consent before undertaking relevant activity. This has the potential to put investors’ money at risk.”
The regulator said that it had historically tended to take a more “sympathetic” approach, excusing breaches caused by admin errors or technicalities – provided issuers quickly corrected them and there was no financial harm to investors.
But, after a recent increase in compliance failures, the JFSC said it would “consider taking further action going forward”.
“Breaches of the [Control of Borrowing (Jersey) Order 1958] constitute a criminal offence,” the JFSC warned. “We consider breaches of conditioned consents issued in accordance with the Order as a material occurrence.”
It has warned that breaches could now be referred to Jersey’s Attorney General, with criminal charges a possibility for those found breaking the rules. The JFSC also stressed that directors – not just legal advisors – bear ultimate responsibility for ensuring compliance.
“The responsibility to comply with the Order, and consents issued according to the Order, rest with the board,” the regulator stated.