The man who shook Absa

Sev­eral fi­nan­cial ser­vices com­pa­nies of which he’s a di­rec­tor op­er­ate from same build­ing

Finweek English Edition - - Openers - VIC DE KLERK

TIMOTHEÜS PRE­TO­RIUS (41), also known as Timo, is the man be­hind Cor­tex Se­cu­ri­ties. Cor­tex is the Safex eq­uity de­riv­a­tive dealer un­able to meet its mar­gin com­mit­ments to its clear­ing mem­ber, Absa. That forced Absa to buy R1,4bn worth of highly ques­tion­able shares. Pre­to­rius is well known to Al­lan Thom­son, se­nior GM of the JSE’s de­riv­a­tive in­stru­ments trad­ing sec­tion. Thom­son has ex­pressed his re­spect at the re­spon­si­ble way Pre­to­rius had han­dled ex­tremely dif­fi­cult prob­lems over the past few months.

Pre­to­rius is the sole di­rec­tor of Ori­genSA, the pub­lic com­pany trad­ing as Cor­tex Se­cu­ri­ties. Fin­week ap­proached Pre­to­rius for an in­ter­view – and per­haps even a pic­ture – in or­der to in­tro­duce the man be­hind the scenes at Cor­tex to the pub­lic. Pre­to­rius was very friendly in de­clin­ing the in­vi­ta­tion, be­cause there’s a se­crecy agree­ment be­tween Cor­tex and clear­ing com­pany Absa that he’s not pre­pared to vi­o­late.

Cor­tex is still do­ing busi­ness and it needs Absa’s good­will on a daily ba­sis. It would be ir­re­spon­si­ble to sour the re­la­tion­ship now, says Pre­to­rius.

Pre­to­rius has come a long way as the man be­hind sev­eral other dealers in fu­tures con­tracts linked with the JSE. In the JSE’s 2004 an­nual re­port, the name of PCS Fu­tures ap­pears in the list of “Fi­nan­cial de­riv­a­tive mem­bers”.

Later, PCS Agri boasted on its web­site that it was one of the “lead­ing agri­cul­tural de­riv­a­tive” dealers. PCS Agri’s ad­dress was given as Greys­tone Build­ing, Four Ways Golf Park. That’s the same ad­dress as Cor­tex.

In fact, on the web­site – which has stuck at 5 April 2005 – Ross Phip­son (he’s still a di­rec­tor of some com­pa­nies, along with Pre­to­rius) writes: “PCS Agri, one of Safex’s lead­ing agri­cul­tural de­riv­a­tive traders, ap­points Cor­tex as their pre­ferred fi­nan­cial fu­tures bro­kers.” He then goes on to sing the praises of the won­der­ful op­por­tu­ni­ties for in­vestors and spec­u­la­tors in fi­nan­cial fu­tures con­tracts.

Safex Eq­uity De­riv­a­tives (ED) and Safex Agri­cul­tural Prod­ucts (AP) are two in­de­pen­dent di­vi­sions of the larger Safex, which in turn is a sub­sidiary of the JSE. A sep­a­rate right or mem­ber­ship is re­quired in or­der to trade on both those mar­kets. The right of PCS Agri to trade on Safex Agri­cul­tural was later trans­ferred to Ori­genSA, which also has the right to trade on Safex Eq­uity.

The struc­ture is there­fore (briefly) as fol­lows:

Ori­genSA Ltd: sole di­rec­tor Timotheüs (Timo) Pre­to­rius, a mem­ber of Safex ED and trades as Cor­tex; a mem­ber of Safex AP and pre­vi­ously traded as PSC Agri.

On both the Safex reg­is­ters, Ori­genSA is in­di­cated as hav­ing had the right to trade on both those fu­tures mar­kets since 2004. Ori­genSA was formed in 2004, and af­ter the res­ig­na­tion of the nom­i­nal direc­tors from what was once a shelf com­pany, Pre­to­rius re­mains as the sole di­rec­tor and is also the sec­re­tary.

Ac­cord­ing to Cipro, which keeps records of all com­pa­nies and their direc­tors, Timotheüs Pre­to­rius is also a di­rec­tor of var­i­ous other com­pa­nies – many of them at the same ad­dress.

Pre­to­rius uses au­di­tors Price­wa­ter­house­Coop­ers’ Welkom branch. Cor­tex, which is now ex­pe­ri­enc­ing dif­fi­cul­ties, also uses those au­di­tors. Some of the com­pa­nies, such as Geared As­set Man­age­ment, in­di­cate that Pre­to­rius could also be in­volved in as­set man­age­ment and other sim­i­lar deal­ings.

A search on the Fi­nan­cial Ser­vices Board’s (FSB) web­site shows that not one of the com­pa­nies is reg­is­tered with the FSB. Pre­to­rius’s ID num­ber doesn’t pro­duce any re­sults from the FSB ei­ther.

Read­ers can go through the list of com­pa­nies, es­pe­cially as­set man­agers and other fi­nan­cial ser­vices com­pa­nies, and find out about any out­stand­ing busi­ness trans­ac­tions. Un­for­tu­nately, the type of busi­ness done by Cor­tex cre­ates un­cer­tainty about other busi­ness em­a­nat­ing from Greys­tone Build­ings, Golf Park and Four­ways.

The good news for Cor­tex’s other or­di­nary clients is that there are no in­di­ca­tions to date that their funds have been used to make good the losses of the four big trans­ac­tions. Un­like the case with Deal­stream, which uses the RMB as its clear­ing agent, the ad­min­is­tra­tion at Cor­tex is in or­der and clients are pro­tected by the JSE against any losses aris­ing from ir­reg­u­lar­i­ties.

But re­mem­ber: If you have bought a sin­gle stock fu­ture on a share and the share’s price has fallen re­cently, like al­most all shares have, it will be a loss. No­body – not Cor­tex, Absa or the JSE – will com­pen­sate you for that.

vicd@fin­week.co.za

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