Beware of scams

Check credentials before you invest

Investing in unlisted shares or private equity can deliver good returns if you invest in reputable unlisted public companies, but you need some expertise to avoid investing in lemons.

Many an investor has lost money after falling for promises of fantastic returns from yet-to-be-listed companies because they have failed to interrogate how those returns could be made.

Relying on a qualified, experienced adviser is wise, but not checking out your adviser’s credentials can lead to losses.

This is what Tshego*, a metallurgist working for a mining company, discovered when she took advice from Sandro Veloza and invested about R123 500 in unlisted shares.

Tshego complained to the Ombud for Financial Services Providers or FAIS ombud that she hasn’t received a cent of her money back.

Naresh Tulsie, the ombud, has ordered Veloza, from Durbanville in Cape Town, and his company, Silver Seed Capital, to repay Tshego.

Veloza did not respond to the ombud’s request for his side of the story, and the ombud concluded from the documents and Tshego’s version that he had not been honest and had misappropriated her money.

According to the ruling, Veloza offered Tshego shares in businesses called UG2 Platinum and Lazaron Biotechnologies as he claimed Silver Seed Capital was raising funds for them.

Tshego told the ombud she made the investment on Veloza’s advice, was confident that she was dealing with a registered financial services provider and that Veloza had investigated the businesses that he recommended.

She invested various amounts between 2006 and 2011 but had no share certificates proving her share ownership.

In 2015, she found out that Silver Seed Capital’s licence to give advice had been withdrawn the year before.

She was aggrieved and asked to withdraw her money, the ruling says.

Besides ordering Veloza to return her money, the ombud recommended Tshego lay a charge with the police.

* Not her real name