Profit Trading still in business
A company that had its financial services provider (FSP) licence withdrawn last year by the Financial Services Board (FSB), after the regulator found evidence that it was running a Ponzi scheme, says it is still operating.
Profit Trading, which markets a “forex robot” that supposedly trades the currency markets on behalf of investors, is still looking for new clients. In correspondence with Business and City Press, company founder Myles Ndlovu has said that Profit Trading does not need a licence as it is a fintech company that only provides a technology service, and this is not an activity governed by the Financial Advisory and Intermediary Services (FAIS) Act. He also indicated he is appealing the decision.
The FSB appeals board, however, says it has not received any notice of appeal.
Profit Trading was launched and licensed, as DMD Capital, in 2014. According to the company website, it offers a web-based application that automates trades on foreign exchange markets around the world. This it calls a “forex robot”.
This technology supposedly assures investors of returns. Its Profit Trading contract states: “Our Forex Robot targets average benchmark of 5% profits on all accounts per month. That is the performance record we aim to uphold and improve whenever possible.”
A compounded monthly growth rate of 5% is just under 80% per year.
Profit Trading was so successful in marketing its product that Ndlovu secured a number of television interviews, including on SABC’s Morning Live, SABC’s Expresso and Business Day TV’s SME Zone. In all these, he claimed his company was a licensed financial services provider.
However, Profit Trading was never licensed to trade forex. The FSB only ever authorised it to give advice and render intermediary services on a category 1 licence.
In September 2015, the regulator instructed its inspectors to conduct a formal investigation.
This led to the suspension of Profit Trading’s licence in February 2016 and finally the full withdrawal of the licence and Ndlovu’s debarment in September last year.
Clients and former employees who put money into Profit Trading have said they were initially able to withdraw profits after 21 days. However, around September 2016, they started experiencing problems with accessing their money.
Months have now passed and they allege that no money has been released.
Two former senior employees at Profit Trading have indicated that R107 million is supposedly in client portfolios at the company. One said R52 million was actually invested. The remainder was the supposed growth on that capital.
Ndlovu declined to comment on these figures and remained defiant about the company’s operations. He insisted that Profit Trading was still able to make payments and that clients would get their money.
He also brushed off allegations made by former employees, arguing that they were “rebellious”. When Business requested further answers as to where the client money was and why they had not been paid out, he replied:
“We have legal representation try and slander and deal with the legal repudiations you will think black an inferior, you will realize what is at stake if you want to publish lies you will enjoy the outcome, try us! Work on facts not on making black people look bad, get professional don’t thrive on damaging black reputation in order to buy yourself a good name.”