Brokers take on Nova board

LEGAL ACTION: FOLLOWS COURT’S DISMISSAL OF ANOTHER APPLICATION The group wants Sharemax properties returned to the investors.

Agroup of about 200 brokers is in the process of instituting legal action against the Nova Property Group’s board members, its auditors BDO and other stakeholders.

The group previously sold Sharemax syndication products to clients.

It announced the intention to take legal action shortly after the Pretoria High Court’s recent dismissal of activist Deon Pienaar’s application to have the Reserve Bank’s decision, that Sharemax contravened the Banks Act, reviewed. Pienaar’s application, made without legal representation, was dismissed with costs.

Brokers played an integral part in the Sharemax scheme and around 6 000 of them sold over 33 000 syndications to around 18 000 investors. Following the Reserve Bank’s decision that Sharemax contravened the Banks Act, thousands of investors lodged complaints with the FAIS ombudsman against the brokers.

In the e-mail, JL Brokers’ Jan Labuschagne says on behalf of the group though Pienaar lost his case, “all is not lost”. “Deon refused our offer of legal assistance and we believe this was why he lost.”

The pending legal action will focus on alleged contraventions by the board of the Companies Act, which cost investors dearly.

Other aspects the brokers aim to focus on include:

The board continuing to pay itself millions in bonuses, while investors received virtually no income from their property investments, despite Companies Act contraventions; The outflow of “consultation fees” amounting to R3 million to the private company of Connie Myburgh, Nova board chair; The purchase of expensive vehicles for consultants and other management companies; Rent that wasn’t collected; The overvaluation of properties by the Nova board. Labuschagne said the group wants the historic Sharemax properties to be returned to in- vestors. “We want rental income to flow to investors and give them the authority to decide what needs to happen with the properties.”

Numerous Moneyweb exposés in recent years have revealed that the Nova board received nearly 90% of the issued shares in the Nova Group without paying a cent. This allowed them to pay themselves exorbitant salaries.

The action group can be contacted at sharemaxlegal@gmail.com.