Failed fund claims hit R12.3m

The Mercury - - BUSINESS REPORT - Roy Cokayne

THE TO­TAL amount that three fi­nan­cial ad­vis­ers need to re­pay 22 in­vestors they wrongly ad­vised to place money in the Rel­a­tive Value Ar­bi­trage Fund (RVAF) has now es­ca­lated to more than R12.26 mil­lion.

This fol­lows sev­eral fur­ther de­ter­mi­na­tions is­sued by the om­bud for fi­nan­cial ad­vi­sory and in­ter­me­di­ary ser­vices (Fais) Nol­untu Bam against th­ese fi­nan­cial ad­vis­ers.

None of the three fi­nan­cial ad­vis­ers have filed no­tices of ap­peal against the de­ter­mi­na­tions.

The fund col­lapsed af­ter its manager and trustee Her­man Pre­to­rius com­mit­ted sui­cide in July 2013 af­ter shoot­ing dead his busi­ness part­ner Ju­lian Wil­liams.

The Fais om­bud last year is­sued 16 de­ter­mi­na­tions against fi­nan­cial ad­viser Michal Calitz and/or Im­pact Fi­nan­cial Con­sul­tants to re­pay in­vestors more than R10m.

The om­bud has is­sued a fur­ther six de­ter­mi­na­tions to date this year against fi­nan­cial ad­vi­sors to re­pay their in­vest­ment clients a to­tal R2.24m.

Five de­ter­mi­na­tions were is­sued order­ing fi­nan­cial ad­vi­sor An­drea Mool­man and/or Vaidro In­vest­ments to re­pay five of her clients a to­tal of more than R1.6m.

In one fur­ther de­ter­mi­na­tion, fi­nan­cial ad­vis­ers Simon Morton and Carol Louw and/or Cat­walk In­vest­ments 592 cc trad­ing as Pin­na­cle were last month or­dered to re­pay a client R600 000.

Bam has made sim­i­lar com­ments in the de­ter­mi­na­tions is­sued to date re­lated to RVAF, in­clud­ing that the com­plaints were about be­ing ad­vised to in­vest in a scheme that was not above board. She said nei­ther Pre­to­rius nor the RVAF it­self was li­censed “in any way”, which was a clear con­tra­ven­tion of the Fais Act.

Risks

In the de­ter­mi­na­tion made by Bam against Vaidro In­vest­ments and/or An­drea Mool­man in re­gard to a com­plaint lodged by Leon van der Walt, who in­vested R206 000, Bam said the is­sues prin­ci­pally per­tained to the fail­ure of Mool­man to un­der­stand the fund and the risks to which she was ex­pos­ing her clients when ad­vis­ing them to in­vest in RVAF.

Bam added that there were no fi­nan­cial state­ments for RVAF and with­out fi­nan­cial state­ments “or so much as a fact sheet” Mool­man could not have un­der­stood the eco­nomic ac­tiv­ity that gen­er­ated the re­turns of the fund.

She said Mool­man was un­able to ex­plain why RVAF was nowhere to be found in the doc­u­men­ta­tion she used in sup­port of rec­om­men­da­tions she made to in­vestors.

“The in­escapable con­clu­sion is that re­spon­dent (Mool­man) knew noth­ing about the fund or its un­der­ly­ing in­vest­ment and ac­cord­ingly was in no po­si­tion to ad­vise her clients to in­vest in it,” she said.

Bam said Mool­man had breached the gen­eral code, which re­quired that a provider must at all times ren­der fi­nan­cial ser­vices hon­estly, fairly, with due skill, care and dili­gence, and in the in­ter­ests of the client and the in­tegrity of the fi­nan­cial ser­vices in­dus­try.

She said Van der Walt was in no po­si­tion to un­der­stand the “any ma­te­rial in­vest­ment or other risks as­so­ci­ated with the prod­uct” as re­quired by the code.

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