‘At­tempts to sue will fail as we haven’t done any­thing wrong’

Weekend Argus (Saturday Edition) - - PERSONAL FINANCE -

Dy­namic Wealth has told clients who may be con­tem­plat­ing su­ing it for the losses they may suf­fer as a re­sult of the im­plo­sion of Cor­po­rate Money Man­agers (CMM) that their claims will not suc­ceed, as “we are not guilty of fraud or gross neg­li­gence”.

A num­ber of Dy­namic clients have told Per­sonal Fi­nance they were as­sured that their money was be­ing in­vested in a low-risk port­fo­lio that would pro­vide re­turns above the money mar­ket rate, and that they could ac­cess their cap­i­tal at any time.

Phillip Hat­tingh, a Dy­namic Wealth spokesper­son, says the com­pany is do­ing ev­ery­thing pos­si­ble to re­cover the money. This in­cluded nom­i­nat­ing one of the cu­ra­tors of CMM and its var­i­ous en­ti­ties.

He says in the mean­time, in terms of the High Court or­der that placed CMM and its var­i­ous en­ti­ties un­der cu­ra­tor­ship, the cu­ra­tors have the right to pay money to hard-luck cases. Dy­namic is sub­mit­ting th­ese cases to the cu­ra­tors.

Dy­namic’s state­ment that clients who are af­fected by the CMM fi­asco are un­likely to suc­ceed if they try to sue is pub­lished on a part of Dy­namic’s web­site that is re­stricted to its clients.

The state­ment says the rea­sons clients have lit­tle chance of suc­ceed­ing if they try to sue in­clude:

The man­date in terms of which Dy­namic dealt with CMM was ap­proved by the Fi­nan­cial Ser­vices Board (FSB). The state­ment says Dy­namic used the in­vest­ment chan­nel to man­age the “money mar­ket port­fo­lio ac­cord­ing to a spe­cific and FSBap­proved dis­cre­tionary man­date”.

But Pa­trick Ward, the FSB’s head of col­lec­tive in­vest­ments, says: “The Col­lec­tive In­vest­ment Schemes Con­trol Act (Cisca) does not make any pro­vi­sion for the in­tro­duc­tion of a fund by en­gag­ing in con­sul­ta­tions with un­named duly au­tho­rised rep­re­sen­ta­tives of the FSB. The unique­ness of this claim is as­tound­ing.”

Ward says that Dy­namic Wealth is at­tempt­ing to claim in­cor­rectly that in­vestors’ money was in a money mar­ket fund.

He says the CMM unit trust fund, into which in­vestors in the Dy­namic Wealth Spe­cial­ist Money Mar­ket Port­fo­lio were chan­nelled, was a fixed­in­ter­est var­ied spe­cial­ist fund, which has a dif­fer­ent in­vest­ment and risk pro­file from a money mar­ket fund.

Dy­namic Wealth re­ceived “a dis­cre­tionary man­date” from its in­vestors. In other words, Dy­namic Wealth had the right to make de­ci­sions on be­half of in­vestors.

The unit trust fund is reg­is­tered and reg­u­lated in terms of Cisca.

Dy­namic Wealth fol­lowed a thor­ough and con­tin­u­ous due dili­gence process.

In its state­ment, the com­pany says it ob­tained and scru­ti­nised con­tin­u­ous re­ports from the fund man­ager, from rat­ing agency Global Credit Rat­ings and from au­di­tors. “There was at no par­tic­u­lar time an in­di­ca­tion of any ex­ist­ing prob­lems in CMM.

“Absa In­vestor Ser­vices (the CMM unit trust fund trus­tee) did also not, at any par­tic­u­lar time, in­di­cate a trans­gres­sion of the man­date.”

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