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