ACTION AGAINST IN­VESTORS’ CLUBS

Weekend Argus (Saturday Edition) - - GOOD WEEKEND -

The FSB has ap­plied to the Pre­to­ria High Court to place a num­ber of busi­ness op­er­a­tions of Pre­to­ria-based fi­nan­cial ser­vices group Dy­namic Wealth un­der cu­ra­tor­ship.

It is un­der­stood that the FSB’s main con­cern is the group op­er­at­ing what the FSB con­sid­ers to be il­le­gal col­lec­tive in­vest­ment schemes un­der the guise of in­vest­ment clubs.

The ap­pli­ca­tion is shrouded in se­crecy. Doc­u­ments lodged with the Pre­to­ria High Court have been re­moved from pub­lic scru­tiny. The ex­cep­tion is an ap­pli­ca­tion by Dy­namic Wealth for dis­clo­sure of in­for­ma­tion. The doc­u­ment refers to the mat­ter be­tween the FSB and Dy­namic Wealth, Dy­namic Wealth Man­age­ment, Dy­namic Wealth Stock­bro­kers, The Bridg­ing Fac­tory and Spe­cial­ist In­come Fund, and as­so­ci­a­tions known as Dy­namic Wealth In­vest­ment As­so­ci­a­tion, Re­tire­ment Fund As­so­ci­a­tion, Multi-man­ager As­so­ci­a­tion, Kwanda As­so­ci­a­tion, MFI As­so­ci­a­tion and Sasep As­so­ci­a­tion.

Bert Chanetsa, the FSB deputy ex­ec­u­tive in charge of fi­nan­cial mar­kets, says the FSB has ap­plied to the High Court for cu­ra­tor­ship of cer­tain Dy­namic Wealth en­ti­ties.

“As there are a num­ber of com­plex is­sues to be ad­dressed, the ap­pli­ca­tion has been set down for ar­gu­ment in Fe­bru­ary 2010,” he says.

Cobus van Wyk, the joint chief ex­ec­u­tive of Dy­namic Wealth, claims in a state­ment that the FSB has not yet taken a fi­nal de­ci­sion on whether to pro­ceed with an ap­pli­ca­tion for the cu­ra­tor­ship.

“We are of the opin­ion that, once they re­ceive our op­pos­ing pa­pers, the FSB view will change sub­stan­tially, and the sub­jec­tive, bi­ased and in­cor­rect in­spec­tion re­port will be set aside, and there­with the ba­sis for any pos­si­ble ap­pli­ca­tion,” he says.

Van Wyk says the FSB’s ini­tial al­le­ga­tions are base­less, ma­li­cious and false, based on “fac­tu­ally in­cor­rect in­for­ma­tion, fab­ri­cated ev­i­dence and as­sump­tions trans­formed into fact”.

He says that Dy­namic Wealth has un­qual­i­fied au­dit cer­tifi­cates from au­di­tors Price­wa­ter­house­Coop­ers for the in­vest­ment clubs. He says the FSB has also blocked a Dy­namic Wealth of­fer to con­vert the port­fo­lios into its white la­bel unit trust funds.

Dy­namic Wealth man­ages the as­sets of seven in­vestor clubs through which R500 mil­lion is pooled in 32 non-Cisca-com­pli­ant port­fo­lios on be­half of more than 1 000 in­vestors.

A cur­rent port­fo­lio and a pre­vi­ous port­fo­lio are in trou­ble. They are:

The Spe­cial­ist In­come Fund, which was sold as a low-risk in­vest­ment of­fer­ing “higher than money mar­ket re­turns”, mainly to pen­sion­ers. The fund, which pro­vided bridg­ing fi­nance for prop­erty de­vel­op­ers, ran into prob­lems when the prop­erty de­vel­op­ers de­faulted in the eco­nomic down­turn. The port­fo­lio was con­verted into a pub­lic com­pany, Spe­cial­ist In­come Ltd, with in­vestors given pref­er­ence shares. But all in­come pay­ments to in­vestors have dried up.

The Dy­namic Wealth Money Mar­ket Port­fo­lio, which chan­nelled in­vestor money into the col­lapsed Cash Man­age­ment Fund unit trust fund, with po­ten­tial losses of R230 mil­lion for in­vestors.

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