ACTION AGAINST INVESTORS’ CLUBS
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.