Johannesburg - The activities of three financial advisers and the investment firm they worked at that allegedly invested their client’s funds in high-risk securities listed on the JSE have been referred to the police and SA Reserve Bank for further investigation.
The Ombud for financial advisory and intermediary services (Fais) Noluntu Bam confirmed this in one of two determinations against Lucky Motsoto, the founder and chief executive of Motsoto’s Trading and Investment; Zanele Elsie Motsoto, the executive manager; and Dolly Motsoto, the sales executive manager.
Bam ordered the three and/or the firm to pay Bhekuyise Innocent Mtshali the R50 000 he gave them to invest and Bheki Robert Mkhumbuza the R65 000 he transferred to Motsoto’s bank account.
She said the complaint arose from an agreement to invest in high-risk shares following advice from the respondents, who were supposedly in the business of buying and selling JSE shares to make a profit.
Bam said none of the four were licensed according to records. She said the claim that they had been awarded a licence by the regulator was deliberately calculated to mislead unsuspecting members of the public into believing they were dealing with a legitimate entity.
She said the undisputed version of Mkhumbuza regarding the advice that led to the investment, when looked at in totality, led her to conclude that he did not lose his money in an investment through normal market movements.
“There is no information to conclude that respondents were conducting a business in the true economic sense. I therefore conclude that the complainant’s money was stolen through fraudulent means.” Bam said the respondents enticed Mkhumbuza to invest in a scheme that had “all the signs of a pyramid scheme”.
In the Mtshali determination, Bam said one paragraph in the terms of the purported contract stipulated that he was required to pay a 60 percent retainer, which was to be maintained throughout the contract.
“The conduct of the respondents can only be regarded as criminal. Not only were these fees not justifiable, there is no doubt in my mind that (Mtshali) would not have agreed to pay more than half of his investment returns in fees to the respondents,” she said.
In terms of Mkhumbuza’s agreement he invested R35 000 and was supposed to get 30 percent interest every 25 working days for three months. In terms of a second agreement, he invested R30 000 and was supposed to get a 100 percent profit payout after 75 working days.
Bam said Mkhumbuza presented proof to her office that he transferred R65 000 into Motsoto’s account in April 2013 and Mtshali had provided proof he paid R50 000 into Motsoto’s account in January 2013.
They both claimed they had not received a single payment.
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