Directors of failed financial firms must repay investors
Beware of financial advisers and companies that offer you guarantees. And always check to see that those offering the guarantees are actually allowed to do so. This is the message from the latest two determinations from the Ombud for Financial Services Providers, Noluntu Bam.
The determinations arise from investments made in or through a collection of companies: Blue Platinum Ventures, trading as Blue Platinum Investments, Merlin’s Private Equity Fund and iBear Global Investment Strategies. None was licenced as a financial services provider.
The companies were controlled by Deolene Susan Catsicadellis of Melkbosstrand in the Western Cape and Reginald William Lynton Rabie of Wellington in the Western Cape.
The determinations arose from complaints by two investors, Mr ABB and Ms NH, who were told that their capital plus a minimum return was guaranteed.
In the case of Mr ABB, who invested R5 000, there was a minimum return guarantee of 10.66 percent every four months, with the potential of 15 to 20 percent, or even as much as 60 percent, over 12 months.
In the case of Ms NH, who invested various amounts but had R133 533 invested at the time of the companies’ failure in 2009, there were guarantees on capital as well as on above-market-related returns.
Bam says in her determination that none of corporate entities now exists but key individuals in the companies can be held responsible, even when not registered as key individuals in terms of the Financial Advisory and Intermediary Services (FAIS) Act. “Their contempt for the provisions of the Act and the illegality of their actions cannot allow them to escape the responsibilities that follow from attempting to assume such a position.”
Bam says the Act allows her to enforce a transaction even though the product providers had no authority to enter into the transactions.
She says the financial advisers who induced Mr ABB and Ms NH to invest, as well as Catsicadellis, had failed to meet the requirements of the FAIS Act Code of Conduct to act with due skill, care and diligence.
“Any reputable financial services provider worth his salt would have queried how the return could be both so lucrative and guaranteed.”
While Rabie did not provide advice, his name was on documentation as both a director and chief executive of the various companies. Bam found he did provide an intermediary service in terms of the FAIS Act.
She ordered Rabie and Catsicadellis to jointly and severally repay the investments to Mr ABB and Ms NH plus interest of 15.5 percent a year.
For problems with financial advice, call the FAIS Ombud, Noluntu Bam, on 012 470 9080, fax your complaint to 012 470 9097, or email firstname.lastname@example.org. The ombud’s website is www.faisombud.co.za