FPI probes advisers’ role in Ponzi scheme
The Financial Planning Institute (FPI), the body for professional financial planners, is investigating whether any of its members breached the organisation’s code of ethics in advising their clients to invest in the Relative Value Arbitrage Fund (RVAF).
RVAF was found to be a massive Ponzi scheme owing some 3 000 investors R3.1 billion and was placed in liquidation after its founder, Herman Pretorius, shot his business partner, Julian Williams, and then himself in July last year.
Prem Govender, chairperson of the FPI, says the FPI encourages you to use a professional financial planner who belongs to the FPI. The organisation therefore has a responsibility to ensure that its members act professionally and adhere to the FPI’s code of ethics and professional responsibility.
The FPI will focus on the advice process followed by its members who recommended RVAF to their clients, rather than on RVAF itself.
Govender says if the FPI’s investigation uncovers any alleged wrongdoing, it will take disciplinary action. This could result in a planner losing the right to use the Certified Financial Planner (CFP) accreditation and being reported to the Financial Services Board.
The FPI has also investigated its members’ involvement in other scams, such as property syndication schemes Sharemax and Blue Zone, which resulted in disciplinary charges being brought against two FPI members. The disciplinary process is ongoing, the FPI says.