Roy Cokayne

FINANCIAL adviser Michal Johannes Calitz and/or Impact Financial Consultants have been ordered to repay a couple R800 000 each for advising them to invest in the Relative Value Arbitrage Fund (RVAF).

This is the ninth determination issued by Noluntu Bam, the ombud for financial services providers, against Calitz and his consultancy related to the RVAF and raises the total amount they have been ordered to repay investors in the fund to R5.85 million.

The RVAF is in liquidation. It collapsed after the fund’s manager and trustee, Herman Pretorius, committed suicide in July last year, after shooting dead his business partner.

In the latest determination, Bam ordered Calitz and/or Impact Financial Consultants to repay Hendrik and Erna du Plessis part of the R1.6m each had invested in the RVAF in March 2008, on his and/or its advice.

Despite making withdrawals, the capital balance on both investments still exceeded the R800 000 jurisdictional limit of the ombud’s office. However, the complainants abandoned their claim in regard to the portion of their investments in the RVAF that exceeded the jurisdictional limit.

Hendrik du Plessis denied he understood that he was investing in a hedge fund or knew what a hedge fund was.

He claimed Calitz and/or Impact Financial Consultants had confirmed that the RVAF was involved in share trading, and while an investment in shares always carried a risk, the growth was good.

Du Plessis previously ran a shoe factory and had retired, but at an advanced stage of his life was compelled to return to this position because of the loss of funds.

Calitz said Du Plessis and his wife had invested in the RVAF prior to their meeting, had visited its offices and attended seminars by Pretorius.

He claimed that he did not advise Du Plessis on the fund and instead had discussions about hedge funds and the workings of the RVAF.

Bam stressed that whatever the interaction between the complainants and the RVAF might have been, this complaint related to monies managed by Calitz in his capacity as financial adviser. He was remunerated by the RVAF by commission, which was not properly disclosed in any record furnished to her office.

She said Calitz, as a financial adviser, had to disclose the risks associated with investing in the RVAF and had a duty to counsel his clients against investing in such an entity.

“For this office to believe the respondent’s [Calitz’s] version that no recommendation or guidance was rendered with respect to the investment of such a large sum would be to stretch the bounds of credulity. That the respondent has failed to provide documentation recording his interaction with the complainant does not assist him,” she said.