Pretoria - A financial adviser has been ordered to repay a retired, previously self-employed mechanic the R180 000 he advised him to invest in Sharemax The Villa Retail Park Holdings, a property syndication scheme promoted and marketed by Sharemax Investments.
Johan Nell and Johan Nell Financial Services of Pinehurst were ordered by the Ombud for Financial Services Providers (Fais) Noluntu Bam to repay Harold Sydney Jackson the amount he invested in the scheme.
Johan Nell and Johan Nell Financial Services were last week also ordered by Bam to repay the R107 000 Jackson’s wife, Heloise, invested in Sharemax Liberty Mall, another property syndication scheme promoted and marketed by Sharemax Investments.
Jackson said he had a long-standing relationship for about five years with Nell, during which time he received assistance with the buying and selling of various Sharemax investments.
He invested R100 000 in Sharemax The Villa in August 2009, and a further R80 000 in the scheme in July 2010, shortly before this syndication collapsed.
Jackson received interest payments on the first investment for a couple of months, but nothing on his second investment.
He claimed he was assured by Nell the investments in Sharemax were low- to medium-risk investments.
The Villa was explained and marketed to Jackson as the largest shopping centre in the southern hemisphere, and as offering very good interest rates.
Jackson indicated at the time of making the investment he was already 69 years old, and sickly, adding that his arm had been amputated because of illness, and he was not in any position to make up for losses he suffered following the collapse of Sharemax.
The money Jackson used to make the investment stemmed from his life savings.
Bam said apart from relying on the fact that Jackson had previously invested with Sharemax, it was not clear how Nell concluded the investment he proposed was appropriate for Jackson at the time.
“The risk profile done in 2009 concluded that complainant (Jackson) was a moderate (risk) investor. Placing the complainant’s fund in a high-risk property syndication was the exact opposite of what was required for a moderate investor who required security of his capital.
“This is indicative of the fact the respondent (Nell) did not appreciate the risks involved with investments in property syndications,” she said.
Bam said in violation of the Fais Act, Nell failed to recommend an investment in line with Jackson’s circumstances at the time.
She said Jackson needed to know he stood to lose his capital “because, among other reasons, the directors of the scheme had chosen to disregard legislation meant to protect investors”.
“The code required the nature of the risk be disclosed to the client to make an informed decision. The complainant could not have made an informed decision about the Sharemax transaction,” Bam said.