JOHANNESBURG – The Reserve Bank’s intervention into the affairs of Sharemax Investments was the cause of the R5million loss by an investor in one of the company's schemes and not any breach by an investors’ financial adviser, the KwaZulu-Natal division of the high court in Pietermaritzburg has found.
This was one of the findings by Judge Johan Ploos van Amstel in a judgment handed down on Monday to a damages claim by the trustees of the Symons Family Trust against Rob Roy Investments trading as Assetsure, represented by financial services provider Peter Griffin.
Symons and his wife, the trustees of the trust, invested a total of R5m in a Sharemax product that was an investment in The Villa, a shopping mall being built in Pretoria.
They claimed, among other things, that Griffin breached his contractual obligations by advising them to invest in Sharemax when the investment carried a substantial risk, whereas the contract was that Griffin would advise the trust about a range of low-risk investments and had advised them that the income and capital returns were guaranteed.
In dismissing the claim with costs, Judge van Amstel concluded that Symons had not established liability by Griffin.
The judgment is in stark contrast to a number of determinations involving Sharemax issued by the Ombud for Financial Services Providers (Fais Ombud), which found financial advisers liable for the loss and ordered them to repay their clients their investments.
About 33000 investors in the various property syndications schemes promoted and marketed by Sharemax lost about R4.5billion when the company collapsed in 2010 after the finding by a registrar of banks investigation that Sharemax’s funding model had contravened the Bank Act became public knowledge.
This led to new investments drying up and Sharemax being unable to make monthly payments to investors. The subsequent scheme of arrangement led to the creation of Nova Property Group.
The registrar of banks laid criminal charges against Sharemax in March 2012 for alleged contraventions of the Banks Act. The Hawks confirmed investigating Sharemax, but to date no charges have been brought against anyone associated with the failed investment scheme.
Van Amstel said in his judgment that it was important to consider what caused the scheme to collapse.
A comment was requested from the SA Reserve Bank (Sarb) on the finding in the judgment that the bank's intervention was the cause of the collapse of Sharemax.
It said: “That is not the judgment - and the extract is taken out of context. Because of that, Sarb is not in a position to comment on the matter.”