The financial advice ombud has ordered a financial advice firm that persuaded a client to invest in a dodgy private equity scheme to repay the client the R140 000 she invested for the education of her children – and lost.
The case is the latest of several involving the firm.
Noluntu Bam, the Ombud for Financial Services Providers, recently ruled on a complaint from a woman, Ms N, who invested in a product called FixedGRO, on advice from representatives from Silver Seed Capital, of Bellville in the Western Cape. The three representatives of the company named in the determination are: Sandro Veloza, Eddie Amaro and John Law.
Bam’s determination says the investment was presented to Ms N as a product that would provide a return of 30% after six months. She invested R100 000 in January 2014 and another R40 000 in May of that year.
Later in 2014, after asking Silver Seed Capital to roll over her investments for another term, Ms N began to suspect something was wrong. And when in September 2014 she tried to withdraw her money, her request went unheeded.
In November 2014, Ms N laid a complaint with Bam’s office. The office wrote to Silver Seed Capital asking for an explanation, but no response was received.
On investigation, the office found that FixedGRO was, in fact, an investment in an unlisted company, UG2 Platinum Limited, of which Silver Seed Capital had at least a 15% holding, and which shared directors (Veloza and Amaro) with Silver Seed Capital.
Bam said Ms N was under the impression that she was making a legitimate investment in a safe product.
She ruled that the firm had breached the Financial Advisory and Intermediary Services Act in several respects, including not disclosing to Ms N the true, risky nature of the investment.