The financial advice ombud has issued two more determinations against financial advisers who, several years ago, advised their clients to invest in property syndications. Many of the investors were pensioners who invested their life savings, and they lost all their money when the syndications collapsed.
In each case, the main reasons for the ombud, Noluntu Bam, ruling against the adviser was that the adviser had not conducted a proper due diligence on the product, had not correctly assessed the degree to which his or her client could afford to take risks with the investment, and had, in some cases, misrepresented the degree of risk in the product.
Abe Gouws Makelaars, now trading as Advice at Platfin, and its key individual, Abraham Jacobus Gouws, was ordered to repay Mr E the R420 000 he invested in The Villa, a Sharemax development, in 2009. Mr E was promised that The Villa was a safe investment. His interest payments ceased in September 2009.
Roelof Johannes Nel of Mossel Bay, who trades under the name R&M Advisors, was ordered to repay a pensioner couple, Mr and Mrs G, the R1 million they jointly invested in the Bluezone property syndication in 2006. Their income from the investment dried up in September 2009.
The ombud also issued a determination against Silver Seed Capital and its representative, Sandro Veloza, who, in July 2014, advised Mrs N to invest in a product known as the FixedGrow Option, which was invested in an unlisted company, UG2. Mrs N was promised a 30% return on her investment of R140 000 after six months. In September 2014, when she suspected something was amiss, she asked for her money back, but she never received it. Silver Seed Capital and Veloza were ordered to repay Mrs N the R140 000.