Archive | April, 2015

RVAF Update

22 Apr

Author: Paul Kruger

Publications: Moonstone

Date Published: 21 April 2015

Die Burger reported on Thursday, 16 April 2015, that investors who placed funds with the Relative Value Arbitrage Fund (RVAF) can expect to get some of their money back.

This information was contained in the latest progress report from the joint trustees of Herman Pretorius’s estate.

According to the article, receipts show that the RVAF group accumulated approximately R2.5 billion between 2004 and 2012 from investors and other sources. A summary of the group’s income and expenses by forensic auditors, appointed by the trustees, states that Pretorius used R753 million of the funds for payments unrelated to payments to investors.

Other unspecified payments amounted to R164 million.

At the time of Pretorius’s death, there was only about R2.1 million left in the RVAF bank account.

It is not clear just how much will become available for distribution to investors. The trustees indicated that they will be applying for the setting aside of judgements obtained to freeze certain of Pretorius’s assets to prevent it from being used. They have also successfully applied for the sequestration of Pretorius’s family trusts.

Broker Commissions

The article also states that R124.6 million was paid to financial advisers who convinced investors to place their funds in the RVAF. The trustees aim to approach these advisers on an individual basis to reclaim the fees paid to them by Pretorius. One such claim was already allowed by the courts, but there is currently an appeal against this finding.

The same broker also appealed against various determinations by the FAIS Ombud that he should repay investors the money they placed in the RVAF on his advice.

In total, 23 FAIS Ombud determinations were made in favour of complainants against a handful of advisers.

Investor Claims

A third article reminds investors who wish to lay complaints against advisers that they would have to do so soon, as they only have three years from the time they became aware of, or should reasonably have become aware of, the occurrence of the act or omission which gave rise to the complaint. Pretorius died in July 2012.

A Double Whammy

There are two sources of hope for investors. The final restitution after the trustees managed to wind up Pretorius’s estate, and/or the Ombud finding in their favour.

In view of a recent Appeal Board decision it appears unlikely that investors will be allowed to have the best of both worlds. They cannot reclaim their investment from the broker, and get a partial payment from the estate. It appears that, until such time as a final payment is made from the estate, the quantum of the loss cannot be ascertained with certainty.

The attempt to get advisers to pay back the “commission” they received is far more complex than what it seems.

In 2012, after the death of Pretorius, the FSB issued a media release on the RVAF in which it said:

” The ambit of the FAIS Act is focused on the rendering of financial services which typically involve three parties, namely a product supplier, an intermediary and a client. Unless a financial product is involved, the FAIS Act does not apply.”

And further on: “To the extent that investors were lured into any of his projects, such investors carried the risk and obligation to enquire into the merits before parting with their money, especially where above-average returns were being offered. The loss of so much money to so many investors is a sad state of affairs but one for which the regulator is not accountable.”

The outcome of the appeal case, referred to above, should provide clarity on this matter.

Justice for All?

Another consideration noted before in this forum, but as yet unresolved by the authorities, concerns the broker’s ability to reimburse clients.

With multiple claims resulting from both the trustees and the Ombud’s determinations, the chances are very good that the brokers involved may be forced to choose the insolvency option.

This could mean that clients will receive justice, but no compensation, while those who benefitted most will walk away scot free.

Such an outcome defeats the object of the exercise, and deserves serious attention.

Stoksiel-gelukkig

21 Apr

Author: Martie Pansegrouw

Publications: Rooi Rose Tydskrif

Date Published: Maart 2015

Om te trou of nie te trou nie, of om weer te trou of nie, is soms net hoe die meetsnoere vir ons val. Dis hoe jy dit hanteer wat saak maak.
Enkellopende vroue het lankal die negatiewe etiket afgeknip.

Om enkellopend te wees beteken nie meer soos in die vorige eeu dat jy nie opsies het nie. Jy het die keuse om te weier dat jou lewe deur die status van jou verhoudings gedefinieer word. Selfs die term “oujongnooi” is lankal nie meer relevant nie. Vroue trou in die dertig, veertig, vyftig of later in hul lewe… of glad nie. Party skei en wil nooit weer trou nie, en sommiges se lewensmaats sterf en hulle kry nie weer ‘n goeie plaasvervanger nie.

Daar is hope webtuistes en blogs waarop enkellopendes hul filosofiee deel. Een van die talle gewildes is die van Mandy Hale, ook bekend onder haar blog-lesers en Twitter-aanhangers as The Single Woman™. Haar leuse is “Life, love and a dash of sass” en sy verkondig “Single is the new fabulous!”  

Failed fund claims hit R12.3m

20 Apr

Author: Roy Cokayne

Publications: iOL -The Mercury

Date Published: 17 April 2015

REPORT  
THE total amount that three financial advisers need to repay 22 investors they wrongly advised to place money in the Relative Value Arbitrage Fund (RVAF) has now escalated to more than R12.26 million. 
This follows several further determinations issued by the ombud for financial advisory and intermediary services (Fais) Noluntu Bam against these financial advisers. None of the three financial advisers have filed notices of appeal against the determinations. The fund collapsed after its manager and trustee Herman Pretorius committed suicide in July 2013 after shooting dead his business partner Julian Williams. The Fais ombud last year issued 16 determinations against financial adviser Michal Calitz and/or Impact Financial Consultants to repay investors more than RIOm. The ombud has issued a further six determinations to date this year against financial advisors to repay their investment clients a total R2.24m. Five determinations were issued ordering financial advisor Andrea Moolman and/or Vaidro Investments to repay five of her clients a total of more than R1.6m. In one further determination, financial advisers Simon Morton and Carol Louw and/or Catwalk Investments 592 cc trading as Pinnacle were last month ordered to repay a client R600 000. Bam has made similar comments in the determinations issued to date related to RVAF, including that the complaints were about being advised to invest in a scheme that was not above board. She said neither Pretorius nor the RVAF itself was licensed “in any way”, which was a clear contravention of the Fais Act. 
Risks 
In the determination made by Bam against Vaidro Investments and/or Andrea Moolman in regard to a complaint lodged by Leon van der Walt, who invested R206 000, Bam said the issues principally pertained to the failure of Moolman to understand the fund and the risks to which she was exposing her clients when advising them to invest in RVAF. Bam added that there were no financial statements for RVAF and without financial statements “or so much as a fact sheet” Moolman could not have understood the economic activity that generated the returns of the fund. She said Moolman was unable to explain why RVAF was nowhere to be found in the documentation she used in support of recommendations she made to investors. “The inescapable conclusion is that respondent (Moolman) knew nothing about the fund or its underlying investment and accordingly was in no position to advise her clients to invest in it,” she said. Bam said Moolman had breached the general code, which required that a provider must at all times render financial services honestly, fairly, with due skill, care and diligence, and in the interests of the client and the integrity of the financial services industry. She said Van der Walt was in no position to understand the “any material investment or other risks associated with the product” as required by the code.

Belvedere allegations: Money in SA unit trusts is safe

20 Apr

Author: Patrick Cairns

Publications: MoneyWeb

Date Published: 14 April 2015

CAPE TOWN – The allegations that local fund manager Cobus Kellerman could be involved in a $16 billion (R200 billion) Ponzi scheme through the Mauritian-domiciled Belvedere Management Limited has caused a lot of consternation in South Africa. Many investors have been worried that money they put into unit trusts managed by Kellerman could be at risk.

Kellerman established Clarus Capital in 2009. Until July last year, Clarus managed a number of funds administered by MET Collective Investments, including the Clarus MET Equity Value Fund and the Clarus Optimal Fund.

These funds, although they still carry the Clarus branding, are now managed by Contego Asset Management. Contego is still awaiting approval from the Financial Services Board (FSB) to change their names.

Contego took over management of these funds after signing a new investment management agreement with MET Collective Investments in 2014. Since July last year, therefore, Kellerman has not been involved in these funds in any capacity.

However, even when he was managing these funds, there was no opportunity for him to take money out of them. The South African unit trust market is highly regulated and there are always custodians that stand between the investors and the fund managers to prevent any kind of fraudulent activity.

“In the history of unit trusts in South Africa there has never been any evidence of a fraudulent act,” says JC Louw, the Asset Management CEO at Contego. “Kellerman could not have touched the money in these funds.”

Every unit trust has an appointed administrator and fund trustee. These are reflected on the fund fact sheets.

The administrator is responsible for verifying the assets held in the fund, while the trustee is a bank which holds those assets in trust. In effect, the fund manager doesn’t actually handle any money. They run the fund off a spreadsheet.

“We can’t withdraw money and the trustee bank will not pay out to a third party,” Louw says. “The custodian will only pay out to a FICA verified bank account supplied by the investor.”

It is also not possible for a unit trust to invest in any unlisted instruments, so a manager cannot divert funds into an obscure holding that they can then raid. The assets held by the fund must always be verifiable by the administrator.

“So there is no evidence whatsoever of money that has gone missing and no evidence of irregularities in South African funds whatsoever,” Louw says. “South African unit trusts are safe.”

The scale of the allegations

The allegations about Kellerman and his partners at Belvedere, Irishman David Cosgrove and Mauritian accountant Kenneth Maillard were first made in an article on OffshoreAlert. It claimed that Belvedere “appears to be one of the biggest criminal financial enterprises in history”.

It based this on Belvedere’s submission to the Mauritian Financial Services Commission that it has $16 billion (R200 billion) of assets under administration, management and advisory. OffshoreAlert suggested that all of this is at risk.

The amount of money in question is huge. It almost matches all of the assets under management in Allan Gray’s South African unit trusts, and is almost twice as much as that managed by Nedgroup Investments in its suite of unit trusts.

However, Moneyweb made enquiries at a number of large local financial advisers and none had heard of Belvedere before the rumours broke. Nor did they have any knowledge of RDL Management – the investment management and advisory arm of Belvedere of which Kellerman is the 50% owner.

This is in rather stark contrast to Herman Pretorius’s R3.1 billion RVAF Ponzi, which was widely known when he committed suicide.

This may be an indication that there is not a lot of South African money with Belvedere. It also raises questions about the allegations in general.

It takes a long time to accumulate an asset pool of that size, and Belvedere is reported to have over 120 funds. So far, however, the only claim that anybody has not been able to recover money from any of them are those from the deVere Group.

deVere is an independent financial advisory group, and seems to be the primary source of information supplied to OffshoreAlert. It claims that clients lost money in one of the fund’s administered by Belvedere: the Strategic Growth Fund.

However, no other investors appear to have come forward to claim that any money invested in any of Belvedere’s other vehicles is unrecoverable. That doesn’t mean there isn’t impropriety going on, but it does raise questions about what evidence really exists.

Kellerman was not available for comment at the time of publication.

Investment red flags

16 Apr

Author: Hanna Barry

Publications: MoneyWeb

Date Published: 14 April 2015

JOHANNESBURG – Unregulated investment schemes may be a dime a dozen in South Africa, but they’re pretty easy to spot so there’s really no excuse to get caught out.

Be wary when promised abnormally high and consistently positive returns that are guaranteed even when the market is down, cautions Marc Alves, senior case manager at the Financial Advisory and Intermediary Services (FAIS) Ombud.

“It’s very difficult to get a 10% return in the market through an established financial services provider, so if someone is offering you 2% a month or 30% per annum, be very cautious,” he says.

The JSE’s All Share Index (Alsi) returned 7.6% last year. The Top 40 Index, which holds South Africa’s largest blue chip companies, returned just 6%. Listed Property and the Financial 15 (which includes the largest banks and insurers) fared significantly better, returning around 19% and 23% respectively.

But even at the upper end, these numbers are significantly lower than the 300% annual returns promised by Zantech Trading or the 2%-a-day returns promised by Chris Walker’s Defencex. Both schemes were found guilty of contravening the Banks Act and ordered to repay investors.

“Empower yourself with sound financial planning and don’t make decisions based on pressure and emotions,” advises Alves, noting that those exploited are often people who have not provided sufficiently for their retirement or other financial needs.

“Ask about the risks and how easy it is to get your money out. A lot of these schemes are willing buyer, willing seller. It’s difficult to get your money out if there is no willing buyer,” he points out.

Make sure you understand how the investment works (could you explain it to someone else?) and where your money is going, Alves adds.

Know the laws

If a company is providing a financial service it must be registered under the FAIS Act and have a financial services provider (FSP) licence number, issued by the Financial Services Board (FSB). An unregistered FSP would be in contravention of the Act. You can check whether a company has an FSP licence on the FSB’s website by running a search on the company’s name (‘Search for FSP name’).

Herman Pretorius’s Relative Value Arbitrage Fund (RVAF) was not a registered fund with the FSB. Yet it is believed to have amassed R1.8 billion from 3 000 investors.

Fortunately, because it fell within the definition of a financial product, the FAIS Ombud was still able to pronounce on it despite it not being registered and has made numerous awards in favour of consumers. Last year alone, one financial advisor was ordered to repay more than R10.7 million to around 20 consumers who he had advised to invest in the RVAF.

However, a number of schemes set themselves up so as to fall outside the definition of a financial product. This leaves consumers with very little recourse since financial regulators can only enforce the laws they have jurisdiction over and only where these laws have in fact been broken. If a company is not registered with either the South African Reserve Bank (Sarb), FSB or National Credit Regulator (NCR), ask why.

The role of financial advisors

Financial advisors approached by clients for advice on these products must do the appropriate due diligence on the product, Alves says. “We’re not saying there’s not a place for alternative investments, but definitely advisors should do their homework and make sure that the products are sound and meet all the criteria,” says Alves.

“If you don’t understand the product yourself, if you haven’t done any due diligence and can’t answer the questions, don’t advise on it and certainly don’t earn fees,” cautions Gavin Came, a financial planner with Sasfin Wealth.

“Product providers have over time caused more damage than intermediaries, although advisors have borne the vast majority of the regulator’s wrath,” he maintains. “When investments don’t pan out, the intermediary carries the can for an ill-designed product at best and a ponzi scheme at worst,” Came says.

Beleggers kry glo iets terug

16 Apr

Author: Marelize Barnard

Publications: Die Burger

Date Published : 16 April 2015

Goeie nuus vir beleggers wat in Herman Pretorius se beleggingskemas belê het, is dat hulle wél van hul geld sal terugkry.

Die gesamentlike trustees van die insolvente boedel van Pretorius se Relative Value Arbitrage Fund (RVAF) Trust het in die jongste vorderingsverslag dié nuus aan beleggers bekend gemaak.

“Dit is duidelik dat daar wesenlike fondse vir verspreiding onder beleggers beskikbaar sal wees,” lui die verslag.

Die trustees het aangedui dat hulle binnekort aansoeke in die Wes-Kaapse hooggeregshof gaan indien vir die tersydestelling van hofbevele wat verkry is om die bates van verskeie van Pretorius se entiteite te bevries.

Die trustees het die bates bevries uit vrees dat Pretorius se weduwee, Susan-Ann, die bates vir haar sou vat.

Nou is dit nodig om die hofbevele tersyde te stel sodat daar ’n vollediger prentjie verkry kan word van die bedrag geld wat vir beleggers beskikbaar is.

Beleggers wat reeds eise ingedien het, asook nuwe eise wat deur beleggers ingedien word, sal ingevolge die Insolvensiewet deur die trustees beoordeel word vir moontlike uitbetalings.

 Pretorius se geldsake van 2004 tot 2012: ’n Opsomming van Pretorius en die RVAF-groep se finansiële situasie van 2004 tot sy skietdood in 2012 toon volgens kwitansies dat R2,5 miljard van beleggers en ander bronne ingevorder is. 

Altesaam R2,1 miljoen van dié bedrag was ten tyde van Pretorius se dood in die RVAF-rekening. 

Vir eie gewin: Pretorius het R753 miljoen van dié geld gebruik vir alles behalwe uitbetalings aan beleggers, volgens ’n opsomming van die RVAF-groep se inkomste en uitgawes wat deur forensiese ouditeurs in opdrag van die trustees opgestel is.

Goeie nuus vir beleggers wat in Herman Pretorius se beleggingskemas belê het, is dat hulle wél van hul geld sal terugkry.

Die gesamentlike trustees van die insolvente boedel van Pretorius se Relative Value Arbitrage Fund (RVAF) Trust het in die jongste vorderingsverslag dié nuus aan beleggers bekend gemaak.

“Dit is duidelik dat daar wesenlike fondse vir verspreiding onder beleggers beskikbaar sal wees,” lui die verslag.

Die trustees het aangedui dat hulle binnekort aansoeke in die Wes-Kaapse hooggeregshof gaan indien vir die tersydestelling van hofbevele wat verkry is om die bates van verskeie van Pretorius se entiteite te bevries.

Die trustees het die bates bevries uit vrees dat Pretorius se weduwee, Susan-Ann, die bates vir haar sou vat.

Nou is dit nodig om die hofbevele tersyde te stel sodat daar ’n vollediger prentjie verkry kan word van die bedrag geld wat vir beleggers beskikbaar is.

Beleggers wat reeds eise ingedien het, asook nuwe eise wat deur beleggers ingedien word, sal ingevolge die Insolvensiewet deur die trustees beoordeel word vir moontlike uitbetalings.

 Pretorius se geldsake van 2004 tot 2012: ’n Opsomming van Pretorius en die RVAF-groep se finansiële situasie van 2004 tot sy skietdood in 2012 toon volgens kwitansies dat R2,5 miljard van beleggers en ander bronne ingevorder is. 

Altesaam R2,1 miljoen van dié bedrag was ten tyde van Pretorius se dood in die RVAF-rekening. 

Vir eie gewin: Pretorius het R753 miljoen van dié geld gebruik vir alles behalwe uitbetalings aan beleggers, volgens ’n opsomming van die RVAF-groep se inkomste en uitgawes wat deur forensiese ouditeurs in opdrag van die trustees opgestel is.

Pretorius het die miljoene rande eerder gebruik om onder meer vir homself luukshede, soos ’n Aston Martin-sportmotor (R1,7 miljoen), aan te skaf asook talle eiendomme en duur juwele vir sy vrou, Susan-Ann, en hul seuns.

Aandele vir homself gekoop:Pretorius het R80 miljoen gebruik om onder meer vir homself aandele in Wesizwe Platinum te koop, luidens die trustees se verslag.

Die trustees is nog in die duister oor waarom Pretorius verskeie groot bedrae in Wesizwe belê het.

Die vermoede is dat hy daarmee wou spekuleer in die hoop dat hy daardeur sy jare lange Ponzi-skema kon verdoesel.

  Makelaars: Die makelaars wat onder meer niksvermoedende pensioentrekkers oortuig het dat Pretorius se RVAF-groep ’n veilige keuse is om hul pensioengeld in te belê, het R124,6 miljoen se betalings van Pretorius ontvang, luidens die verslag. 

Vordering word tans gemaak met eise teen die onderskeie makelaars wat uitbetalings ontvang het. Wanneer die geld ingevorder word, sal dit meer geld vir beleggers beteken.

Susan-Ann het R4,18 miljoen van haar man ontvang.

Ander betalings wat deur Pretorius gemaak is (wat nie deur die forensiese ouditeurs gespesifiseer is nie) beloop R164 miljoen.

Die trustees noem verder dat Pretorius se familietrusts intussen met welslae gesekwestreer is.

Pretorius het oor die jare verskeie trusts gestig om homself, sy vrou en hul twee seuns te begunstig.

Die bates wat deur die trusts bekom is, sluit in ’n luukse vakansiehuis in Hermanus, die Pretorius-gesin se huis in Welgemoed en twee eiendomme vir sy seuns in onderskeidelik Higgovale en Claremont – wat intussen op openbare veilings deur die RVAF-trustees verkoop is.


KLEINGELD

R2,1 miljoen

Van die R2,5 miljard wat van beleggers ingevorder is, was net R2,1 miljoen in die RVAF-rekening oor.

Due Diligence and the Financial Adviser

13 Apr

Author: Paul Kruger

Publications: Moonstone

Date Published: 9 April 2015

Section 2 of the General Code of Conduct requires that ‘a provider must at all times render financial services honestly, fairly, with due skill, care and diligence, and in the interests of the clients and the integrity of the financial services industry.’

To the best of my knowledge, this does not require that a FSP must conduct a due diligence to the same extent required when mergers and takeovers are concerned. This is a formal process involving lawyers and accountants, and goes far beyond what can or should be expected from a financial adviser.

In a recent determination, the FAIS Ombud again referred to this thorny issue involving an investment in the Relative Value Arbitrage Fund (RVAF) run by the late Herman Pretorius.

In the formulation of the complaint, the determination reads:

Complainant contends that he was not informed by respondent that what he was investing in what was actually a pyramid scheme as opposed to a legitimate investment. Had he so known, he would never have invested and accordingly holds respondent accountable for his losses.

From the information supplied by the respondent, it appears that she was equally unaware that the scheme was, in its last years, run as a Ponzi scheme. In fact, this only materialised after the death of Pretorius.

In the determination under discussion, the following information is supplied by the respondent:

[12] Specifically questioned as to the due diligence she conducted, respondent advised that having been introduced to Abante Capital she visited the premises where Herman Pretorius explained the strategies and how the risk was managed. Having been introduced to the trading team, respondent then proceeded to ascertain whether Abante Capital was registered with the FSB. In addition thereto respondent confirmed with Momentum and Old Mutual and spoke to their fund managers about Abante Capital and their use of the fund in their portfolios.

[13] Respondent goes on to state that, having a reasonable knowledge of Hedge Funds, respondent concluded that the strategy is sound and when mostly top 40 JSE companies are invested into, this should be a sound fund. According to respondent, Mr Pretorius explained that the way that this fund operated the risks are relatively low.

[14] Respondent contends that she was satisfied that persons investing in the fund were fully appreciative and aware of the risks involved, both in that they attended presentations by Herman Pretorius but also in that respondent further explained the process and operation of the fund as she understood it. In this regard a written explanation of Board Notice 5711 was provided and explained to each client.

[15] As to the basis upon which respondent deemed RVAF to be a suitable basis for her clients, respondent advised as follows:

15.1. Many clients need a higher return on their investment to ensure that they reached their investment goals, and as an adviser it was her duty to ensure that all products and all investment avenues are explored on behalf of clients;

15.2. Given the various market crises, hedge funds could both act as a defensive strategy and outperform traditional investments in a downturn;

15.3. Researching the different hedge funds available in the country, respondent’s research showed that Abante Capital was one of three hedge funds in South Africa;

15.4 In 2008 Abante Capital won a hedge fund award. With regards thereto respondent provided a Symmetry multi manager document showing the market neutral category winner as ‘Abante Statistical Arbitrage.’

[16] The portfolio was explained to clients as a hedge fund which invested in shares on the JSE. It was explained that as in any investment involving shares the risk is of a high nature, however historically the loss in downside markets is lessened when hedge trading strategies are used.

[17] In this regard respondent states that hedge funds may actually be a lower risk than traditional investments as the target is to protect capital, increase defensive strategies, and obtain absolute returns under all market conditions as explained by Herman Pretorius.

Concerning the client’s knowledge of investments, the determination states:

With regards to the investment in RVAF, complainant was given to understand that the underlying investment was comprised of shares on the Johannesburg Stock Exchange. To this end and having personally dabbled a bit in shares he understood that there were risks involved in the investment, chief amongst which was that the share market could go up or down;

The respondent’s version of the client’s profile states:

‘Mr VD Walt has a degree, a residential and commercial property portfolio, runs his own consulting practice and trades a share portfolio. He is investment savvy and understands how shares can be traded long and short for a profit in a bear market’.

Was the advisor negligent?

A recent Appeal Board ruling on this case contains the following interesting view:

What then constitutes negligence? The lack of skill or knowledge is not per se negligent. It is however, negligent to engage voluntarily in any potentially dangerous activity unless one has the skill and knowledge usually associated with the proper discharge of the duties connected with such an activity. Hence, in interpreting the meaning of “care and skill”, our authorities have held that a mandatory should always employ reasonable care and skill in exercising his or her mandate.

What is reasonable in the circumstances is measured against the “general level of skill and diligence possessed and exercised at the same time by members of the branch of profession to which the mandatary belongs. If a mandatary negligently falls to execute his mandate or he is negligent in exercising his mandate, he failed to act with “care and skill”. To act negligently means to act in a way that falls short of the standard of the reasonable person”. Hence the defendant is negligent if the reasonable person would have acted differently if the unlawful causing of damage was reasonably foreseeable and preventable.

It is difficult to see how the actions by the respondent, as outlined above, can be deemed to have been lacking in “… due skill, care and diligence…”, or negligent.



Piramideskema se eise kan begin verjaar

12 Apr

Author: Nellie Brand-Jonker 

Publications: Die Burger

Date Published : 12 April 2015

Beleggers wat geld verloor het in Herman Preto­rius se piramideskema, moet opskud as hulle nog eise wil instel teen die makelaars wat hulle oorreed het om in die skema te belê. 

Pretorius is in Julie 2012 dood nadat hy eers sy sakevennoot Julian Williams van die Basileus-groep en toe homself doodgeskiet het.

Sedertdien het dit aan die lig gekom dat beleggers R2,2 miljard in Pretorius se Relative Value Arbitrage Fund (RVAF) belê het.

Die RVAF-fonds het al sedert die vroeë 2000’s geld van beleggers gekry. Opbrengste van sowat 20% per jaar is belowe en is jare lank gelewer.

Noluntu Bam, ombudsman van finansiëlediensteverskaffers, het pas nog twee uitsprake gelewer ten gunste van beleggers wat in die RVAF-skema belê het. Dit bring die getal positiewe uitsprake op 23 te staan.

Sowat R13 miljoen moet reeds deur finansiële adviseurs terugbetaal word aan van die beleggers.

Franscois van Gijsen, direkteur van regsdienste van Finlac, wys daarop dat beleggers wat nog eise by die Fais-ombudsman wil indien, dit gou moet doen. In Julie sal dit drie jaar wees sedert die skietdood van Pretorius en dan kan die eise verjaar.

Hy help nou vier mense wat destyds in die RVAF-fonds belê het, om eise in te dien.

Oor die moontlikheid dat die eise kan verjaar, het Bam by navraag gesê die proses vereis dat ’n klagte “die ombudsman nie later moet bereik nie as drie jaar vanaf die datum dat die finansiële diens gelewer is of nie later nie as drie jaar vanaf die datum dat die klaer redelikerwys bewus geraak het of behoort bewus te geraak het dat iets fout is”.

Sy wou nie kommentaar lewer op ’n vraag of dit so is dat eise binnekort kan verjaar nie en sê: “Ons kan nie ja of nee op die vraag antwoord nie omdat elke saak op eie meriete gehanteer moet word.”

Die ombudsman het nie die mag om die verjaring van eise uit te stel nie.

Van Gijsen glo egter dit gaan moeilik wees vir beleggers om te bewys hulle het nie geweet dat iets fout is nadat die nuus oor Pretorius se selfmoord in Julie 2012 bekend geword het nie.

“As jy nie teen Julie ’n eis ingedien het nie, gaan jy die geleentheid verbeur.”

Volgens Van Gijsen het hulle ná Pretorius se skietdood in 2012 aanvanklik baie navrae gekry van beleggers wat wou weet hoe om klagte by die Fais-ombudsman in te dien. Min beleggers het egter opgetree teen die bepaalde makelaars – vermoedelik omdat hulle wag om te kyk wat uit die likwidasieproses spruit.

Die makelaar Michal Johannes Calitz wat in Stellenberg in Kaapstad woonagtig is, het in dié stadium verreweg die meeste geld terugbetaal. Daar is al berig dat sy kliënte op sy advies meer as R86 miljoen in die skema belê het. Daar is reeds 17 uitsprake teen hom om altesame R10 miljoen aan beleggers terug te betaal.

Die eerste belegger wat verlede jaar teen Calitz ’n uitspraak gekry het, het Vrydag gesê hy is nog nie die geld terugbetaal nie omdat Calitz besig is om by die Raad op Finansiële Dienste (RFD) te appelleer teen die uitspraak.

Belvedere Management: Massive Criminal Enterprise or Defamed Fund Manager?Posted on April 11, 2015 by

11 Apr

Author:  

Publications: naked capitalism

Date Published :11 April 2015

…….. Looking a little further afield in the Belvedere fund universe, we find some other nuggets.

First, Belvedere runs some onshore funds in South Africa, but a presumably rather sweaty independent audit, initiated very soon after Marchant’s article came out, says they’re fine.

Second, Belvedere man Cobus Kellerman had some wonderful investment timing when his Ankh Analytic sold out its indirect holdings in Basileus Capital on the very day its principal, Julian Williams, was shot and killed  by his former business partner Hermann Pretorius, who then shot himself.  Pretorius’ RVAF Trust then turned out to be a Ponzi. Basileus Capital got into difficulties too:

The empire of slain businessman Julian Williams appears poised for collapse, following the announcement that his Basileus Capital group has initiated “business rescue proceedings”.

Business rescue is an alternative to liquidation provided for under the updated Companies Act.

Also at risk are investors in the JSE-listed BK One, a capital-raising vehicle for Basileus.

There is a trail of related party trans­actions, comprising intercompany investments, loans and write-offs, which raise questions about how much of the cash Basileus was able to raise from investors actually made its way into the project “pipeline” of which it boasted.

Belvedere crops up in the BK One story again, benefitting handsomely from a relatively terrible BK One deal for shares in Avalloy:

The February report discloses that R52-million was used to buy shares in Avalloy from SA Superalloys and from a mysterious Mauritian investment fund called Four Elements. A further R11.6-million was spent in taking over a loan to Avalloy that Four Elements had extended. Part of the loan had been converted into shareholding, meaning BK One had bought an effective 10.5% shareholding in Avalloy at a cost of R65-million. In contrast, the Industrial Development Corporation got its 10% in effect for free – a bonus for providing a R35-million loan.

Even more curious is that an associate of Four Elements was the major subscriber to shares in BK One, accounting for nearly half of the R200-million raised. The second-biggest shareholder in BK One, with 17%, is another Mauritian entity, Two Seasons, which shares the same management team as Four Elements: Ken Maillard and David Cosgrove of Belvedere Management, Mauritius. A message left on Belvedere’s automated answering service went unanswered.

Third, Belvedere funds made (purportedly modest) investments in the very dreadful Harlequin Property scheme, famous in the UK, a  resort development company that sucked up £400Mn of investor funds and ran out of cash with hardly any of the promised development complete.

Fourth, David Cosgrove of Belvedere has some previous form:

The now exposed Belvedere Ponzi kingpin David Cosgrove is no stranger to the South African financial authorities. Just over a decade back, he single handedly collapsed JSE-listed financial services company mCubed after the Reserve Bank and SARS discovered he was helping clients to illegally ship money offshore.

Described by those who know him as a high-pressure salesman who considers laws and regulations the same way SA taxi drivers view traffic lights, Cosgrove used the institutional offshore allowance as a vehicle to prey on rich South Africans nervous about the country’s future.

When the scheme was discovered, the authorities levelled a R140m fine on mCubed, which in effect killed the business, a piece of which was later picked up by the equally corrupted Fidentia. As a result, Cosgrove is about as popular at the Financial Services Board and in SA financial circles generally, as Netanyahu would be at an ISIS gathering………..

Regstappe kom teen makelaars

8 Apr

Author: Marelize Barnard

Publications: Die Burger

Date Published : 8 April 2015

Wes-Kaapse makelaars wat miljoene rande gemaak het deur beleggers na die Ponzi-skema van wyle Herman Preto­rius te lok, weier nou om hul kommissiegeld terug te betaal.

Die trustees van Pretorius se Rela­tive Arbitrage Fund (RVAF) en Seca Trust se volgende stap is om “een vir een op die ry af” die makelaars met regstappe te dwing om die geld terug te betaal, het Rynette Pieters van Independent Trustees Dinsdag gesê.

Intussen het die ombudsman vir finansiële adviseurs en tussengangers (Fais) Dinsdag die makelaars Simon Morton en Carol Louw, voorheen verbonde aan Catwalk Investments 592 met ’n besigheidsadres in Durbanville, beveel om R600 000 te betaal aan ’n belegger wat deur hul toedoen by die RVAF belê het.

Morton, wat ’n kantoor in Durbanville gehad het, het intussen na Auckland in Nieu-Seeland geëmigreer. Louw woon in Goedemoed.

Die klaer aan wie die geld terugbetaal moet word, Nigel Andrew Freddy, noem in die klag wat by Fais ingedien is dat hy R450 000 van sy R600 000-beleggingsgeld by Allan Grey wou belê, maar dat Morton hom anders oortuig het.

Noluntu Bam, ombudsman vir finansiële diensteverskaffers, het bevind dat Morton en Louw “blindelings” aanvaar het wat oor Pretorius se RVAF aan hulle vertel is. ’n Behoorlike ondersoek na die bestuur van die RVAF-beleggings is nie gedoen nie en albei het versuim om hul plig teenoor die belegger na te kom.

Bam het verder bevind dat die belegger nie ’n ingeligte keuse kon maak nie omdat dit nie aan hom genoem is dat sy geld belê sou word in ’n entiteit wat nie gereguleer of geregistreer was nie.

Morton en Louw het as “geregistreerde finansiële diensteverskaffers versuim om die Fais-wetgewing na te kom en kan nié die skuld vir die beleggingskeuse op die belegger plaas nie”, het Bam bevind.

Morton is een van die makelaars wat ook miljoene rande kommissie moet terugbetaal – tussen R8 miljoen en R10 miljoen.

Nog ’n makelaar, Wilhelm Erwee van Moorreesburg, moet meer as R12 miljoen aan kommissie terugbetaal.

Die makelaar Michal Calitz van Impact Finansiële Konsultante in Bellville weier om R9,06 miljoen terug te betaal nadat regter Monde Samela ’n bevel daaroor in die Wes-Kaapse hooggeregshof gemaak het.

Calitz het aansoek gedoen om verlof tot appèl teen Samela se uitspraak en daar word gewag op ’n datum waarop die appèl aangehoor kan word.

Pierre du Toit van Mostert en Bosman, regsverteenwoordiger van die kurators, het gesê die volgende stap is om teen elkeen van die makelaars op te tree sodat al die kommissiegeld terugbetaal kan word.

Adviser who put clients in RVAF must repay R1.6m

4 Apr

Author: Angelique Arde

Publications: iOL

Date Published: 4 April 2015

The financial advice ombud has handed down five scathing rulings against financial adviser Andrea Moolman of Vaidro Investments in Wilro Park, Roodepoort, for advising her clients to invest in the Relative Value Arbitrage Fund (RVAF), which is in liquidation following the suicide of Herman Pretorius, the architect of the scheme. 

Although it was promoted as a hedge fund, the RVAF was a Ponzi scheme, according to the ombud. The fund reportedly owes more than R2 billion to about 3 000 investors, and the trustees of the fund have said that most, if not all, investors’ funds have been lost. 

In the first of five rulings handed down last month against Moolman, the Ombud for Financial Services Providers, Noluntu Bam, said her office had received a number of complaints from the adviser’s clients who were invested in the RVAF.

he key issues in all complaints were identical, and the essence of Moolman’s response was to renounce liability for any breaches of the Financial Advisory and Intermediary Services (FAIS) Act, the ruling states. Additionally, Moolman claimed she had carried out a due diligence on the RVAF and that her actions were in the best interests of her clients. 

All the investors who have lodged complaints against Moolman say she advised them that, not only had the RVAF won a top award in 2008, but it was part of a financial services provider (FSP) known as Abante Capital, which had been in existence for years. 

“In reality, Abante Capital was a separate legal entity and was licensed as an FSP by the Financial Services Board (FSB), while RVAF was not,” Bam says. 

There was no mention of Abante or its licence number in the contractual documents between clients and the RVAF, and client funds were transferred directly into the fund without the protection of a nominee account, the ombud says. “Furthermore, there were no financials or even so much as a fund [fact] sheet.” 

Without these, Moolman could not have understood the economic activity that generated the returns, she says. 

When, in November 2011, the first complainant heard a warning about RVAF and its lack of transparency, he took this up with Moolman. She reassured him that the fund had weathered the recession and sent him a survey of South African hedge funds. 

Bam says the survey is pertinent because it was sent to substantiate her advice, yet the RVAF was “conspicuously absent” from the survey. Moolman’s action placated her client but “provides evidence that the RVAF did not exist as a hedge fund”, Bam says. When asked to explain the glaring absence of the fund among the funds listed, Moolman’s response showed that she relied on the supposition that Abante was the fund manager. 

Bam’s rulings against Moolman refer to her determination Inch vs Calitz, which unpacks all the issues on the rendering of advice to invest in the RVAF. These relate to the adviser’s failure to understand the RVAF and the risks to which clients were exposed. 

The Inch ruling was the first of 16 rulings by Bam against financial adviser Michal Calitz, who has the Certified Financial Planner accreditation and who is a member of the Financial Planning Institute. Calitz received R8.4 million in share profits from the RVAF. 

In terms of the FAIS Act, a financial adviser must recommend products that suit your needs and your investment objectives, and the risk inherent in the product must suit your risk profile. Your adviser is also obliged to ensure that the investment that he or she recommends is legitimate, and that the person offering the investment, or acting as an FSP, is licensed. Pretorius wasn’t licensed as an FSP. 

In the five rulings, Bam has ordered Moolman to pay back more than R1.6 million to the complainants. 

Under new regulations passed last month, hedge funds will be regulated by the FSB. They must, by March next year, be regulated as collective investment schemes, offering you, the consumer, a great deal more protection. 

Although they were not regulated at the time of Moolman’s advice, any advice rendered in respect of a hedge fund was subject to the FAIS code of conduct and a notice issued by the FSB. 

In terms of this code, a hedge fund service provider must obtain a signed mandate from a client before rendering any intermediary service to the client, and the mandate must be approved by the regulator. An additional signed mandate, confirming the contents of the first, is also required. 

Bam’s ruling states: “The legislature has made every effort to require not only that a client be appropriately appraised as to the risks inherent in, and the processes and strategies followed by, a hedge fund, but that the client confirms such disclosure having taken place.” 

Bam says Moolman was out of her depth in advising on the RVAF and failed in her duties to her clients. 

“Quite simply, no adviser would have recommended this product as a suitable component of any investment portfolio had they exercised the required due skill, care and diligence,” she says.