Failed fund claims hit R12.3m

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.

How to lay a complaint with the FAIS Ombud

Author: Hanna Barry

Publications: MoneyWeb

Date Published: 26 January 2015

JOHANNESBURG – To help you navigate the world of financial services in 2015, Moneyweb has put together a guide to understanding how the complaints process of the Financial Advisory and Intermediary Services (FAIS) Ombud works. Since the FAIS Ombud handles complaints from members of the public against financial advisors and product providers it could come in handy.

1. Try make amends

Before submitting a complaint to the FAIS Ombud, you must try to resolve it with the responding party (financial advisor or product provider) within a six-week time frame. Once you’ve received the final word from the respondent and are still not satisfied, you then have six months to approach the Ombud with your complaint.

2. Fill out a form

Your complaint should be outlined in a six-page form under the How to complain tab on the Ombud’s website. You can phone the Ombud on 012 470 9080 if you need help completing the form, but it’s fairly self-explanatory. The form requires a detailed explanation of your complaint, including background, product details, as well as date-stamped phone calls and emails exchanged with the person or company you are complaining against. Supporting documentation, such as proof of your investment and any relevant correspondence you may have, should be attached to your complaint. There’s even a section that asks you to describe how you would expect your complaint to be resolved.

3. Know your limits

The Ombud has a jurisdictional limit of R800 000 per complaint and complainants must agree to forego any amount in excess of R800 000 in order for the Ombud to consider their complaint. However, it’s important to understand that one complaint can comprise a number of causes of action, which for the purposes of this rule are considered as separate complaints.

“Where a person makes an investment of R790 000 in July 2013 as a result of advice offered by their financial advisor and then in May 2014 a further amount of R1 million is invested, following the advice of the same financial advisor, the two transactions make two separate causes of action,” explains FAIS Ombud, Noluntu Bam.

“In other words, even though the person will send us one complaint detailing all the investments they made, the two transactions remain two separate causes to institute a complaint,” Bam tells Moneyweb.

If this complaint were to succeed, the full R790 000 would be awarded in respect of the first cause of action, while the second cause of action would be limited to R800 000. The complainant would ultimately walk away with R1.59 million.

Importantly, the Ombud is precluded from looking at complaints pending before a court of law. The office’s eventual determination has the effect of a civil judgment of the court.

4. Wait for an outcome

Once the FAIS Ombud has received your complaint, the office “may follow and implement any procedure which the FAIS Ombud deems appropriate, and may allow any party the right to legal representation,” an information leaflet on the Ombud’s website broadly explains.

The respondent is naturally given a chance to respond and the Ombud must first attempt to mediate a settlement between the parties. If the parties refuse to accept the Ombud’s recommendations, the Ombud will make a final determination. This could include either the dismissal of the complaint or the upholding of the complaint wholly or partially by compensating the complainant for financial harm suffered.

R10m for one advisor

Of the 9 400 odd new complaints received in the 2013/14 financial year, the Ombud settled 7 587 within the same year (including 49 determinations), returning around R30.6 million to consumers.

Of the 49 determinations made, 17 were made against Impact Financial Consultants CC and Michal Johannes Calitz in respect of Herman Pretorius’s Relative Value Arbitrage Fund (RVAF).

Excluding the annual interest accumulating from the date of determination to the date of final payment (varying between 9% and 15.5%), the total awards made to consumers in respect of this one advisor and product came to more than R10.7 million.

Calitz moet R8 m. betaal

Author: Marelize Barnard

Publications: Die Burger

Date Published : 17 Oktober 2014

Wyle Herman Pretorius se beleggingskema het “ ’n baie lae risiko en is gepas vir ’n mens wat op die punt is om af te tree”.

Dít was die raad wat die makelaar Michal Calitz van Impact Finansiële Konsultante in Bellville volgens ’n belegger verskeie kere aan hom gegee het toe hy tussen Augustus 2007 en Maart 2011 al sy aftreegeld by Preto­rius belê het.

Die belegger, Hendrik Carstens, is een van die mense wat Calitz by die ombudsman vir finansiële adviseurs en tussengangers (Fais) verkla het. Carstens het vyf keer beleggings met ’n totale waarde van R2,3 miljoen in Pretorius se Rela­tive Value Arbitrage Fund (RVAF)-trust belê en mettertyd R175 000 daarvan onttrek.

Die Fais-ombudsman, Noluntu Bam, kan slegs eise van tot R800 000 hanteer. Sy het Dins­dag beslis dat vir die een belegging van R1,9 miljoen Calitz slegs R800 000 hoef terug te betaal. Sy het egter die ander vier beleggings bygereken en gelas dat Calitz R1,19 miljoen aan Carstens moet terugbetaal.

Bam het Maandag nog ’n eis van R150 000, wat deur Jeanrich Ehlers ingedien is, teen Calitz toegestaan. Dit is die jongste van 13 suksesvolle eise teen Calitz en hy moet nou reeds meer as R8 miljoen aan beleggers terugbetaal.

Die Burger het vantevore berig dat Calitz die eise teen hom teenstaan.

Calitz voer aan dat daar geen kousale verband is tussen die skade wat beleggers gely het en sy optrede as makelaar nie. Die skade was nie sy (Ca­litz se) toedoen nie, maar die gevolg van Pretorius se bedrog.

Calitz is ook besig met ’n aansoek om verlof tot appèl teen ’n uitspraak van regter Monde Samela in die Wes-Kaapse hooggeregshof.

Dit is nadat Monde gelas het dat Calitz, sy beslote korporasie Impact Finansiële Konsultante en die maatskappy EQ Prop R9,06 mil­joen moet terugbetaal.) Vyf makelaars het reeds ooreenkomste aangegaan met die kurators van Pretorius se maatskappye en trusts en hulle het reeds R1,8 miljoen terugbetaal. ’n Verdere sowat R2,4 miljoen gaan deur dié makelaars terugbetaal word.

Makelaar moet sy Pretorius-miljoene terugbetaal

Author: Marelize Barnard

Publications: Die Burger

Date Published : 14 August 2014

KAAPSTAD. – Die makelaar Michal Calitz, wat beleggers gelok het om meer as R86 miljoen by die swendelaar Herman Pretorius te belê, moet miljoene rande aan kommissiegeld en ‘n “kontantgeskenk” terugbetaal.

Regter Monde Samela het in die Wes-Kaapse hooggeregshof uitspraak gelewer in ‘n aansoek deur die kurators van Pretorius se gesekwestreerde Relative Value Arbitrage Fund (RVAF) en sy Seca-trust.

Die kurators het ‘n aansoek by die hooggeregshof ingedien dat Calitz R6,54 miljoen aan die RVAF en nagenoeg R380 000 aan die Seca-trust moet terugbetaal.

Verder is geëis dat Impact Finansiële Konsultante (’n beslote korporasie waarin Calitz ’n 80%-aandeel het) ook sowat R2,1 miljoen aan die twee trusts moet terugbetaal.

In die beëdigde verklaring van Lambertus von Wielligh Bester, een van die kurators, en hofdokumente wat in die aansoek ingedien is, word genoem dat Calitz tussen 28 Februarie 2005 en 31 Mei 2012 meer as R6 miljoen in betalings ontvang het uit die RVAF as wins of kommissie omdat hy beleggers na Pretorius verwys het.

Van die Seca-trust het hy R377 155 ontvang.

Pretorius het ook net minder as R1 miljoen aan Calitz geleen. Van dié geld is R750 000 aan Pretorius terugbetaal deur Calitz se kommissiegeld van die lening af te trek. Pretorius het die res, R250 000, as ‘n geskenk aan Calitz gegee en hy het dit aanvaar.

Die kurators het aangevoer die betalings was deel van ‘n onwettige beleggingskema, of Ponzi-skema.

Calitz het op sy beurt aangevoer dit is geld wat hy vir dienste wat gelewer is, betaal is en waarop hy belasting betaal het.

Samela het gelas Calitz moet die geld – met rente bygereken – terugbetaal.

Makelaar sê verlies is nie sy skuld nie

Author: Marelize Barnard

Publications: Die Burger

Date Published : 12 August 2014

KAAPSTAD. – Die rede waarom beleggers die geld verloor het wat hulle by die oorlede swendelaar Herman Pretorius belê het, was die gevolg van Pretorius se bedrog en “nie die optrede van ’n makelaar nie”.

Dít is die verweer van die makelaar Michal Calitz van Impact Financial Consultants teen wie die ombudsman vir finansiële adviseurs en tussengangers (Fais) die laaste tyd ’n rits besluite geneem het.

Die Fais-ombudsman het Calitz gelas om van sy kliënte se geld wat by Pretorius belê was, terug te betaal.

Calitz het aangedui dat hy dié beslissings gaan betwis. Hy sal dus geen geld in dié stadium terugbetaal nie.

Jean Kotzé, Calitz se prokureur van die prokureursfirma Laäs en Scholtz, het gister gesê ingevolge die regulasies van die Fais-ombudsman het Calitz 30 dae tyd nadat ’n beslissing gelewer is om aan te dui of hy appèl wil aanteken.

“Calitz voer aan dat daar geen kousale verband is tussen die skade wat beleggers gely het en sy optrede as makelaar nie. Dit was nie Calitz se toedoen nie, maar die gevolg van Pretorius se bedrog,” het Kotzé gesê.

“Die skade wat deur beleggers gely is, is ook nie die gevolg van professionele nalatigheid of Fais-regulasies waarby daar nie gehou is nie.”

Volgens Kotzé is daar van die kliënte wat klagtes by die Fais-ombudsman ingedien het wat steeds sy dienste as makelaar gebruik.

“Dit wys hulle besef die skade wat hulle gely het, is te wyte aan Pretorius se bedrog en nie Calitz se betrokkenheid nie.”

Die moontlikheid bestaan dat dié beleggers hoop dat Calitz se versekering die eise teen hom sal dek.

Beleggers het op advies van Calitz meer as R86 miljoen in Pretorius se skema belê.

Calitz het ook ’n aansoek in die Wes-Kaapse hooggeregshof teengestaan waarin die kurators van Pretorius se gesekwestreerde Rela­tive Value Arbitrage Fund (RVAF)-trust en sy Seca-trust geëis het dat hy diensgeld wat aan hom betaal is, moet terugbetaal.

Die kurators het ’n aansoek by die hooggeregshof ingedien dat Calitz R6,54 miljoen aan die RVAF-trust en byna R380 000 aan die Seca-trust terugbetaal.

Calitz het op sy beurt aangevoer dat hy geregtig is op al die betalings aan hom. Volgens hom is dit geld wat in die normale verloop van sy sake met Pretorius se Abante-groep aan hom betaal is.

Regter Monde Samela het in Mei vanjaar uitspraak voorbehou.

More woes for hedge fund adviser

Author: Angelique Arde

Publications: iOL

Date Published: 03 August 2014

The Ombud for Financial Services Providers has handed down another ruling – the fifth so far – against financial adviser Michal Calitz, who advised a number of his clients to invest in the Relative Value Arbitrage Fund (RVAF), which turned out to be a scam.

Calitz was paid R8.4 million in share profits from the RVAF before it collapsed in July 2012, the month the master-mind of the scheme, Herman Pretorius, committed suicide. The RVAF collected an estimated R2.2 billion from about 3 000 investors.

In the latest ruling, ombud Noluntu Bam ordered Calitz to repay Garvitte Herman Lombard R700 000.

According to the ruling, Calitz alleged that he did not introduce Lombard to the RVAF. He claimed that another of his clients who had invested in the scheme had. He also claimed that he told Lombard that the RVAF was an unregulated hedge fund, and that the fund manager, Abante Capital, was registered with the Financial Services Board. He contested that Lombard was satisfied with the risk and that the funds invested constituted about 10 percent of Lombard’s portfolio. The RVAF investment was to diversify the client’s portfolio.

In the latest ruling, ombud Noluntu Bam ordered Calitz to repay Garvitte Herman Lombard R700 000.

According to the ruling, Calitz alleged that he did not introduce Lombard to the RVAF. He claimed that another of his clients who had invested in the scheme had. He also claimed that he told Lombard that the RVAF was an unregulated hedge fund, and that the fund manager, Abante Capital, was registered with the Financial Services Board. He contested that Lombard was satisfied with the risk and that the funds invested constituted about 10 percent of Lombard’s portfolio. The RVAF investment was to diversify the client’s portfolio.

But in her determination, Bam refers to her first ruling against Calitz and the “key issues”: his failure to understand the entity and the risks to which he was exposing his clients, whose funds were transferred directly into the RVAF “without even the protection afforded by a nominee account”.

“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,” Bam says.

Lombard relied on Calitz’s advice, and Calitz failed to act in accordance with the Financial Advisory and Intermediary Services Act.

Calitz is the owner of Impact Financial Consultants, an authorised financial services provider in Bellville, Western Cape. He is a member of the Financial Planning Institute and is an accredited Certified Financial Planner.

Hedge fund scam: more rulings

Author: Angelique Arde

Publications: iOL

Date Published: 20 July 2014

Michal Calitz, the financial adviser who was paid R8.4 million in share profits from the Relative Value Arbitrage Fund (RVAF), which was, in fact, a scam, has been ordered to compensate two more clients who lost money after he advised them to invest in it.

The RVAF collapsed after Herman Pretorius, the mastermind of the scheme, shot his business partner and committed suicide in July 2012. The scheme collected an estimated R2.2 billion from about 3 000 investors.

In the two latest rulings by the Ombud for Financial Services Providers, Calitz has been ordered to repay Dr Johannes Hartshorne R460 000 and Martha Jooste R165 000.

This brings to four the number of rulings by ombud Noluntu Bam against Calitz (Personal Finance reported recently on the previous two rulings, and the reports can be viewed at http://www.persfin.co.za).

Calitz is the owner of Impact Financial Consultants, an authorised financial services provider with offices in Bellville, Western Cape. Calitz is a member of the Financial Planning Institute (FPI) and an accredited Certified Financial Planner.

Bam’s latest rulings show that in the weeks leading up to Pretorius’s death, Calitz advised both Hartshorne and Jooste to disinvest from the RVAF – “but by that stage it was already too late”.

In both cases, Calitz had been an adviser to the complainants for many years.

Hartshorne contends that Calitz never told him that neither the RVAF nor Pretorius were registered with the Financial Services Board (FSB) and that there could be potential risks.

“On the contrary, Calitz told [Hartshorne’s] wife that Pretorius was a person of integrity and that the RVAF was performing well.”

Hartshorne also told the ombud that Calitz did not carry out a risk assessment on him.

Jooste complained that Calitz assured her that there was no risk of investing in the RVAF and that he had invested some of his own money in the fund, which “was managed by professional people with industry experience”.

Jooste’s R165 000 was her entire investible capital and had been sitting in an Absa money market investment account before Calitz persuaded her that the RVAF was her best option.

In response to both complaints, Calitz claims to have explained to his clients the workings of a hedge fund and that these instruments are not regulated but that investment manager Abante Capital through which the investments were channelled was registered with the FSB.

But in both determinations, the ombud says the key issues, as with previous rulings against Calitz, pertain to the rendering of advice to invest in the RVAF – principally, Calitz’s “failure to understand the entity and the risks to which he was exposing his clients”.

She reiterates that no adviser would have recommended the RVAF as a suitable component in “any” investment portfolio had they exercised the required due skill, care and diligence.

The FPI responds

Jacqui Grovè, the legal and compliance services manager for the FPI, says that when the news broke about the RVAF, the FPI launched an enquiry to find out whether any FPI members might have been involved in the scheme.

By the end of last year the FPI had evidence of the possible involvement of two members, she says.

“Our investigation was made difficult by the fact that, despite our best efforts, we could not find sufficient verifiable evidence with respect to these members. We then took a decision to await the results of the ombud’s investigation.”

The release of the financial advice ombud’s determinations has provided the FPI with [the] information [needed] to proceed with disciplinary action, Grovè says.

“We are now proceeding as speedily as possible, having regard for due process, with finalising hearings. We shall publish the results of these hearings.”

Although the ombud’s rulings carry the weight of a high court ruling, Grovè says an FPI member is “deemed innocent until found guilty by a competent FPI disciplinary panel of his or her peers”.

She says the institute’s purpose is to benefit the public by ensuring that its members can be trusted always to put their clients interests’ first.

Hedge fund scam: second ruling

Author: Angelique Arde          

Publications: iOL

Date Published: 13 Jul 2014

The Ombud for Financial Services Providers has handed down another ruling against financial planner Michal Calitz of Impact Financial Consultants in Bellville.

Calitz earned R8.4 million in so-called share profits from the Relative Value Arbitrage Fund (RVAF), which purported to be a hedge fund but was, in fact, a scam.

The RVAF collapsed after its architect, Herman Pretorius, shot himself in July 2012. The fund is in liquidation, and its trustees have indicated that some, if not all, investor funds have been lost.

Both of Bam’s rulings against Calitz are the result of complaints by clients who invested in the RVAF on his advice.

The latest ruling states that, acting on Calitz’s advice, Robert Whitfield-Jones invested two amounts in the RVAF: R350 000 in March 2009 and R250 000 in February 2012. The money for both investments came from Whitfield-Jones’s unit trust fund investments. Calitz told his client that he could earn a better return if he invested in the RVAF.

Whitfield-Jones says he knew nothing about the risks associated with investing in a hedge fund and trusted Calitz to render the best advice, particularly because they had a relationship that went back several decades.

Holding Calitz accountable for his loss of R600 000, Whitfield-Jones turned to Bam for compensation.

In her determination, Bam refers to her previous ruling against Calitz in which she found that, “on the objective evidence, he could not have conducted even the most basic due diligences on the RVAF”.

The issues pertain to Calitz’s failure to understand the RVAF and the risks to which he exposed his clients when he advised them to invest in it, she says.

“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,” Bam says.

Whitfield-Jones, as a client of a registered financial adviser, relied on Calitz’s advice when he made the investment. When rendering financial services to clients, the financial services provider is required to act in accordance with the Financial Advisory and Intermediary Services Act and its code of conduct. Calitz failed in this regard, Bam says.

She ordered him and his company, jointly and severally, to pay Whitfield-Jones R600 000.

Calitz holds a postgraduate diploma in financial planning and has the Certified Financial Planner accreditation. He is a member of the Financial Planning Institute (FPI), which has its own code of conduct.

The FPI has yet to discipline any of its members who advised clients to invest in the RVAF. In October 2013, the FPI said it was expecting to hold disciplinary hearings in December. The outcomes of the disciplinary hearings would be published once the appeal period had expired. But to date no outcomes have been published. Personal Finance has had no response to questions put to the FPI’s legal and compliance services manager.

Unit trust manager received R15m from Herman Pretorius

Author: Julius Cobbett

Publications: MoneyWeb

Date Published: 20 June 2013

Financial advisers connected to RVAF Ponzi testify in insolvency inquiry.

JOHANNESBURG – An insolvency inquiry has revealed that one-time unit trust manager Michal Calitz received more than R15m from Herman Pretorius.

Calitz was one of Pretorius’s closest friends. A rare public photo of Pretorius shows him posing with his two sons and Calitz on the golf course. Calitz and Pretorius went to the same Bible study group, which met every second Friday.

Calitz referred many investors to Herman Pretorius’s Relative Value Arbitrage Fund (RVAF), which has since been exposed as a Ponzi scheme. It has been estimated ………

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