Tag Archives: Moneyweb

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.

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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.

How to lay a complaint with the FAIS Ombud

27 Jan

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.

Herman Pretorius brokers got at least R100m

31 Oct

Author: Julius Cobbett

Publications: MoneyWeb

Date Published: 31 October 2013

Financial Planning Institute says it is finalising charges against members.

JOHANNESBURG – Brokers who sold the investment products of the late Herman Pretorius were paid commission of “at least” R100m. This is according to the most recent letter from the curators of his failed investment scheme, the Relative Value Arbitrage Fund (RVAF). A copy of the letter can be downloaded here.

It has been more than a year since Pretorius shot first his former business partner and then himself. The incident confirmed what some had already suspected: Pretorius had been running a massive Ponzi scheme. It has been estimated that the scheme took roughly R2.2bn from 3000 investors.

Both the Financial Services Board (FSB) and the Financial Planning Institute (FPI) have launched investigations into brokers who peddled the scheme. But there has been no disciplinary action announced as yet. Likewise the financial advice ombudsman Noluntu Bam has yet to issue a determination connected with a Herman Pretorius investment.

Earlier this year the RVAF identified Michal Calitz as one of the more prominent brokers. Calitz, who was a close friend of Herman Pretorius, received more than R15m from the scheme.

Calitz is still a representative of Impact Financial Consultants CC, which is an FSB-authorised financial service provider.

Calitz is also listed on the FPI’s website as a valid member.

The FPI tells Moneyweb that it is finalising charges against members in relation to the RVAF. It says it will only pronounce on the matter once a disciplinary hearing has been held. The hearing is expected to be held in December, the exact date yet to be confirmed.

“In terms of the FPI’s Disciplinary Regulations the outcomes of disciplinary hearings will be published – however, this is done once the matter is finalised and the period for an appeal has expired,” it says.

Similarly the FSB says its own investigation into the Herman Pretorius matter is not finalised yet as the “FAIS supervision department is still in a process of engaging with the identified financial services providers and other interested parties”.

The RVAF’s curators are trying to trace investor money that was moved by Pretorius to the UK and Switzerland. The curators have appointed attorneys in both those countries to assist them trace the funds.

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Oh my hat, do I really need a financial advisor?

17 Oct

Author: Sasha Planting

Publications: MoneyWeb

Date Published: 17 October 2013

Is it not enough to google like crazy and learn that way?

CAPE TOWN: For a long time I had a deep distrust of any kind of financial advisor, associating them with several ill-advised and costly investments made back in my twenties and thirties.

So I did my own research, invested in a retirement scheme without the benefit of a broker; started a savings plan and began building a small portfolio of shares which I manage myself.

I was pleased with myself. Then this year our friendly taxman lobbed a R25 000 tax penalty at me. Suddenly I had a different view on advisors and scrambled for a tax consultant. Needless to say he was worth every cent. I was even able to get the better part of the penalty back – to my advisor’s surprise, I might add.

So then I wondered, if I could mess up my simple tax that badly, perhaps I could mess up my financial planning too. Hmmm. Do we really need financial advisors? Is it not enough to google like crazy and learn that way? I wasn’t sure any more. And assuming I did need an advisor, how on earth would I find someone independent and trustworthy? Because now I’m starting to think that finding a good financial advisor might be more important than finding a good husband.

So I chatted to some advisors for their views. Rita Cool is a financial consultant with Alexander Forbes; Gavin Gehlig is co-founder of CGN Wealth and Warren Ingram is co-founder of Galileo Capital who has coincidentally written a book entitled ‘Become Your Own Financial Advisor’. All are certified financial planners.

Of course asking a financial consultant if one really needs a financial advisor is like Little Red Riding Hood asking the wolf if he is hungry. But let’s face it, when the wolf answered yes, he was telling the truth.

So it was not surprising that all three advisors agreed that most people – note, not all – would be financially better off had the enlisted the services of an advisor early on in life. They also agree that the internet is a useful resource, specifically when you are looking for targeted information.

What the internet lacks is the ability to take all the information and compile it into a holistic plan. “Advisors add value by helping you get from where you are now to where you want to be – financially that is,” says Cool. “They help you quantify and qualify your goals and will devise a personal, step-by-step plan to get there. They are also aware of things the ordinary person may not be – changes in regulation or which product is more or less suitable in different circumstances. So many people become paralysed by the amount of information available that good intentions remain just that.”

Even financial advisors have their own financial advisors Ingram says. “It is difficult to be knowledgeable about all aspects of your finances. For instance, I pay someone to do my tax and update my will even though I am in the industry.”

So how on earth do you find an advisor? Everyone says ‘by word of mouth’, but it doesn’t help if your friends don’t have someone either. It also doesn’t help if their trusted advisor turns out to be less than kosher, as investors in Herman Pretorius’s Real Value Arbitrage Fund discovered.

As a general rule it is advisable to seek out advisors with a professional qualification. This means they need to be a CFP® professional and you can find a list of them in your area from the Financial Planning Institute’s website www.fpi.co.za. Another general rule is to focus on advisors who work for independent companies rather than those who work for a product provider or a bank.

Of course their advice comes at a price. I used to struggle with this idea because in my experience product advice was ‘free’. But when I noticed that commissions (paid to the agent who sold the product) were eating up my returns I learned that ‘free’ also has a price.

“A great financial planner can make an enormous difference to your life while a bad advisor can set you back very badly,” says Ingram. “So you should choose your advisor very carefully and not necessarily focus on the cheapest.” Would you choose the cheapest bridge-building engineer or the cheapest doctor, or would you pay for the best you could afford? “I think the same applies to your money.”

Most advisors still earn an income from product commissions. “This is fine,” says Cool, “but clients should always be informed of the commission component charged on a product.” She notes that the commission-based structure is slowly changing towards a fee structure where a client pays a set fee for a specific service.

Some planners work on an hourly rate which varies from R700 all the way up to R2500, depending on complexity. Others prefer to charge a flat rate for the plan itself. “This way the potential client is aware of the cost upfront. I would charge R3000 (vat inclusive) for a retirement and estate plan which could include creating or updating a client’s last will and testament,” Gehlig says.

Younger clients when starting out won’t be earning a fortune and will still be in the build up phase of their lives and probably change jobs a few times prior to settling and finding their niche. “As a planner your services for a client earning R10 000 per month would be different to a client earning R100 000 per month but each client deserves to be treated identically,” he says.

It’s a good idea to check if there is a fee for the initial advice consultation.  In many offices there is no fee for an initial consultation and fees are only charged if and when a product is set up.

That is a good enough reason to just give it a try.

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Sharemax director warns against Fais Ombud complaints

24 Sep

Author: Julius Cobbett

Publications: MoneyWeb

Date Published: 24 September 2013

Dominique Haese claims investors might lose their right to investment returns.

JOHANNESBURG – Investors in Nova Group Investments have been cautioned against pursuing complaints with Fais Ombud Noluntu Bam. Investors have been warned that if they pursue their complaints, they may forfeit their rights to investment returns or repayments from the Nova Group

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Moneyweb shines at Sanlam Awards

18 Jul

Author: Julius Cobbett

Publications: MoneyWeb

Date Published: 18 July 2013

Clark and Rees honoured with three category awards.

Two Moneyweb journalists scooped three category awards at the prestigious Sanlam Awards for Excellence in Financial Journalism. Moneyweb founder Alec Hogg also received a Lifetime Achievement Award.

Moneyweb’s financial services correspondent Jeanette Clark won in the categories of Personal Finance and Infrastructure Development.

Malcolm Rees was honoured in the category for the Economy and Industry for his in-depth reporting on developments in the unsecured lending market. He was the co-winner with Business Report veteran Ann Crotty.

Julius Cobbett was also a finalist in the category for Personal Finance for his reporting on the Herman Pretorius saga.

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Apartment linked to Herman Pretorius on auction

25 Jun

Author: Julius Cobbett

Publications: MoneyWeb

Date Published: 25 June 2013

Movables included in the sale are a patio couch set, a Bosch dishwasher and an LG Exresscool fridge.

A luxury Claremont apartment which forms part of the assets of a company in liquidation and of which the late Herman Pretorius was a director, will be presented for public auction on-site by the ClareMart Auction Group on Wednesday, July 10.

“Our Group received joint instruction from the liquidators of RZT Zelpy 4005 (Pty) LTD  to proceed to auction with this premier southern suburb apartment and we are certain that this auction will achieve similar interest as our successful sale of Pretorius’ sea front home at Voelklip. The Claremont apartment will be sold together with all of its luxurious and décor appointed contents” says Executive Director, Andrew Koch.

Pretorius was known for his involvement in ……..

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Unit trust manager received R15m from Herman Pretorius

20 Jun

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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Warning signs of Ponzi schemes: Part 2

22 Mar

Author: Malcolm Rees

Publications: MoneyWeb

Date Published: 22 March 2013

Lessons from Defencex: avoid schemes affiliated with religion, huge returns and friends’ advice.

JOHANNESBURG – The apparent collapse of the 2%-a-day scheme, Defencex, has left a very large, mostly poor, investor base out in the cold.

The Defencex bank account, held in the name of Net Income Solutions, contained R320m at the time it was frozen.

Although it remains unclear how much in total has been collected through the scheme, the sheer size of the account suggests a very large operation which has managed to attract thousands of members .

……… Ponzi schemes are often disguised as legitimate investment operations such as with the massive Bernard Madoff scheme in America or the tragic Herman Pretorius case locally. In an effort to help potential investors identify when they might be falling victim to such schemes Moneyweb asked experts to describe some of the typical red-flags that would be suggestive of a prohibited business practice.

……… Many of the more sophisticated Ponzi schemes are not as bold as to offer returns at levels in excess of 30% per annum. Instead such scheme, as with the Herman Pretorius case, may offer investors high but not extreme levels of profit. These sophisticated operations blend genuine investment or activities with a Ponzi type structure and can stay in operation for extended periods of time, says de Villiers.

 

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Moneyweb’s top ten stories of 2012

4 Jan

Mainly dominated by the events surrounding the death of Herman Pretorius

 

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Herman Pretorius’s widow responds to curator allegations

11 Dec

Author: Julius Cobbett

Publications: MoneyWeb

Date Published: 11 December 2012

Susan Pretorius and lawyer deny wrongdoing, oppose application to freeze assets.

JOHANNESBURG – Susan Pretorius, the widow of multibillion rand pyramid schemer, Herman Pretorius, denies that she and other family members are hiding assets. The fear that assets might be hidden was raised in court papers by Rynette Pieters, joint curator of Herman Pretorius’s failed R3.1bn investment scheme, the RVAF Trust ………

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FSB News

10 Oct

Two recent artiles on the FSB. In the moneyweb artiles the FSB is struggling to pass candidates  for the  Financial Services Board’s (FSB) FAIS regulatory exam.  The deadline has yet again being postponed for a further six months.

Solidarity has asked for a moratorium on all examinations for financial advisers. Their accusation claims that due to poor management from the FSB, only about 68% of  representatives have passed the exam by the beginning of June.

Read the articles:

Financial reps struggling to pass FSB exams

PRETORIA – Financial representatives are struggling to pass the Financial Services Board’s (FSB) FAIS regulatory exam. Two weeks before the deadline for those who have written at least once, but failed (September 30), the FSB has announced that the deadline will be extended by another six months.

The extension comes after the FSB stated on numerous occasions that it will not ……… (Read More)

Union calls for moratorium on FSB regulatory exams

PRETORIA – Trade Union Solidarity has handed a memorandum to the Financial Services Board (FSB) that calls for a moratorium of at least a year on all regulatory examinations for financial advisers.

The first deadline for financial advisers to write the regulatory exams was the end of June, but various ……… (Read More)

Fais Ombud – A Toothless Tiger with no Real Power?

20 Sep

Author Self

Publications: RVAF MEDIA RELEASES

Date Published: 20 September 2012

As the RVAF saga draws on, the role of the FSP and Fais (ombud) is even more unclear than 3 months ago. We heard that Herman Pretorius was or was not registered with the FSB, but would that have helped?

First we saw a declaration from them, washing their hands in innocence:

Herman Pretorius: Clarity on the Financial Services Board’s investigation

FSB explains its probe into Herman Pretorius

and seems that if they do make a ruling, its not enforcable!

Rogue broker ignores Fais Ombud

JOHANNESBURG – A victim of bad financial advice is struggling to enforce a Fais Ombud ruling.

The Ombud ruled in McCarter’s favour on November 4 2010. (Click here to download a copy of the determination). Van der Merwe was ordered to pay McCarter R660 000 with interest of 15.5%, beginning from October 2008.

McCarter’s difficulties in enforcing the Ombud’s ruling may be a common theme for other victims of bad advice.

Garek broker unfazed, unrepentant

Ordered to refund three more investors, broker continues to peddle shares.

JOHANNESBURG – In the face of fresh punishment, rogue financial adviser Andre van der Merwe is unfazed and unrepentant.

What’s you’re thoughts?

Fund’s lucky escape from Herman Pretorius fallout

12 Sep

Author: Julius Cobbett

Publications: MoneyWeb

Date Published: 12 September 2012

Fund sold its entire stake in listed Julian Williams entity on the day he was shot.

JOHANNESBURG – Fund manager Ankh Analytic sold its entire stake in BK One on the day Basileus Capital CEO Julian Williams was shot.

The sale was a very lucky escape for Ankh, because BK One’s portfolio consists of four Basileus-related companies. One of these companies, Tor Construction, has already been placed under provisional liquidation in the fallout of Williams’s death. The remaining three ………

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“I am deeply sorry” – Herman Pretorius broker

4 Sep

Author: Julius Cobbett

Publications: MoneyWeb

Date Published: 04 September 2012

Death threat and a summons for New Zealand-based, FSB-registered financial adviser.

JOHANNESBURG – In May last year, financial adviser Simon Morton got a new client. She was 61 years old. The client, Betty*, asked Morton to set up an investment portfolio for her retirement.

Morton’s advice was for Betty’s husband to withdraw funds of R1 150 000 from Stanlib. Morton recommended that half this money be placed in an unorthodox “hedge fund”. The other half was to be split between an unlisted company called SA Superalloys, a junior platinum company called Wesizwe, and a “new fund” called Abante Holdings.

Needless to say, this was bad advice. All of the above ………

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Clients of ex-hedge fund boss speak of misfortune

30 Aug

Author: Sasha Planting

Publications: MoneyWeb

Date Published: 30 August 2012

Business rescue meeting offers cold comfort for Superalloys’ investors.

CAPE TOWN – Two years ago the late Herman Pretorius, of the now infamous Relative Value Arbitrage Fund (RVAF), had a ‘vision’ that he would one day bring immense harm to many people. He voiced these concerns to his Dominie, who advised him to walk a truthful and righteous path.

Preaching at Pretorius’s funeral last month, the same Dominie told the assembled congregation that Pretorius had lost his way. He was not preaching just to family and friends, but to investors too – because in many cases investors were also friends and the relationships stretch………

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Troubled Basileus Capital wants to list assets on JSE

28 Aug

Author I-Net Bridge

Publications: MoneyWeb

Date Published: 28 August 2012

BK One the intended home for seven companies with an unknown value.

Johannesburg‚ Aug 28 (I-Net Bridge) – BK One Limited (BK1P) announced on Tuesday that last week it had entered into a binding memorandum of understanding for it to acquire various target assets from Basileus Capital.

The target assets consist of seven assets‚ three of which the BK One already has an interest in. They include Pure Ocean‚ Cash Connect‚ Kawuleza Connect‚ Lefatse Minerals‚ Toroic‚ Burgan Oil and Agri-Tech.

“The company (BK One)‚ through its historic …….

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Herman Pretorius’s “fund” owes R3.1bn to investors – curator

27 Aug

Author: Julius Cobbett

Publications: MoneyWeb

Date Published: 27 August 2012

New information shows the scheme to be much larger than originally thought.

JOHANNESBURG- Herman Pretorius’s unregulated Relative Value Arbitrage Fund (RVAF) has turned out to be much larger than originally thought. The fund’s curator, Lambertus von Wielligh Bester, says that records suggest that about R2.2bn was received from the public. And updated quarterly statements show that the fund owes its investors about R3.1bn.

The difference of R900m between the amounts received and owed is most likely explained ………

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Death of Julian Williams causes liquidation threat for JSE investors

23 Aug

Author: Julius Cobbett

Publications: MoneyWeb

Date Published: 23 August 2012

director James Ngculu seeks liquidation of a BK One investment.

JOHANNESBURG – Basileus Capital director, James Ngculu wants an investment of JSE-listed BK One declared insolvent. Ngculu is a former ANC member of parliament and the right-hand man of the late Basileus CEO Julian Williams.

Ngculu drafted an affidavit calling for the liquidation of road-building business Tor Construction. Tor Construction is one of four companies …..

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PwC helped Herman Pretorius sell his R1.8bn fund

20 Aug

Author:  Julius Cobbett

Publications: MoneyWeb

Date Published: 20 August 2012

Audit firm admits to “facilitating” meetings but denies recommending Pretorius’s scheme.

JOHANNESBURG – Audit firm PricewaterhouseCoopers “facilitated” investment meetings held by the late Herman Pretorius. Before his death Pretorius had been operating an unorthodox investment scheme called the Abante Relative Value Arbitrage Fund (RVAF). This fund, which took the form of a trust, was provisionally sequestrated by the Western Cape High Court on August 1. The fund is believed to owe R1.8bn to 3 000 investors.

A number of readers have contacted me claiming that PricewaterhouseCoopers (PwC) was involved ……..

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Basileus seeks business rescue after death of CEO Julian Williams

14 Aug

Julian Williams

Author: Julius Cobbett

Publications: Moneyweb

Date Publiched: 14 August 2012

Business rescue includes SA Superalloys which owes R140m to 500 investors.

JOHANNESBURG – Basileus Capital, a private-equity firm that employs nearly 50 people, has initiated business rescue proceedings. This comes nearly three weeks after the death of Basileus CEO Julian Williams. It is believed that Williams was shot dead by his former business partner Herman Pretorius, who committed suicide afterwards.

The initiation of a business rescue is the second act of insolvency to result from the murder. Less than a week after the ………..

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FSB explains its probe into Herman Pretorius

10 Aug

Author:  FSB

Publications: MoneyWeb

Date Publiched: 10 August 2012

If there was any non-compliance by Pretorius, it was well-designed not to be subject to scrutiny – FSB.

In the wake of the shooting by Mr Herman Pretorius (“Pretorius”) in Cape Town, with indications of massive losses to investors that invested in his schemes, the Financial Services Board (“FSB”) would like to offer some perspectives on the regulator’s actions and investigations which it could legally have done and did do with respect to the business activities of the late Pretorius.

There have been varying concerns expressed and  ……….

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Herman Pretorius: Brokers will pay for bad advice

5 Aug

Author:  Julius Cobbett

Publications: MoneyWeb

Date Publiched: 05 August 2012

Complaints with the Fais Ombud could bankrupt financial advisers in R1.8bn scam.

JOHANNESBURG – Financial advisers who peddled the investment products of the late Herman Pretorius could pay dearly for their bad advice. Investors can lay complaints against their advisers with Noluntu Bam (pictured), the ombud for financial services providers (Fais Ombud). For more information on how to complain, visit the Ombud’s website,www.faisombud.co.za.

If the Ombud finds that bad advice was rendered, she has the power to order an adviser to refund a client as much as R800 000. An adverse finding has the same strength in law as an …………..

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I had money with Herman Pretorius – unit trust manager

3 Aug

Author:  Julius Cobbett

Publications: MoneyWeb

Date Publiched: 03 August 2012

Statement from Maitland Fund Administrators.

JOHANNESBURG – One of Herman Pretorius’s investors is a fund manager at unit trust company 4i Asset Management. This almost beggars belief because Herman Pretorius’s investment scheme had none of the checks and balances that apply to credible investments.

Michal Calitz, a fund manager and director at 4i, is, however, more than just an investor. He 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. They went to the same bible study group, which met every second Friday.

As an investment professional, Calitz should have been ……….

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Curators appointed to Herman Pretorius’s fund

3 Aug

Author:  Sasha Planting

Publications: MoneyWeb

Date Publiched: 03 August 2012

Pretorius’s business premises have been secured and locked down.

CAPE TOWN – The Master of the High Court has provisionally appointed three curators to take joint control of the Relative Value Arbitrage Fund Trust, a scheme run by the late Herman Pretorius.  The Relative Value Arbitrage Fund (RVAF) had an estimated 3 000 investors who are owed about R1.8bn.

This follows Judge Burton Fourie’s decision on Wednesday to grant an order to provisionally sequestrate the RVAF .

The application to sequestrate was brought on Tuesday by attorney Morné Strydom, a client of ………

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Ex-hedge fund boss ran into trouble selling insurance at FNB

2 Aug

Author:  Sasha Planting

Publications: MoneyWeb

Date Published: 02 August 2012

Broker tells of how Herman Pretorius could sell ice to Eskimos.

CAPE TOWN – He could sell ice to Eskimos. This was how people who knew Herman Pretorius, the man who allegedly shot Julian Williams dead, have described him.

Pretorius has been in the financial services industry for over 30 years. In 1991, aged 34, Pretorius was one of First National Bank’s top insurance brokers.

Even back then it would appear that Pretorius …………

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Herman Pretorius: Court grants sequestration order

1 Aug

Author: Julius Cobbett

Publications: Moneyweb

Date Publiched: 01 August 2012

The RVAF, which owes investors R1.8bn, placed under provisional sequestration.

JOHANNESBURG – The Cape Town High Court has granted an order to sequestrate Herman Pretorius’s scheme. Pretorius was a supposed investment guru who had ran a scheme called the Relative Value Arbitrage Fund. The scheme, which took the form of a trust, had an estimated 3000 investors who are owed about R1.8bn. Pretorius allegedly shot his former business partner and then himself on Thursday last week.

Herman Pretorius’s R1.8bn scheme is bankrupt – lawyer

31 Jul

Author:  Julius Cobbett

Publications: MoneyWeb

Date Published: 31 July 2012

RVAF’s only remaining trustee has no knowledge of where the funds were invested.

JOHANNESBURG – Investors placed around R1.8bn in one of Herman Pretorius’s investment schemes. This figure emerged in court papers asking for the scheme’s sequestration.

Pretorius allegedly shot his former business partner Julian Williams on Thursday last week before turning the gun on himself.

Pretorius’s scheme was called the Relative Value Arbitrage Fund (RVAF). A portion of the funds raised by the scheme appear to have been invested in a trust.

On Monday an investor in the RVAF, lawyer, Morné Strydom of the firm Mostert & Bosman, brought an application to sequestrate the fund. Strydom has a personal investment in the RVAF to the value of R233 000.

The RVAF had two trustees: Herman Pretorius and Eduard Brand. After Pretorius’s death, Brand is

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FSB visited fund manager on day he died

31 Jul

Author:  Julius Cobbett

Publications: MoneyWeb

Date Published: 31 July 2012

A team of inspectors were at Herman Pretorius’s offices.

JOHANNESBURG – The Financial Services Board (FSB) visited fund manager Herman Pretorius last week Thursday, the day he died. On Tuesday morning, the FSB’s Gerry Anderson confirmed that a “team of FSB inspectors visited” Pretorius’s offices. Anderson is the FSB’s deputy registrar for financial services providers.

Earlier this month, on July 10, Anderson told this reporter that the FSB had engaged with Herman Pretorius with regard to his activities during 2011. Said Anderson: “Such engagement cannot be seen as formal investigation.

However, Anderson said that a case had been opened against Herman Pretorius after he received information fromMoneyweb: “Upon receipt of your recent information, we have opened a case on Herman Pretorius and are looking at the matter.”

The FSB’s visit indicates that Thursday must have been an extremely stressful day for Pretorius. He had scheduled a meeting that evening in Moorreesburg to address clients about the status of their investments. Pretorius also had a meeting that afternoon with his former business partner, Julian Williams. It was at this meeting that Pretorius allegedly shot Williams twice before turning the gun on himself.

Pretorius had received a number of withdrawal requests from investors in his Relative Value Arbitrage Fund (RVAF). These investors had been persuaded that the RVAF was perhaps not as safe as they had been led to believe.

It is likely that withdrawal requests were sparked by an article published by Moneyweb in June, which noted that Pretorius’s high returns had been questioned by financial advisers. See: Former hedge fund boss’s returns questioned.

Pretorius’s fund had a notice period of one month. Thus, by last week Thursday, he was probably due to pay out millions to several investors.

Pretorius gave no indication that the payment of investors would be a problem. Quite the opposite, in fact. He toldMoneyweb that he would welcome investors withdrawing their fund, because this would give him time to pursue other business interests, which included several private-equity ventures.

The invitation to investors to withdraw their funds may have been an attempt at reverse psychology. There is evidence that Pretorius had employed such methods in the past. For example, in May a financial adviser wrote the following of Pretorius’s fund: “Recently a big client withdrew his money because he was scared he might lose it. After a couple of weeks of earning nothing in the bank he wanted to re-invest it and Pretorius refused to take his money back.”

True or not, this story had clearly done the rounds among Pretorius’s broker and investor network. It would have had the effect of making them think twice before withdrawing their funds and thus permanently losing out on earning the good returns reported.

 

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Liquidator circles shooter’s investment scheme

30 Jul

Author:  Julius Cobbett

Publications: MoneyWeb

Date Published: 30 July 2012

UPDATE: Lawyer asks for postponement. Judge Burton Fourie will decide on Wednesday

JOHANNESBURG – An investor has applied for the sequestration of Herman Pretorius’s investment scheme. This comes barely four days after the ex-hedge fund boss allegedly shot his former business partner, Julian Williams, before turning the gun on himself.

On Monday Morné Strydom, an attorney at Mostert & Bosman, and client of Herman Pretorius, applied to the Western Cape High Court for the scheme’s sequestration.

Pretorius had been operating an unorthodox investment scheme called the Relative Value Arbitrage Fund (RVAF). The scheme had reported returns in the region of 20% a year for at least the past five years. If genuine, these returns would rank Pretorius among the country’s best money managers. However, the RVAF had no independent verification of returns. This did not seem to bother Pretorius’s loyal investors.

Moneyweb has in its possession two different types of statements from the RVAF. In one the scheme is labelled an “en commandite partnership”, and in another it is the “RVAF Trust”.

On Monday many of Pretorius’s investors received a letter from liquidator Lambertus Von Wielligh Bester from the firmProgressive Administration. The letter was addressed to investors in and creditors of the “RVAF Trust”, registration number IT 932/2004. This is the same registration number that appears in the top right-hand corner of investor statements in which the RVAF is labeled a trust.

Von Wielligh Bester wrote: “We wish to confirm that an application for the sequestration of this trust will be heard in the Cape Town High Court on Tuesday, July 31, 2012.

“If a sequestration order is granted, the Master of the High Court will appoint a curator to manage the affairs of the trust.”

Von Wielligh Bester offered himself as curator to investors. Absent from Von Wielligh Bester’s letter were reasons why he considers himself best suited for the curatorship position.

Von Wielligh Bester asked investors to fill out an attached requisition form which calls for his nomination as curator.

The sequestration application does not bode well for investors. Few sequestrations, liquidations or curatorships of investment schemes have happy endings. They are usually drawn-out affairs that can take years to unwind. The fees of liquidators’ or curators’ and their lawyers can seriously erode any eventual payment to investors and creditors. In some cases liquidators take legal action against investors who received interest payments and withdrawals from a scheme. The failed investment schemes Krion and MoneySkills are examples where this has happened.

UPDATE:
A further letter distributed by Von Wielligh Bester to investors states: “Our switchboard has since been swamped with telephone calls at a rate of more than 120 per hour. At times our switchboard and answering machine are unable to handle these volumes and it has become impossible for writer to immediately respond to queries and reply to messages. Please have regard to the fact that there are approximately 3 000 investors.”

The application to sequestrate was heard before Judge Burton Fourie. A lawyer representing an investor asked Judge Fourie to postpone the matter by a week to give investors time to decide whether to oppose or support the application.

Fourie will announce his decision on Wednesday morning.

 

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Julian Williams shot by former partner: Julius Cobbett – investigations journalist, Moneyweb

30 Jul

Julius Cobbett

Author:  Julius Cobbett

Publications: MoneyWeb

Date Published: 30 July 2012

A rather creepy story from Moneyweb’s ‘Cockroach’.

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ALEC HOGG: Let’s pick up with Mr Cobbett. Jules, it is a creepy story. It’s to do with two fellows based in the Cape – money managers. They start with Julian Williams. He is a fairly dodgy character – was involved in the initial stages of Wesizwe Platinum. Take us through the story there.

JULIUS COBBETT: Ja, it might be a bit premature to say that he’s dodgy…

ALEC HOGG: It was dodgy at that stage, everybody knows that. They went into the platteland, raised money. Mike Solomon had to come in, remember, with Wesizwe, try and formalise it, make it a little more reputable, list on the stock market, and so on. So from that side it was fairly dodgy. The guy is dead now, so…

JULIUS COBBETT: Well, he’s got a colourful history and I think a lot will come out in due course. Julian Williams, like you said, was involved with Wesizwe and he started a company called Basileus Capital, which today employs nearly 50 people. And he started a whole bunch of small companies which he then sold stakes in, some of them to a listed company called BK1.

ALEC HOGG: You were busy engaging with him – why?

JULIUS COBBETT: The focus of my investigation was an entity called The Relative Value Arbitrage Fund which, as far as I know is not a fund at all. And it’s got none of the checks and balances in place that you would expect from an ordinary investment. I was alerted to this thing by the relative of an investor earlier this year, and then later some financial advisers contacted me as well. They had clients invested in the fund, and they were concerned.

ALEC HOGG: The fund was doing what?

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Shooting victim played a key role at JSE-listed pref share

27 Jul

Author:  Julius Cobbett

Publications: MoneyWeb

Date Published: 27 July 2012

UPDATE: With comment from BK One’s CEO Dean Richards.

JOHANNESBURG – Basileus Capital CEO Julian Williams played a key role at BK One, a company whose preference shares are listed on the JSE. Williams was shot and killed in his Cape Town offices on Thursday afternoon. See: Former hedge fund boss dies in shooting incident.

Williams was not a director of BK One, but he was instrumental in developing and managing its various investments. These investments include equity stakes in:Avalloy, a producer of specialist alloys; Pure Ocean, a farmer of salt- and fresh-water fish; and TOR Construction. BK One had also lent R33.8m to cash management company Cash Connect.

Williams was a director of each of these companies, and Basileus Capital had played a key role in their early development. BK One has sourced all of its investments from Basileus Capital.

BK One is a joint initiative between Basileus Capital andKwanda Capital. Basileus Capital focuses on investments that advance government policies, including job creation and minerals beneficiation.

Williams founded JSE-listed Wesizwe. He served as director at the junior platinum company until his removal in March last year.

 

 

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Former hedge fund boss dies in shooting incident

27 Jul

Author: JULIUS COBBETT

Publications:The Citizen

Date Publiched: 27 July 2012

Julian Williams, CEO of private- equity group Basileus Capital, was shot dead in his Cape Town offices on Thursday afternoon.

The alleged shooter was his former business partner, Herman Pretorius.

Pretorius allegedly shot Williams dead, then turned the gun on himself. eNews Channel journalist Lester Kiewit reported on Twitter that the suspect (Pretorius) had a gunshot wound to the head and was taken to hospital where he was declared dead on arrival.

Pretorius used to be involved with a hedge fund called the Abante Statistical Arbitrage.

At the time of his death he ran an unregulated investment scheme called the Relative Value Arbitrage Fund (RVAF), which many investors believed to be a hedge fund.

Pretorius had been due to attend a meeting of investors in Moorreesburg on the evening of his death. Investors were informed that the event had been cancelled because Pretorius was in a meeting with Julian Williams.

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Former hedge fund boss in dividend dispute

5 Jul

Author:  Julius Cobbett

Publications: MoneyWeb

Date Published: 05 July 2012

Argument over unlisted pref shares failing to pay their 15% coupon.

A war of words has erupted over the failure of unlisted public company SA Superalloys to pay dividends on its preference shares. The shares were sold to various investors by Herman Pretorius, who recently featured on Moneyweb for his unorthodox investment vehicle, the Relative Value Arbitrage Fund (RVAF).

In the article, Moneyweb noted that the RVAF had reported consistent returns of about 20% a year for the past five years, but that there is no obvious way to verify this performance. The RVAF does not appear to have an auditor or third party administrator, and Pretorius is not licenced with the FSB.

Many of the RVAF’s investors also hold preference shares in SA Superalloys. There are about 500 preference shareholders, mostly from Cape-based farming communities, who have invested roughly R140m into SA Superalloys.

Moneyweb can reveal that Herman Pretorius has personally lent about R40m to SA Superalloys so that it could afford to pay generous dividends to its preference shareholders.

However, the dividends ran dry this year, which has sparked some unhappiness among investors.

The SA Superalloys shares were sold by Pretorius and brokers affiliated to him as far back as 2006.

SA Superalloys is a 55% shareholder in Avalloy, a Pelindaba-based manufacturer of special alloys for, among others, the aerospace and power turbine industries.

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Former hedge fund boss’s returns questioned

14 Jun

Author:  Julius Cobbett

Publications: MoneyWeb

Date Published: 14 June 2012

Update: *responses from Momentum and the JSE MAP.

JOHANNESBURG – On the face of it, former hedge fund boss Herman Pretorius and his company, Abante, have delivered excellent returns for his investors – in the region of 20% a year for the past five years. This would rank him among the top money managers in the country.

Pretorius has an unknown number of relatively wealthy private investors. Those known to Moneyweb are typically from small farming towns such as Moorreesburg, Porterville, Hopefield, Malmesbury, Durbanville, Riversdale and Sasolburg.

But two financial advisers – whose clients have money invested with Pretorius – have asked whether his returns can be verified.

One financial adviser wrote to Moneyweb: “There are a number of red flags that go up for me with regards to Abante but nobody (as far as I know) has really scratched around.”

One of the biggest concerns for this adviser was the consistency of the investment performance. “Their performance is just too consistent. I am not aware of a single negative quarter for this fund. They seem to average anything from 20-30% per annum every year. Even through the global financial crisis.”

The investment, called Relative Value Arbitrage Fund (RVAF), also does not have the type of safeguards that apply to most hedge funds.

Pretorius is not licensed with the FSB and claims he is not required to do so. What’s more, the statements issued to investors are basic in the extreme. An example  …..

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