JOHANNESBURG – Technical analysis “guru” Clive Roffey has been accused of managing money without the necessary licence. A complaint has been laid against Roffey with the Fais Ombud. The Financial Services Board (FSB) has also re-opened an investigation into Roffey’s activity.
Roffey has a long career in technical analysis – the study of charts. He is a television personality and author. Roffey has a regular slot on Summit TV, called the Roffey Review.
The complaints have been lodged by DF Steyn, who claims that Roffey managed R400 000 on his behalf, and lost almost all of it in just six months.
Steyn, a retired veterinarian, used to be a keen amateur trader. But in 2010 he suffered a stroke.
Steyn lost faith in his ability to trade successfully. Thus, in September 2011, he wrote to Roffey for guidance.
Roffey replied that he could not “run a DIY service” but that he did manage portfolios bigger than R100 000. Roffey’s fee was R2 000 for each R100 000, as well as 20% of any profits made on the account.
Steyn agreed to Roffey’s proposal. He signed a “consultancy mandate” with Share Action CC, a close corporation connected to Roffey. A copy of this mandate is in Moneyweb’s possession.
Neither Roffey nor Share Action CC are registered with the Financial Services Board (FSB).
Steyn signed a three-page power of attorney which authorised Roffey to trade on his behalf. The power of attorney is printed on a Global Trader letterhead and appears to have been drafted by it as well. A copy is in Moneyweb’s possession.
By the end of September 2011, Steyn had deposited R400 000 into his Global Trader account, and R8 000 into Roffey’s personal account for management fees.
Steyn says he never once had access to his Global Trader account while it was open. All trading was done by Roffey.
In March 2012 a distressed Mrs Steyn received a report from Global Trader indicating that there was only about R90 000 left in the account. Roffey had lost more than three quarters of Steyn’s portfolio.
On March 11 2012 Steyn, with the help of a family member, instructed Roffey to exit all positions. Roffey allegedly failed to comply with this instruction.
In the two weeks it took Steyn to close his account, it had been eroded by a further R28 000, leaving just R62 000 from the original R400 000. In six months Steyn lost 85% of his investment.
A draft copy of this article was sent to Roffey on Wednesday morning with the invitation to comment on Steyn’s allegations. Roffey declined to comment within Moneyweb’s deadline. He said he needed more time to formulate a detailed response. Moneyweb will publish Roffey’s response when it is received.
However, a response can be found in e-mail correspondence between Roffey and Steyn’s relative. Roffey wrote: “When this trading account was opened it was clearly explained to Dr Steyn and fully understood by him that CFD trading carried an extremely high risk of losses… He was happy to accept those conditions and understood that it was not an investment account.”
Global Trader CEO Charles Savage also notes that Steyn received regular statements, which should have alerted him to the losses earlier.
Says Mrs Steyn: “We did receive weekly reports which we could not understand. I called Global Trader once or twice to find out what was going on, because it looked like the money was shrinking. But they said that the money was somewhere else and will go up again, so we mustn’t worry.”
Savage says that Roffey had power of attorney to manage the accounts of three clients, including Steyn’s. No complaints have been received from the other two clients.
As a result of the Roffey incident, Global Trader has since changed its policy on powers of attorney. It now only allows close family members and FSB-registered asset managers to trade on clients’ behalf.
In April Steyn laid a complaint against Roffey with the FSB. On August 7, the FSB informed Steyn that it had closed its file on Roffey due to “insufficient evidence to suggest that trading on behalf of customers is a regular feature of the business of Share Action CC”.
This was despite the fact that Steyn had provided the FSB with a copy of the power of attorney authorising Roffey to trade on his behalf, as well as several other documents to support his complaint.
Approached for comment, the FSB’s Gerry Anderson responds: “As far as I know, there is no proof in our possession that Dr Roffey or Share Action CC traded on behalf of clients. If this is the case, then they have been contravening the FAIS Act and action will be taken against them. We will look into the matter.”
The FSB advised Steyn to lay a complaint with Fais Ombud Noluntu Bam, who rules on financial advice. A complaint was laid. Steyn awaits the outcome. So far Roffey has allegedly ignored the Ombud’s attempts to engage with him.