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FSB linked to Sharemax “licence for hire” scheme

Wife of former Sharemax director is top official at FSB.

JOHANNESBURG – A Financial Services Board (FSB) official used to be involved in a company that “rented” licences to Sharemax brokers.

Sharemax is a failed property syndication promoter.

Rinate Goosen, wife of former Sharemax Director Gert Goosen, is a manager in the FSB’s FAIS enforcement department.

However, Rinate Goosen’s involvement with a company called Unlisted Securities South Africa (USSA) may be seen by some as a black mark on her career.

USSA came under scrutiny by Fais Ombud Noluntu Bam last week. In her latest determination against a Sharemax broker Bam wrote that USSA’s business amounted to “nothing short of the hiring out of a licence for a small monthly fee”.

Many brokers were not licensed to sell Sharemax’s share-and-debenture products. Gert Goosen solved this problem by setting up USSA, a company licensed to sell both shares and debentures. For a small fee of R150 per month, a Sharemax broker could become a “representative” of USSA.

Bam’s determination describes how USSA helped Sharemax brokers to obtain the necessary licence to sell property syndication products.  At its peak USSA had 1 376 representatives listed on its FSB licence.

Bam’s determination can be downloaded here.

Rinate Goosen is still listed on the USSA website as the company’s compliance officer. Her husband Gert Goosen is USSA’s sole director and key individual. Gert was also a director of compliance at Sharemax. Gert Goosen is also reportedly the brother-in-law of former Sharemax managing director Willie Botha.

At the time of its collapse, in September 2010, Sharemax’s 33 syndication companies owed R4.5bn to about 30 000 investors.

USSA’s high number of representatives has raised eyebrows in financial services circles. Paul Kruger, editor of Moonstone Monitor, a publication associated with compliance company Moonstone, asks why USSA was allowed to operate as it did.

Kruger says it would have been “impossible” for USSA to fulfil its obligations correctly. He notes that an FSB notice, effective 2009, requires financial services providers to “directly supervise” representatives selling shares and debentures.

Says Kruger:  “With 1 376 representatives under supervision, it would have been impossible for USSA’s one key individual to comply with this requirement.”

Moneyweb approached Rinate Goosen for a response but she replied that she was not available for comment.

Moneyweb asked the FSB’s Gerry Anderson to comment on Rinate Goosen’s links to Sharemax.

Anderson confirmed that Rinate Goosen was employed by the FSB from 1991 to 1999. She left the FSB in 1999 to join Liberty Collective Investments (which later became Stanlib) where she spent five years in a compliance officer position. Goosen later joined USSA where she spent at least four years as that company’s compliance officer.

Last year Rinate Goosen was re-employed by the FSB. This means that she was not employed by the FSB while her husband worked for Sharemax.

Anderson denies there is any conflict of interest: “At the time of her re-employment, it was known to the FSB what the position of her husband was.  It is not believed that there is a conflict of interest.  Rinate was employed on her own merits and despite being married to Mr Goosen, based on career history.”

Financial journalist and long-time Sharemax critic Deon Basson has also questioned the FSB on its relationship with the property syndication company.

Basson wrote to Anderson in March 2007 to ask about a paragraph that appeared in a Sharemax newsletter. The paragraph read as follows:

Sharemax’s compliance awareness week that ran from 1 to 7 February 2007 was a big success. The closing speech was by Mr. Gerry Anderson, deputy chief executive of the Financial Services Board and responsible for the implementation of FAIS, at Sharemax House. It was a privilege to be able to listen to him and he was pleased with Sharemax’s role in compliance.” 

Anderson comments: “I was asked at the time (a reasonable request) by Sharemax to address a group of representatives, both connected to it and independent, on the FAIS Act.  Such presentation did take place and the duration was about an hour.  This is seen as regulatory assistance and I find it strange that, notwithstanding the fact that similar presentations are given to many groups by senior staff of the FSB, this is singled out specifically.”

Click here to read Basson’s full correspondence with Anderson. 

TIMELINE
1991 Rinate Goosen joins FSB
1999 Willie Botha starts Sharemax
Rinate Goosen leaves FSB to become compliance manager for Liberty Collective Investments (later Stanlib).
2004 Gert Goosen’s USSA is licenced with the Financial Services Board. Rinate Goosen is its compliance officer
USSA offers brokers a solution to Sharemax brokers who require a licence to sell property syndication schemes
The solution costs R150 a month
At its peak, USSA had 1376 broker representatives yet only one key individual and one compliance officer
2005 Gert Goosen is appointed a director of Sharemax
2008 FSB issues notice 104 of 2008 which requires financial services providers to “directly supervise” representatives who sell shares and debentures
2009 Sharemax collapses
2011 Rinate Goosen rejoins FSB as a manager in the Fais enforcement department
2012 Fais Ombud Noluntu Bam describes USSA’s business as ““nothing short of the hiring out of a license for a small monthly fee”. 

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