You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App

NEW SENS search and JSE share prices

More about the app

Sharemax: exposure increases for Santam subsidiary

Insured Sharemax broker ordered to refund pensioner couple.

Santam (JSE:SNT) subsidiary Stalker Hutchison and Admiral’s (SHA’s) exposure to Sharemax rose by at least another R300 000 this week. This came as the Fais Ombud Noluntu Bam made another adverse finding against SHA’s client, Deeb Risk.

Risk is an authorised financial adviser who has sold Sharemax syndications to a yet-unknown number of elderly investors. He is insured by Stalker Hutchison and Admiral (SHA), a Santam subsidiary.

To date, the Ombud has made four adverse determinations in complaints against Risk. He has been ordered to repay complainants a total amount of R2.2m.

So far all of the complainants have been described by the Ombud as retirees.

Any hopes these retirees may have had of getting a prompt repayment from Risk were dashed when he took the Ombud to court, arguing that she does not have jurisdiction to make findings against him. Risk argues that a more appropriate forum for his clients’ complaints would be a court of law.

Risk has taken his legal action on the advice of SHA. The case has finally received a court date. It has been set down in the High Court of Pretoria for July 30 and 31, 2012.

If Risk is unsuccessful in disputing the Ombud’s jurisdiction, he will still have another possible avenue of delaying or removing his obligation to clients. Risk previously told Moneyweb that he intended to appeal the Ombud’s rulings. (See this article for an interesting description of the appeals process and its associated pitfalls).

Bam’s latest determination, which can be downloaded here, orders Risk to refund a retired couple, the Oldacres, the R300 000 they invested in a failed Sharemax scheme. Lionel Oldacre is 75 years old, and his wife, Catherine, is 69.

The determination describes how Risk advised the Oldacres to invest three separate amounts of R100 000 into Sharemax’s The Villa. The first of these investments was made on March 31 2009.

This money was previously invested with the Stanlib Cash Plus Fund (R200 000) and the Standard Bank (JSE:SBK) Money Market account (R100 000).

“At the time, complainants were largely reliant on income from their investments to support themselves,” wrote Bam in her determination.

The Oldacres lodged a complaint against Risk on September 21 2010, soon after The Villa defaulted on its payments to investors.

The Oldacres claimed that, bearing in mind their position as pensioners and their risk profile, the advice given by Risk was clearly not a product of due skill, care and diligence.

Risk denied these allegations. He said he conducted a comprehensive risk assessment of Lionel Oldacre, and, later, his wife. Risk claimed that Oldacre was well versed in financial matters, and that he had time to consider and understand The Villa’s prospectus before he decided to invest.

Risk said in his view it was premature to complain before it is determined whether The Villa will fail. At the heart of The Villa is a large, unfinished shopping centre east of Pretoria. It could take more than a decade to determine whether an attempt to complete the centre and repay investors will be successful.

Bam found that Risk had failed to disclose the material aspect of risk in The Villa. “I have found no evidence that the complainants were informed of the exact nature of the investment. I am persuaded that the complainants will still not understand Prospectuses 4 and 14.”

She said that Risk failed to recommend a product commensurate with the complainant’s risk tolerance.

Bam also dismissed Risk’s contention that the complaint was premature as “irrelevant.”

“The issue is not whether some monies will be recovered by complainant at some future unknown date. The test is whether the advice, given Complainants’ circumstances, was appropriate. The advice provided was clearly inappropriate and not relevant to the Complainants’ needs.”



Comments on this article are closed.





Follow us:

Search Articles:
Click a Company: