Fais Ombud exceeded her powers – Sharemax directors

Appeal against controversial Fais Ombud ruling is heard at the FSB offices.

JOHANNESBURG – Advocates acting for present and former Sharemax directors argued on Monday that the Financial Advisory and Intermediary Services (Fais) Ombud exceeded her powers when she issued a controversial determination against their clients.

The arguments were heard at the Financial Services Board’s (FSB’s) offices on Monday morning in an appeal hearing. Four Sharemax directors and Sharemax itself are appealing a determination against them issued by the Ombud more than two years ago, in January 2013. (See: Fais Ombud finds directors liable for investor’s loss)

Fais Ombud Noluntu Bam offers the investing public free recourse against financial advisers who provide bad advice. Bam has the power to order a financial adviser to reimburse clients their losses. However in two controversial Sharemax determinations, she found the advisers liable, and extended this liability to four Sharemax directors, Willie Botha, Dominique Haese, Andre Brand and Gert Goosen, and Sharemax itself.

The Ombud denied the directors leave to appeal the determination. However, their request for leave to appeal was granted by the FSB’s appeal board.

The Ombud has suspended all determinations relating to property syndications, pending the outcome of the appeal. This has created quite a backlog, with hundreds of complaints yet to be adjudicated.

The Sharemax investors whose complaints gave rise to the controversial determinations were not present at the appeal. The complainants were Gerbrecht Siegrist, 75, and Jacqueline Bekker, 76. Siegrist’s attorney Danie Goosen submitted a notice to abide by the chairman’s ruling. His client did not submit heads of argument. Bekker informed the appeal panel that she could not afford legal advice and her request for legal aid was denied.

Siegrist’s financial adviser, CJ Botha, and Bekker’s adviser, Eddy Carter-Smith, did not apply for leave to appeal the determinations against them.

Sharemax and its former and present directors had powerful legal representation at the hearing. Willie Botha was represented by Cedric Puckring. Dominique Haese was represented by JJ Brett. Willie van Zyl appeared for Andre Brand. Sharemax was represented by Lucas van Tonder. All are senior advocates. Only Gert Goosen did not have legal representation. However Goosen was supported by his wife, Rinate, a former FSB official.

Although the Fais Ombud was neither a respondent nor appellant, she was represented by former pension funds adjudicator Vuyani Ngalwana.

One of the main arguments made by the Sharemax directors was that the Ombud exceeded her powers when she pierced the corporate veil and found them liable. Brett pointed out that the original complaints were against the financial advisers, respectively Botha and Carter-Smith, and not against the Sharemax directors at all. The Fais Ombud took it upon herself to make Sharemax and its directors respondents.

Haese’s advocate Brett argued that the Ombud did not bring an application to court to get a declaratory order allowing her to pierce the corporate veil. He said a court needs to declare in what respects there is to be a piercing. “It can’t just be open sesame.”

Brett went so far as to ask for a costs order against the Fais Ombud. The chairman replied that this would not be possible, because it would be similar to imposing a cost order on a magistrate.

The Ombud’s representative, Ngalwana, told the panel that he was not there to defend the determination but to assist the proceedings. He said the Ombud was not bound by the rules of a court, and had the power to both investigate and adjudicate. He emphasized that the determinations against financial advisers CJ Botha and Carter-Smith were still valid because neither had applied for leave to appeal.

Moneyweb will report on the appeal board’s decision when it is announced.

COMMENTS   3

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in and an Insider Gold subscriber to comment.

SUBSCRIBE NOW SIGN IN

This is what happens when shysters hide behind the complexity of the law. Then other scamsters determined to rip off the public know that they can get away with it, as they will be in Australia or other foreign climes by the time the law catches up with them – if it ever does.

Hi MoneyWeb team.. Thanks for your thoroughly researched topics posted thus far. I eagerly plow through your articles daily. With regards to the Sharemax situation… I know you cant give any advice, but what are the possible steps to take if one was caught by the sharemax scheme? Feedback would be much appreciated! Regards

Ek sien die FSB se uitspraak op die aangeleentheid is gegee. Soos verwag het die Voorsitter die Ombud se kop gewas en die bevinding van die Ombud tersyde gestel.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Subscribe to our mailing list

* indicates required
Moneyweb newsletters

Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.
INSIDER SUBSCRIPTION APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING

Follow us: