The Financial Sector Conduct Authority (FSCA) has provisionally withdrawn the licence of Stringfellow Investment Services. This follows allegations that its founder, Thomas Stringfellow, may have misappropriated more than R100 million in client funds.
“The [FSCA] is currently investigating allegations of misappropriation of investments and incorrect financial advice given by Stringfellow Financial Services (Pty) Ltd director, representative and key individual, Mr Thomas Stringfellow,” the regulator wrote in a notice. “As a result, we have provisionally withdrawn Stringfellow Financial Services’ license (sic).”
Last month it came to light that Stringfellow, a well-known financial advisor in Johannesburg, had been placing client money in unregulated investment schemes since around 2010. These schemes appear to have collapsed.
“Mr Stringfellow allegedly raised funds from his clients to invest in the women’s sportswear business, Leigh LJ (Pty) Ltd [which trades as Lorna Jane], where he serves as its MD,” the FSCA noted.
“This investment scheme offered his clients a return of 14% per annum.
“Some clients opted to receive monthly returns and did receive their money until the scheme collapsed in June 2019. Other clients opted not to receive monthly returns but to invest the money for a specific period with the option to withdraw the money and interest at the end of the period.”
These investors are all now facing the possibility that their money may be gone.
“Mr Stringfellow was arrested on 11 July 2019 and has been charged with one count of fraud by the South African Police Services (Saps),” the FSCA noted. “Since Mr Stringfellow is a representative and key individual of an authorised FSP, the FSCA has decided to provisionally withdraw the license (sic) of Stringfellow Fin Services (FSP number 23376), pending the outcome of the investigation.”
Stringfellow’s name is also associated with another financial services provider, Stringfellow Advisory Services (FSP number 9669). He is however not registered as either a representative or key individual in this business, and it continues to be a licensed entity.
Stringfellow Financial Services was also the portfolio manager of two unit trusts that carry the Stringfellow name. These were co-branded funds managed by Boutique Collective Investments (BCI).
BCI however terminated its contract with Stringfellow to manage these funds at the end of June when it became aware of problems in the business. The money in these unit trusts is not at risk, and BCI has taken over the management of the portfolios for the time being.