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Another Sharemax ruling by FAIS Ombud

Legalbrief reports as follows:

Another financial adviser has been ordered by the FAIS Ombudsman to repay a retired couple who invested their pension money in The Villa syndication of Sharemax, says a Sake24 report. Ombudsman Noluntu Bam ruled that Christoffel Johannes Nel should repay R320 000 to the couple from KZN. According to the complaint, the couple was told it is an ‘investment with no risk that delivers a higher monthly income’. Bam found that Nel was not licensed to sell unlisted shares and promissory notes of The Villa and had not informed the couple about the risk of the investment. He also did not inform the couple that he would earn R21 188 commission on the transaction. The ruling comes at a time when a legal battle is under way in the North Gauteng High Court in which financial adviser, Deeb Risk, alleges the Ombud does not have jurisdiction to order the repayment of R3.08m to Sharemax investors. Judgment was reserved in this case.

There is an obligation on product providers to ensure that they only accept business from FSB registered FSPs. We have seen similar transgressions being referred to the FSB’s Enforcement Committee, and will be watching this one with interest.

We are still not sure of the validity of “fining” the advisor for the full amount invested, plus interest, when the actual loss, if any, is yet to be determined.

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