Four years ago, former FNB financial adviser, Clynton Cotton, pleaded guilty to stealing R12 million from his clients. One of them, Carmen Goodman, finally won her court battle with the bank. FNB was ordered to repay R2.5m that she invested through the bank’s advisor.
An article in The Mercury states that:
The bank compensated many of his victims, including another claim lodged by Goodman of R600 000. But it denied her claim of R2.5m, pointing to the contract she signed with Cotton, on behalf of FNB, which stated that he would render services in accordance with accredited products. The bank argued that the loss of R2.5m had been through an investment or loan he had made on her behalf in a company which was not an accredited product.”
Goodman, in her evidence before the court, said she had trusted Cotton “absolutely”.
The judge said: “She was aware that he was employed by FNB. He had a dedicated secretary and she believed he was the branch manager.
“She also did not concern herself about the Master’s approval as she assumed that as Cotton had met with the Master and the Master had approved the initial investment, there was no need to go through the process.”
Goodman further said she had assumed that all the investments were accredited by the bank.
The judge said the pertinent and undisputed evidence was that Goodman had consulted Cotton in his office at the Overport branch of the bank, as an employee of the bank. He had offered her advice on investment products which she had accepted and acted on without any adverse result or effect on the estate until the last investment.
“She was consequently susceptible to inducement by Cotton. Not only did she trust and rely on him, the inducement was attractive because he advised her that she would get better returns.”
The judge said that Cotton, in his interaction with Goodman, had conducted himself as a financial consultant in the employ of the bank and had recommended or proposed products which ostensibly lay within his mandate.
“There was no need for her to question or be suspicious. His unlawful conduct was closely allied with his employment with FNB,” the judge said, adding that it appeared that at the time there were no specific safeguards to alert the bank to the fraud and theft committed by Cotton and for the protection of his clients.
The judge granted judgment in favour of Goodman for R2.5m, with interest from 2006 and her legal costs.”
Cotton was sentenced to an effective 10 years in prison but only served three years in jail, the rest of his sentence being changed to correctional supervision. He was released from jail last year.
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