FSB warns against NaxaInvest

In a recent press release, the Regulator warned the public against conducting business with NaxaInvest. It is not authorised as a financial services provider and is not a representative of an authorised financial services provider. According to the records of the FSB, NaxaInvest has not applied for a licence to be authorised as a financial services provider. The entity was also never inspected by the FSB.

It is often said that the FSB should be more proactive in preventing scams which lead to financial ruin for investors, and blight the reputation of the industry. The problem lies in uncovering these schemes, though. By law, the Regulator is obliged to supervise the activities of those who are licensed. The onus to apply for accreditation lies with the body wishing to provide financial services. If they choose to operate without such a licence, there is very little the FSB can do until it hears about it.

This creates a situation where those wishing to work within the law are subject to constant scrutiny, while those outside the net virtually have carte blanche in what they do and offer.

In a way, making the public aware of potentially risky schemes by means of media releases, and publication of such warnings on its website, is one way of making the investing public aware of its own obligation in terms of not getting duped. Many investors in property syndications, for instance, burn their fingers more through greed, than actual ignorance. They want to believe that the promised returns are real, and the investment safe as houses, in a manner of speaking.

NaxaInvest was apparently started in response to complaints from investors in another scheme which were prohibited from conducting business. The authorities did not think that a return of 2% per day was sustainable, and obtained a court order to prevent it from continuing. Naxinvestments offered the same return. Its website has since been closed down, but a colleague managed to extract the following statements which appeared in Q & A format on its website:

How different are you from the other online investment companies who have come and disappeared?
NaxaInvest has a unique system where we are trading on the JSE daily and we share our profit with you as Investor.

How is NaxaInvest going to be sustainable and return all the peoples capitals as promises?
We have an admin system that we can monitor all our deposits, profits and withdrawals daily, our daily profits is much higher than what we are paying out.

How is NaxaInvest going to stay safe and escape SARS?
We are not here to escape SARS, that won’t be very clever if you think about it on the long term, every member has his/her own responsibility for declaring their profits, end of every year we will send to all our Investors a statement on his Investment account that shows also his profit earning for the year that will be seen as a kind of ERP 5.

Since NaxaInvest started operating in 2009, what stopped you from acquiring your FSB certificate in the past 4 years?
We were trading with our own capital and had no intension to open for the public, after some clients ask us to share with them, then we realized that the normal person needs some sort of income to help them sustain in the current financial situations.

Why don’t you have contact numbers or physical addresses where your office is located in Limpopo and Heidelberg?
That is our dream to open 1 office where everything is under one roof but at this stage we currently waiting for our FSB License. We will rather share the profits with you as Investor then spending it on fancy offices and raising monthly overheads. Ask yourself this

If you are a legitimate company why do you operate without your FSB certificate, why do you not wait for it to be issued?
Like we said we were trading with our own money previously and the public asked us to start in the meanwhile, at this stage we are telling the customers that we have not yet received our license so that they can be aware. The people urgently needed something to help boost their income.

Ask yourself this question?
Does having an office mean the company will still be there tomorrow?
Having telephone number does not mean it will still work tomorrow.

We try to answer all emails within a few hours and this should be more than enough proof to you that we are serious in being there for you.

Why do you want us to waist your profits in setting up things that will not benefit you? If we setup offices, employ people, install telephones then we will have to reduce the percentage profit you earn.

We obviously did not edit any of the above. If any member of the public with half a brain cell did not smell a rat when reading this, perhaps they deserve what they got?

Whilst we realise that the detection of such schemes are difficult for the Regulator, each of us can play a part by reporting apparent scams to the FSB. In view of criticism in the media recently, we believe that such reports will receive more attention than before.

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