Last week was not a good one for the two most prominent property syndications in the country. We reported elsewhere about the woes of Sharemax, and now Picvest also made the headlines.
This property syndication group, previously known as PIC, launched an appeal to the Pretoria High Court after unsuccessfully approaching the FSB Appeal Board, writes Hanna Barry in Moneyweb. This concerns the withdrawal of its FSB licence.
Directors of property syndication promoter Pickvest have launched an application in the Pretoria High Court to have an incriminating determination by the Financial Services Board (FSB) reviewed and set aside.
The decision, which was made in February by the FSB’s Appeal Board, found that Pickvest’s directors acted dishonestly and without the care, skill and diligence expected of financial services providers (FSP) under the Financial Advisory and Intermediary Services (FAIS) Act.
Pickvest promoted 22 different property syndication schemes known as Highveld Syndications (HS), a number of which are now under business rescue. Investors bought units (a mixture of shares and loan accounts) in any one of the HS companies by depositing money into the trust account of Pretoria attorneys Eugene Kruger & Co. Incorporated.
The FSB says the agreements signed by investors in response to the prospectus of HS 21 made no provision for the property syndication’s obligation to secure transfer of properties before withdrawing money from the trust account to purchase them. It thereby contravened a 2006 Department of Trade and Industry (dti) Notice gazetted in terms of the Unfair Business Practices Act (formerly the Consumer Affairs Act), which stipulates that investor funds can only be withdrawn from a trust account in the event of transfer of the property.
Pickvest claimed that Kruger advised it that the notice did not apply to them. The reasons given by Kruger for this opinion were chiefly that the dti continued to register company prospectuses after March 2006 even where these contained provisions that were not in accordance with the notice in question.