ALEC HOGG: David
Shapiro, you know the
top story today – Dealstream.
DAVID SHAPIRO: I heard.
ALEC HOGG: Dave, you came
out, you spoke about what
caused the Dealstream
disaster, in your opinion. We
are going to have more on that
tomorrow, I think. We've got
Mr Leigh working on a whole
bunch of new questions,
including those that you posed.
DAVID SHAPIRO: Ja. For
those who haven't read the
story, my biggest concerns
were his back office. And,
having been in broking for so
long, very difficult to run a
trading operation without the
logistics behind you – and
looking after clients’ money.
You know, that’s the MS Global
[story] at the moment – you
know the whole issue that’s
happening there. It's the same
thing. Suddenly, when clients’
money is shifted from Peter to
pay Paul it's a major concern.
But Alec, my biggest concern,
and something that still has
not been answered, is how he
managed to operate outside of
regulation. There’s no
regulation or Act that governs
those kind of operations. That
to me is the biggest concern,
and it's still going on. Under
what jurisdiction or regulation
do CFDs operate?
ALEC HOGG: It is quite
incredible. You’ve got a
Financial Services Board,
you’ve got the Johannesburg
Stock Exchange in this case.
You have the Financial
Services Board in the
Sharemax case. There were so
many articles written by the
late Deon Basson about
Sharemax. I do recall engaging
with the people at one point in
time and finding them rather
odious characters – but I hadn't
done the work Deon had done.
He came up, pointed a lot of
fingers. Julius Cobbett of
Moneyweb has been pointing
fingers for years, and nothing
happened. And now we've got
a disaster of R4.5bn, 35 000
people scrambling around
trying to grasp any straw to
see if they can get some of
their money back.
DAVID SHAPIRO: Alec, what
people assume on the outside
is that these are controlled and
regulated bodies because, if
you look at banks, they are
tightly regulated. We know
how our banks held up against
the crisis. The stock exchange
– and you can ask Russell
Loubser – is a very, very well-
run body in terms of controlling
its members. But I felt that
maybe they knew, because
back side of the deals were
coming from Dealstream onto
the single-stock futures or onto
those markets, because he had
to in some cases regulate
them or hedge them. So he
was doing it through the stock
exchange, through the back
end…
ALEC HOGG: Are
investigations still going on
there?
DAVID SHAPIRO: If they do it
thoroughly, I think there are
going to be a lot of people who
were in high positions who will
have to answer to how an
operation of this magnitude
was allowed to continue
without someone clamping
down on them.
ALEC HOGG: Russell Leigh
reckons there was just
excessive gambling. He is
sitting in Israel, ran away from
South Africa, so I guess you’ve
got to take what he says from
that context. I don’t think he is
saying he was innocent, but I
think he is saying he’s not the
only one who caused the whole
disaster and others should also
be exposed.
DAVID SHAPIRO: Of course.
I'm sure there will be others.
But excessive gambling –
that’s up to you, and that’s up
to the regulatory body to make
sure – when I said Russell was
overtrading, it means that he
never had the right capital
against the kind of deals that
he was doing, which happens
in every other regulated body.
ALEC HOGG: What about the
Sharemax story, David? Have
you been on it?
DAVID SHAPIRO: Not as
closely as you have. But this is
the property one. This is one
you exposed – how many years
ago? How many years ago did
you have them in the studio
asking questions which were
never followed up?
ALEC HOGG: I also was
talking to a lawyer friend of
mine over the weekend, and
he said what is happening at
the Fidentia issue is
unconscionable. The lawyers
and other people are feeding
at the trough, and grabbing
fees out of this thing, and of
course the losers are the
poorest of the poor. The
widows and orphans are blue-
collar workers. These are
people who had only a few
thousand rand to rely on,
anyway, and those are going
up in smoke with the lawyers
who are, according to my
lawyer friend, fiddling by the
day as the day goes on. All of
this is unconscionable.
DAVID SHAPIRO: But it takes
so long to bring it to court or to
get it sorted out. In America,
the MS Global issue, Jon
Corzine is in front of Congress,
straight away, right away,
asking questions, and it will be
sorted out soonest. But here it
just goes on and on.
ALEC HOGG: I guess the
lobbyists here are within the
professional bodies, not within
the polictical bodies. But we'll
get there. We will get there.
There are developments, Vavi
now calling for those politicians
– how crazy is that? You are in
politics, but you can do
business with the government.
DAVID SHAPIRO: Ja, I know.
ALEC HOGG: That’s absurd.
DAVID SHAPIRO: It just
shows you that people want to
go into politics so they can do
business. It just gets them in.

LATEST UPDATE on LIQUIDATION for defrauded investors

From:  Elmerette Maidment
Cc: Michelle Morris
Subject: Dealstream Securities (Pty) Ltd (In Liquidation)



The liquidators are still busy collecting outstanding debts and busy with further investigations. We also applied for an extension to lodge the First Liquidation and Distribution Account until end May 2012. At this stage, there are no further developments. The liquidator will do a circular to creditors as soon as there are any further developments.

Kind regards.


Elmerette Maidment

INDEPENDENT TRUSTEES (PTY) LTD

Corporate Recovery Advisors

Clearview Office Park, Unit B5

Wilhelmina Ave, Constantia Kloof

P O Box 21341, Helderkruin 1733

Tel No 011 991 5500

Fax No 011 991 5506

e-mail : elmerettem@corprecover.co.za

website : www.corprecover.co.za

++++++++++++++++++++++++++++++++++++++++++++++++++++++

 

Russell Leigh breaks the surface of his cave in Israel to give us some wisdom.

Talks for the first time about the Dealstream collapse.

Well it wasn’t quite what I’d hoped for. A direct discussion is always preferable. But Russell Leigh, kingpin of liquidated derivatives trading business Dealstream, was prepared to engage via e-mail on Monday. And for the first time since the collapse of the company over three years ago, Leigh has started to offer his side of a saga that cost traders and the banks hundreds of millions of rand and had a debilitating impact on a number of JSE listed companies including gold miner Simmers and IT group Vox. Neither company survives as an independently listed entity.
Here’s our initial “conversation”, which I’m hoping to follow up on Tuesday after doing some more research into the three year old saga.
HOGG: What in your opinion caused the collapse of Dealstream?
LEIGH: Simply, like every other collapsed banking institution in 2008: bad debts.  BD [bad debts] from Dealstream’s client base or inability to collect the debtors fast enough to meet our creditor, the daily Safex margin call where 100% of our business was executed.
HOGG: Were client funds used in an attempt to trade out of underwater positions?
LEIGH: No, we only ever traded liquid accounts on mandate, the rest of the trading was executed by liquid clients through DMA.
HOGG: Did the FSB, JSE and the banks which were involved – Investec and RMB – act responsibly and rationally during the episode?
LEIGH: Investec really shouldn’t be grouped with the rest, they are totally innocent of everything. As for the FSB, RMB and the JSE, I don’t believe they operated responsibly or rationally.
HOGG: Were shareholders in Dealstream like Ernst & Young and the IDC approached to assist during and after the collapse came? How did they react?
LEIGH: The investors’ non-executive Dealstream director sat next to me almost every day during the last year of the company and was guiding me in every aspect of management of the company, We were joined at the hip – it was communicated to me that this was all they could actually help me with and I took all the help I could from them. They understood that our debtors were the cancer.
HOGG: People like Doug Reed of Vox Telecom accuse you of destroying his wealth. You agree?
LEIGH: Did he really say that? If you can show me that he did say that, I will show you his trading account at Dealstream and you can decide who and how he lost his money. Alec, I have only seen editorial from you and other editors, which pretty much line for line has been inaccurate. I have only seen words from people like DR admitting to their own mistakes and how they have grown and learnt from Dealstream. I haven't see them say what you and other editorial has said.
HOGG: It was reported that you left the country when the collapse happened, going to Israel. Is this true?
LEIGH: Not exactly, it’s very complicated – see below. I actually found myself in Israel months and months afterwards while persuing [sic] a business interest.
HOGG: It was reported that you would not return to SA to assist in the probe into the collapse because you feared for your life. Were there threats on your life?
LEIGH: Yes, they are ongoing with case numbers. Israeli police are very efficient and are actively working on ongoing threats. We know everyone who was involved in every aspect of everything regarding the threats, names places and people. In any event I offered all the assistance I could from the first day of the collapsed, but no one wanted anything from me. My exact contact details have always been available to the curator and then the liquidators who met with me in Tel Aviv in the summer of 2009 (N Hemisphere summer) and I stood by the white board teaching them everything they needed to know.
HOGG: Where are you now and how are you earning a living?
LEIGH: All I will say is that contrary to all the editorial of what has been written, I haven’t traded one thing in the market for over three years. Having no interest.
This article first appeared on Alec Hogg's daily blog


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 _______________________________________________________

If anyone knows the whereabouts of Russell Owen Leigh in Israel - kindly let us know. There is a  reward available for his capture.


hopefully after Osama Bin Laden and Gaddafi,  this one wont be too difficult to hunt down.


www.twitter.com/dealstreamfraud

Russell Owen Leigh Speaks from his cave in Israel _article

Vox Telecom CEO Doug Reed accused by Leigh of gambling with shareholders' money, and worse.

After yesterday’s broad questions, Russell Leigh invited more in-depth discussion. I took the opportunity to dig deeper into the biggest financial scandal of 2008 with the man who until now hasn’t been prepared to engage in a public forum. What he is alleging  is dynamite. Leigh’s version of the truth paints Vox Telecom in a most unflattering light and uncovers a default by Regiments Capital and provides inside information on roles of the Financial Services Board, Ernst & Young, Simmers and others.
We’re still in e-mail only discussion. So what follows are Leigh’s answers to a list of questions. I’m expecting that we will engage in some follow ups over the next few days. For those only now stumbling onto the story, Dealstream was a derivatives trader that went into liquidation three years ago, with  losses for thousands of clients running into hundreds of millions of rands.
HOGG: After the collapse the FSB claimed that it had instructed Dealstream to stop making misleading claims. If so how many times was this done and what sanction was threatened?
LEIGH: I remember the FSB speaking to us once, we explained the situation to the tee, implored them to come and visit us, do a full audit and sit on our desk and go through our processes (I have all this in email exchanges). They called us back saying they approved everything as we were a SAFEX derivatives broker regulated by JSE. They had been prompted to call us from a complaining client, a lawyer who owed us money on a margin call and was trying to attack validity of our claim. They had asked us to stop trading in unlisted securities without an FSB license and when we explained our situation they gave us approval.
HOGG: After the collapse it emerged that Dealstream’s registration with the FSB as a financial advisor had been cancelled. Were you aware of this and if so when?
LEIGH: We never actually ever made an application to become an FSB financial advisor, we were intending to open up a new line of business for which it was required. When you tell the FSB that you want to apply, they give you an application number and send you the documents. Due to volatility of financial markets from mid-2007 onwards, we never expanded our offering from being a SAFEX regulated derivatives broker and we never submitted an application.
HOGG: The FSB claims since its formation in 2004 no financial accounts were prepared by Dealstream. When was the most recent set of audited accounts produced?
LEIGH: Never. Although we had signed off provisional accounts from our auditors for the first two years. I don’t know why they were not submitted by them as final. Our systems actually gave us a real-time picture of the company’s financial situation, so they were easily enough done.
HOGG: In its report the FSB said R134m was “missing” from Dealstream clients’ accounts. What happened to these funds?
LEIGH: Absolutely all clients’ funds at Investec went out to RMB’s SAFEX clearing account.
HOGG: Vox Telecom says cash of R30m held in trust on its behalf also disappeared. Its MD Doug Reed said in a recent interview with me that the losses were “R60m maybe more….” How was this money lost?
LEIGH: Vox gave us cash and shares to in their words, “boost your capital” as a result of a margin call against various Vox directors, staff and their family as a result of their own trading and failure of the Vox share price below 212c. A margin call is lost money paid to replenish lost equity. The capital was also given to Dealstream to finance a share buy-back program that was losing money for them. Did anyone ever ask them this question or ask them why DS had that money?
HOGG: Did the Vox executives lose their money gambling on other shares? How did the relationship with Vox’s executives work? Was there a similar relationship with the executives of Simmers?
LEIGH: Vox and Simmers are really two very different stories.
Vox executives, staff and their families lost all the excess capital we wanted them to hold with us as a condition for us leveraging their Vox shares by trading many other shares and their own shares in the market.
Simmers was just one share in which many of our non-Vox clients and many Vox executives, employees and their family lost their capital. Simmers was introduced to us by ex-VOX FD, Mike Von Holdt. His father Chris Von Holdt had initially made a lot of money buying Simmers at Dealstream and instructed Mike to buy some. On the day Mike instructed us to follow his father and buy Simmers, he made maybe hundreds of thousands and possible millions on the transaction. That presumably hooked all his Vox colleagues in because they all bought and that’s partly how they lost their capital. In 2008, Investec share price halved, Anglo American had a R300 trading range so losses were made everywhere by Vox people.
HOGG: Doug Reed says that you met with him on the day you left the country, assuring him everything was fine.  What is your version of events?
LEIGH: I told him that the Friday before I had met with RMB and that they had agreed to allow us time to try and collect on our debtors and Vox needed to come through on the commitments to recapitalise their positions with DS. He asked me what I needed and I explained that to start, he needed to pay for a parcel of 12m Vox shares, which he agreed to do at 190c the next morning. By the way, the curator told me this transaction was not booked to Vox and it has been therefore been apportioned to the loss that DS clients have had to absorb. He understood that the money he had sent us to recapitalize his positions with us was spent money and sitting at RMB. He knew that his shareholder Regiments Capital had defaulted to us causing us extreme pressure and he knew we were working through the weekend with Regiments’ Eric Wood and Litha Nyhonyha so that they could make a payment to us. He knew we both faced a very fluid situation based on his share price and that the share price was hanging at a precipice – if he intimated to you that we had a meeting where everything was solid and fine then he is delusional because it’s a matter of record that above 200 he was solvent and below that everyone known to anyone at Vox was insolvent.
HOGG: RMB’s report states that on September 2, 2008, Dealstream was unable to meet its margin call. Yet the bank only put Dealstream into default on September 22nd . What happened in these three weeks?
LEIGH: During the period you mention we were given time to collect from our debtors, there had been some big positions on SAFEX which were going to be refinanced by the owners. We were also given time to unwind our positions on SAFEX thereby reducing risk. As I mention above, DS’s solvency status was extremely fluid depending on live market prices, we were given time by RMB to bring risk into acceptable levels and to collect on debtors.
HOGG: What was Saul Cohen’s relationship with Ernst & Young at the time that he was sitting next to you every day (as you explained yesterday). Ernst & Young claims that it sold out its minority stake in Dealstream before the collapse. If so when? And if that was the case why was Saul still so closely involved with Dealstream?
LEIGH: I am not sure about Ernst & Young’s sale of its stake in the fund or the fund manager. IDC and Ernst & Young where shareholders in the Argil-IDC fund that owned 50% of Dealstream. As I understood, Saul Cohen was an owner of the fund manager that managed the fund. In any event he was a non-executive director of Dealstream.
HOGG: After the collapse Saul claimed “We (presumably E&Y’s Argil VC fund) were always under the impression that clients’ positions were protected and their funds segregated. You rely on what you are told. ” Why would he have believed this? Were Dealstream clients’ trust funds were lumped together in a pool or segregated?
LEIGH: He could only mean that he believed that client money that RMB was holding in the SAFEX margin account as a result of their daily margin call against DS would be protected and segregated by RMB at close out.
HOGG: Please could you explain how the Dealstream clients’ trust accounts functioned? They were opened in the client’s name but did Dealstream have carte blanche over the funds?
LEIGH: Opened in a client name, we had a mandate to pass the funds over to SAFEX margin account at our clearing bank RMB or other such accounts that we had at Peregrine Securities at earlier some stage.
HOGG: Reports after the collapse state Dealstream had 2 700 clients. Roughly what percentage had exposures to Vox and Simmers?  Were they all long?
LEIGH: I don’t know this number. By close of business we had been given time to unwind positions and reduce risk as I said above, so at close our book was left with that which was taking longer to unwind. Vox was held by directors and we were having a lot of trouble executing a close out on the FD, MD, CEO and every other key person at Vox.
HOGG: Why was Dealstream and its clients so heavily exposed to Vox and Simmers? What was it about the fundamentals of these companies that made them so appealing?
LEIGH: Simmers: we had numerous investor presentations about how it was under valued based on the value of it’s reserves and the value of their listed uranium subsidiary in Toronto. Every quarterly result came with a promise of hitting better production on the next and the potential there was significant. However, it’s not as much as what we thought of Simmers as to what our clients thought. Many of them came from people who knew the Watsons. When our clients are wrong, DS is liable for their margin call by 12pm and we’re left chasing them for it. As far as I can remember, Barry Sergeant wrote a report about some mining asset where the reserves and reserve model was very wrong but he liked Simmers. Whatever the case, Simmers was theoretically supposed to be able to produce a lot more than they were doing.
I don’t think Dealstream had anything to do with the internal situation at Simmers. I believe it really had to do with the fact that the pile of rock or the hole they owned didn’t amount to any real value in the time frame investors needed to support the share price. Management were also frustrating shareholders by executing zero cost collars which resulted in a flow of equity into the market on delta, that provided excess liquidity to a planet that was under a liquidity crisis.
Vox: I never really understood the business at all and initially I was always short or trying to be short of it. If I bought it ever, it was based a short term trading buy. There is an old saying in banking, when you owe the bank R1m they own you and when you owe them R1bn, you own them. When Vox universe of people suddenly owed DS hundreds of millions of rand I decided to engage management as to what was going on with it. Thereafter, I had a very close relationship with Tony Van Marken and Douglas Reed for two years. I had a single track mind with them irrespective of the business I didn’t really understand: I wanted to see them improve the quality of their shareholders. Regiments Capital approached me to try and get a significant (-+10%) stake of Vox in the 212c placement and Mvelephanda also bought in. At the same time Regiment brought along the PIC and the IDC. TVM spoke to me a lot about how other Stellenbosch based investors were wooing him and how Vodacom Business was always eyeing them and there were opportunities with Didata who could have been convinced of a strategic alliance of a voice business to compliment their 100% data business. TVM convinced another wealthy individual to buy a stake. We understood the PE was high but new earnings were going to bring it down and its client base and infrastructure were becoming more and more valuable and impossible to replicate. When the PIC bought Vox we decided to put some client money into it where we had a mandate to do so – it was a leap of faith. However, as I said what DS did with Vox is immaterial in respect to what our clients own holdings in Vox and how they spent their equity with us which was supposed to be used to protect their holdings in Vox.
HOGG: At the time of the default on September 22, how many of Dealstream’s clients had positive balances in their trading accounts? Did any get back funds from their trust accounts?
LEIGH: I have tried to find out but I don’t know the status of this at all, the liquidators are not communicating with me at all since meeting with me in 2009. I really wanted to work with them and the curator from day one as there were debtors who could have under moral suasion alone agreed to pay what they should have. There are debtors who know their debts and who are some of the wealthiest people in South Africa today and some of the biggest sports heroes and they are in default today. Part of the irrationality of the FSB and JSE I alluded to yesterday is based in the fact that once they became aware of DS’s solvency issue and our unpaid margin, there was no crisis meeting to try and avoid the melt down that occurred. They went straight for our throat. The JSE even divulged to a private client of ours what our liquidity position was while RMB was working with us to help improve our liquidity. This caused the panic that resulted in the client bringing a mob to the office, assaulting staff and causing us to close down at a time RMB apparently wanted us to try improve our risk profile through normal operations. From them on, they never asked me for anything more, they wanted their bad guy and did not want to talk to me.
HOGG: There are a number of reports stating that Dealstream traded in CFDs. Was this the case or did you only trade in Single Stock Futures?
LEIGH: All of DS’s business was in listed JSE single stock futures. DS business was a trading system that allowed clients to execute via DMA into the JSE and book all transactions as Futures!
Let me explain: the single stock future price of Anglo American looks very different to the Anglo American share price because of financing and dividend assumptions in the future’s price. Also, there is almost zero trade in SSF’s on Safex. All trade is in underlying shares on the JSE which are then changed into a future by essentially changing the delivery date to a future date on the JSE transaction. Trade occurs on JSE and then a transaction is booked as a future in SAFEX. SAFEX rarely actually transacts futures with buyers and sellers. This mechanism works very well except for the fact that a future price takes into account a dividend assumption. If a company changes its dividend, the broker (DS) or the future underwriting bank can be very exposed to each other for that change in dividend. DS had to sign a supplementary dividend swap agreement with its broker which gave mutual protections to each other. This is not efficient so SAFEX starting allowing us to book the two components of the future separately: the underlying share price future and the dividend future. This is effectively a CFD. This is how our website marketed our CFD’s. Gist was that we advertised that trades were DMA into the JSE and booked as SSF’s and which the client could have the option of viewing in our systems as a CFD with the underlying share price, dividend and interest components of the SSF viewed as separate items – which is essentially a CFD.
HOGG: On last night’s radio show David Shapiro said Dealstream’s administration was in a mess. Your comment?
LEIGH: That’s a cheap shot because it doesn’t matter how good administration is if its 2008 when market volatilities where at unprecedented levels and we have 1000 margin calls before lunch, worth a multiple of our capital base. DS was a spectacular failure only because it was first a great success because DS offered a good service. David had no insight into DS operations but I do understand where he is coming from. When I was trying to put DS together a mutual friend tried to ask David to join DS as a founding partner. In all our meetings, David had said that one thing that was important was to get administration right and it was a central theme to him. I think he is and was saying back in 2004 that with all the best of intentions you are going to fail if administration is bad. DS was set-up with the best of intentions and I think dealing with 3000 clients with a staff of under 20 we did very well in terms of administration. We knew our exposure every second of the day. We executed hundreds of transactions every day and which were booked, matched and margined. It was a fireable offense for our staff to leave the day without a completely matched trading day. We were dealing in complex instruments which required a formula to calculate their value and rounding off something to five decimal points rather then 2 had the difference of millions of rands. From mid 2007 until late 2008, financial markets faced a continuous tsunami of unprecedented volatility that broke every model for risk management. The issue was that we would close the day as a highly solvent concern and open the next day with 500 clients being under margin call and by lunchtime 1000 and we would close any day at various states of liquidity. As long as the margin call came in we were liquid and the week after the weekend Merrill Lynch collapsed the volatility became too much. It wasn’t as much as an administration issue as it was an issue of risk management with a book geared up too much on illiquid stocks in a liquidity crisis that took out most global brokerage houses.





 _______________________________________________________

If anyone knows the whereabouts of Russell Owen Leigh in Israel - kindly let us know. There is a  reward available for his capture.


hopefully after Osama Bin Laden and Gaddafi,  this one wont be too difficult to hunt down.


www.twitter.com/dealstreamfraud

2 new links

 

 

 

 

 

 

 

 

Two new links

http://bit.ly/sjlRZg

http://bit.ly/tOv0Er

 

 A picture of him (for bounty hunters)

http://bit.ly/rXurJt

 

http://bit.ly/sTe1Lr

 

 

 Oct week 3 articles here 2008...

DEALSTREAM DEBTS COULD BE HIGHER - Renee Bonorchis

Wed, 29 Oct 2008

DEALSTREAM may have flinched 27.3m shares worth R17m from its client VOX TELECOM. VOX chairman Tony van Marken has said this could mean that the debts that DEALSTREAM CE Russell Leigh left behind when he fled to Israel could be higher than originally estimated. DEALSTREAM JSE-regulated trades was owed R214.4m.



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JOHN FRASER: Dealstream is very bad news – the collapse of that institution has left all sorts of ripples, and one of which is, of course, the impact on Vox Telecom. They appear to have had 27 million shares invested in Dealstream, I believe on behalf of some of their employees, a pension fund or something, and in essence they’re saying that those shares appear to have gone missing and as a result of the exposure to the Dealstream disaster their headline earnings a share are going to halve, down by 45% - 55% for the year to August. Presumably if you were a shareholder in Vox, you’d be asking some quite serious questions about why they were so careless.

JONATHAN FISHER: Sure - the exposure was way beyond what shareholders would have expected. I believe that financial impact is to the tune of R30 million which is big for a company like Dealstream – that is a once off item, so it won’t happen again. It’s not nice for shareholders to get a surprise like that. I think the news was a red in the market. It’s been out there for probably six weeks or so. The price didn’t do much on the back of this announcement, and I guess we’re going to have to look at Vox going forward. Their results are going to be released shortly, within the next two weeks, but to have that kind of exposure beyond your control is not a nice surprise.

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Vox Telecom's earnings a share for the year to August were expected to be 45 percent lower because of the collapse of Dealstream, the JSE-listed company said yesterday. Headline earnings a share would be 55 percent lower during the period.

The company said that if the effects of Dealstream were excluded, earnings a share and headline earnings a share would have grown by between 20 percent and 30 percent. Last month Vox said it had not entered into contracts in which it had liability to Dealstream, but the company held R30 million of its cash, which it warned could be difficult to recover.



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Dealstream's Leigh avoids investigation

October 29, 2008 Edition 1
Mzwandile Jacks Johannesburg
Russell Leigh, the former chief executive of Dealstream, had indicated he would not return to South Africa to help with the probe into the collapse of the derivatives brokerage firm because he had received threats to his life, Bernard Levenstein, the curator, said yesterday.
Levenstein told Business Report this could make his investigation difficult.
Dealstream had defaulted on R167 million in debts to Rand Merchant Bank (RMB).
Levenstein, who has been communicating via e-mail with Leigh, said the former Dealstream chief executive was concerned about his safety in South Africa.
He said Leigh told him he was in Israel, but he did not have evidence to prove this.
"He has called me from a secret phone number and I do not have his numbers," Levenstein said. "He said his safety had been compromised."
Leigh emerged about two weeks ago, after disappearing last month.
"At this point investigations are ongoing," said Levenstein. "Any evidence of criminal misconduct will be referred to the relevant authorities, who may decide to conduct an extradition."

Levenstein said he had received complaints from investors who claimed to have lost money when Dealstream collapsed. "The names will be in my report, which will come out on November 10."
Levenstein had earlier said that Investec, which held accounts on behalf of Dealstream and its clients, might come under investigation should it be implicated in the probe.

He said Investec could be investigated just like RMB, Dealstream management and staff, including Leigh.

Levenstein insisted that at the moment Investec was not being investigated, but all the other parties involved in business dealings with Dealstream would face an extensive probe.
A Johannesburg-based analyst, whose company does not allow him to be identified, said that if the curator wanted to get to the bottom of the matter he would have to probe Investec now and not wait for what came out of the investigation.
"When they investigate Investec, it is not to say the investment banker is guilty. It is just to try to get right to the core of the issues," the analyst said. "I think even though Investec was not named in the Financial Services Board [FSB] report as one of the parties to be investigated, they need to look at them."
A report released recently by the FSB recommends that RMB's role in the extension of credit be investigated. It also recommends that Dealstream's status as an authorised user of the JSE since its inception be investigated too.




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South Africa: Dealstream's Failure Leaves Tangled Web

Business Day (Johannesburg)

30 October 2008
Posted to the web 30 October 2008

Renée Bonorchis
Johannesburg

BERNARD Levenstein, curator of failed brokerage Dealstream, said yesterday he was still in touch with Dealstream's CE, Russell Leigh, and if there was enough evidence charges would be laid against Leigh along with an attempt to extradite him from Israel.

Dealstream has become one of the most scandalous financial collapses in SA in the past decade. It was a small company but had large clients, and big names from Investec to Rand Merchant Bank (RMB) and the JSE have been pulled into the debacle.

Levenstein, working in Leigh's offices in Johannesburg, said the office was being dismantled where possible, but selling Dealstream's assets would not fetch much.

Dealstream traded in regulated single stock futures and unregulated contracts for difference . Last month the company started to default on its payments to its clearing agent, RMB.

When Dealstream went under at the end last month and Leigh fled the country, the Financial Services Board (FSB) did a preliminary investigation and found R134m was missing from client accounts and that Dealstream's account had just R15,5m in it.

Levenstein said he had met with RMB and Investec. He had Investec's data and could track the cash movements of Dealstream and its clients.

Ciaran Whelan, Investec's head of risk, said there had been contact with Levenstein, but Investec had not handed over clients' funds because there were competing claims for the funds.

"The money probably went back to Dealstream to pay its margins," Whelan said when asked about where Dealstream's clients' money may have disappeared to.

Levenstein said yesterday many investors were registering their claims against Dealstream via its website and it was possible claims would amount to more than the missing R134m.

On Tuesday, Vox Telecom issued a statement showing that two of its directors had their entire holdings in Vox wiped out while another four had their holdings significantly depleted. This would be in addition to the disappearance of Vox's share scheme, worth R17m. There is also the fact that Vox's share price has fallen more than 60% since the news of Dealstream's disintegration. Vox has lost R1,47bn off its market capitalisation thanks to Dealstream's damage to its reputation.

Levenstein's first progress report, which is not public, went to the FSB last week. His final report goes to the courts on November 10.

At that point there may be a challenge against those appointed as the provisional curator and the provisional liquidator, since both parties are linked to the Gobodo group.

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Newer articles here

http://www.hellopeter.com/the_comment.asp?recid=206862&comp=711512

Anyone else diddled?

Am I the only one in Gauteng who was diddled by Dealstream online trading? Why the silence on this matter?

Investec has taken the “it’s not our fault” stance. The JSE suddenly says Dealstream has no licence to trade although Dealstream have been trading for around four years on the JSE.

The Financial Services Board has turned a blind eye.

About R70 000 in my “Trust Account” has been frozen and I can’t get to the cash which is legally mine.

BRIAN

Roodedpoort

Ombudsman ready for a higher caseload
Renée Bonorchis

---

Print-Friendly

Financial Services Editor

CHARLES Pillai, the Financial Advisory and Intermediary Services (Fais) ombudsman, said last week that he was watching the global market crisis with concern, but remained confident SA had a robust system of financial regulation.

But Pillai, who was speaking at the launch of his organisation’s fifth annual report at Gallagher Estate on Friday, said SA would not come out unscathed.

Pillai’s chairman, Cyrus Rustomjee, said he had no doubt the ombudsman would experience an increased workload. In the year under review, the number of complaints sent to the ombudsman grew 27,5% to 5720. The ombudsman office was able to resolve 486 cases and dismissed 1218 cases. In total 18 determinations were issued and the settlements related to those cases amounted to just over R14m.

Pillai drew attention to a couple of the more meaningful cases. One was to do with what he described as “errant practices” within the retail furniture industry. The Barnetts store in Port Shepstone, which is one of JD Group’s brands, had sold “ poorly educated domestic worker” Thulisiwe Gumede a TV , a mini oven and a TV licence. The goods were worth R3004 but Gumede signed “lots of papers” and walked away owing R6468. Upon further examination it was found she had been conned into signing up for a credit life policy, a warranty, and a goods insurance policy in addition to contract fees. The retailer was ordered to refund Gumede with interest.

In the past year, for the first time, the ombudsman pronounced on a case to do with the principles of equity. A pensioner and a widow, Elizabeth September, used a broker from Sanlam Life who took her bundle of cash and put the funds into Fidentia, the pension fund that collapsed early last year. September was promised 20% a year from her investments and, up until February last year, that is what she got. And then there were no payments.

September spoke to Sanlam Life and the company said it had nothing to do with it, referring her to Fidentia. But when the ombudsman stepped in it found Sanlam Life was responsible for the actions of its employees and ordered the company to repay all of September’s money with interest.

Given the collapse of Fidentia and most recently Dealstream, the ombudsman may have set a precedent for investors to get their money back from their brokers.

As for his own office, expenses grew more than 27% to R14,3m. The deficit is funded by the industry regulator, the Financial Services Board, and in the fiscal period it managed to create a process map for complaints, install a data management system, recruit six new case managers and work on its public profile.

However, while the costs of producing annual reports almost doubled to R354988, it slashed its spending on advertising and consumer education from R437371 to just R75918. Entertainment expenses rose 142% to R52816 and the cost of unspecified gifts went from R915 to R8920. Strategy planning and workshops, which cost nothing in the 2007 fiscal period, suddenly cost R52906 in the most recent period, textbook and library costs quadrupled and travel and accommodation costs doubled to R244632.

Some costs had been cut, but expenses were on an upward trend and Pillai was certain the ombud’s journey had only just begun. “The Fais ombud is now set to take centre stage in the financial services industry,” he said.

South Africa: 'Silence' After FSB Call for Dealstream Probe

Business Day (Johannesburg)

15 October 2008
Posted to the web 15 October 2008

Renée Bonorchis
Johannesburg

AFTER rushing out an inspection report and recommending an investigation of Rand Merchant Bank's (RMB's) role in the collapse of brokerage Dealstream, the Financial Services Board (FSB) had yet to contact RMB or ask for further information.

Alan Pullinger, CEO of RMB, said yesterday silence had descended, leaving the focus on RMB, although other parties named in the FSB report could help shed light on what happened.

Dealstream traded in single stock futures and contracts for difference (CFDs). It had accounts with Investec and RMB, with the merchant bank acting as a clearing agent for Dealstream's single stock futures trades.

In September, Dealstream started to default on its margin calls with RMB. This meant Dealstream could not give RMB enough cash in reserve to insure its trades. After three weeks, RMB reported Dealstream, and the brokerage was closed down and put into curatorship last week.

No one has been able to contact Dealstream CE Russell Leigh. He is said to have fled, flying first to London. One source said disgruntled clients arrived at Dealstream's offices calling for Leigh's head.

RMB's timing has been questioned, but RMB and the JSE have said it is normal to let a client default on margins before acting.

However, the FSB found that apart from the JSE knowing about Dealstream's misleading statements about CFDs since the beginning of 2006, Investec was acting as a market maker and a corporate cash manager for Dealstream.

Dealstream's clients had to have trust accounts with Investec to trade, and the FSB said those accounts should have had a total of R134,1m in them. But it appears Leigh bundled all but R15,5m into a single account, and may have absconded with the rest. How he got money out of client accounts held with Investec is not clear.

Tim Till, chief of operations at Investec Private Bank, said yesterday Investec held accounts on behalf of Dealstream and Dealstream's clients.

"Investec has been requested to release funds standing to the credit of Dealstream's account and standing to the credit of Dealstream's client's accounts to the curator of Dealstream," Till said.

"Certain clients of Dealstream have requested Investec not to release these funds to Dealstream. Investec is ... faced with competing claims to the funds which it is holding, and is taking legal advice ... to protect all parties."

RMB is owed R214,4m in its own right, and was left with more than R1bn in open trades for Dealstream's account. By the end of last week RMB had sold that down to R742m without losses. Pullinger said yesterday the bank still had two large positions in Vox Telecom and Simmer & Jack, making up to 90% of the remaining portfolio. Pullinger said it would take RMB longer to realise any value.

"We're taking a longer term, private equity type of mindset," he said. "We're moving on, and we're not sure of the FSB's next move. Certainly there are other parties that could shed light on what's transpired, especially the shareholders. Dealstream never released audited financial statements. Shareholders should have been asking for them."

Relevant Links Southern Africa Banking and Insurance Economy, Business and Finance Legal and Judicial Affairs South Africa

Dealstream curator Bernard Levenstein's first progress report for the registrar of the high court is due next week. A full report is to be filed by November10.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

INVESTECs PART in this- CASH in TRUST at INVESTEC MISSING- what Investec says

Post/Comment here, or email any new info and we will post it for you.


____________________________________________________

DEALSTREAM WEBSITE read...
Trust Account
JSE listed Securities - Equities, Single Stock Futures, Options, Index and Agricultural Futures offered by Dealstream Securities Pty Ltd.
A SAFEX trust account will be opened for you to hold cash and stock positions.

CFD's and over the counterproducts offered by Dealstream Online PTY Ltd
Once a live trading account is activated, Dealstream will open a Trust Account at Investec Bank in your own name. You will receive a confirmation from Investec and Email from Dealstream providing you with your account details.

Trust Interest Rates
Dealstream negotiates a wholesale interest rate for each its clients based on the cumulative balance of funds held by all clients at Dealstream. In this manner it is possible to receive highly competitive rates for minimal cash deposits.


_____________________________________________

I contacted Invested and gave them my ID number and they informed me of my cash balance held in TRUST a few months back and my latest balance being considerably less!!




CASH in TRUST at INVESTEC MISSING- what Investec says
Where is cash that was held IN TRUST by INVESTEC?

Dealstream had cash held in trust at Investec...

Our Cash is missing !!

HOW CAN IT JUST VANISH WITHOUT A TRACE?
WE ARE NOT STUPID PEOPLE.
WHO IS TAKING RESPONSIBILITY HERE?

INVESTEC money held in TRUST in our personal names-where is it?

Yes Investec we know the accounts are frozen and that they are empty. Now explain how you are going to get our money that was in your trusting hands back to us?





ask Investec Corporate Cash Management where it is and that we want it back
Steven Group
Kris Mietz kris.meitz@investec.co.za
dgriffiths@investec.co.za

0112869607



IS INVESTEC TAKING RESPONSIBILITY FOR OUR CASH HELD IN TRUST WITH THEM?




_____________________________________
RESPONSE FROM INVESTEC


We are aware of the current problems related to Dealstream Securities (Pty) Ltd (Dealstream). Dealstream utilises an online product provided by Investec to intermediaries who manage client accounts. In terms of the legal relationships:

* Investec has limited capacity to deal with the clients of any intermediary that use this online product
* Dealstream requires each client to sign a mandate with Dealstream authorising them to open accounts and transact on behalf of the client
* Based on the legal agreement, and the client mandate referred to above, Investec can only transact based on instruction (electronic or otherwise) from designated officials at Dealstream .

Due to the legal structures that are in place, until we obtain some clarity on the future of Dealstream and the legal process that will be put in place, Investec will be unable to divulge information and/or process transactions based on instructions directly from the clients of Dealstream.

As an interim step, we have frozen access to the client accounts managed by Dealstream and we will actively work with the parties involved (the JSE, the FSB, RMB and Dealstream) in order to bring this matter to resolution as quickly as possible.

Furthermore, Investec has no trading exposures to Dealstream.

All press related queries should be referred to the Investor Relations division on 011-286 7070.


_________________________________________________


So INVESTEC, what exactly are you saying to the people who had their money held IN TRUST at investec on call?
Are you backing slowly out of this and not assuming any responsibility?

If I have to give you Investec my ID number to find out my cash balance in trust with you, and I found out that I have been defrauded, are you telling me that I must now ask someone else about the whereabouts of my cash in investec?

HELP info here- for those defrauded

HELP info here- for those defrauded

Post/Comment here, or email any new info and we will post it for you.




DEALSTREAM's DEAFRAUDED CLIENTS
If you have been defrauded by Dealstream in Melrose Arch, South Africa,
kindly share your input here, so we can, as a larger informed number, head in the right direction to get our money back.


________________________________________________________

FSB LETTER

It is indeed unfortunate that you and many other investors under Dealstream Securities find yourselves in an unforeseen circumstance with regards to your investments. However we must reiterate that the FSB is working tirelessly to get to the core root of this problem. We further advice that every investment has an element of risk and that people should advance with caution when getting into any investment contract. The FSB will communicate through the media if and when there any developments with regards to their investigations on the operations and demise of Dealstream. For further assistance, please feel free to call the FSB Contact Centre 0800 20 20 87 / 0800 110 443 (Monday to Thursday 07h30 to 17h00, Friday 07h30 to 16h00) I trust that this information is to your satisfaction

_________________________________________________________



INVESTEC
ask Investec Corporate Cash Management
where our cash is and that we want it back

Steven Group

Kris Mietz
kris.meitz@investec.co.za

Mr Griffiths.
dgriffiths@investec.co.za

0112869607

____________________________________





SAPS Commercial Branch

You need to open up a case of FRAUD againts Russell Leigh of Dealstream at your local SAPS First... and have a case number in order for them and the Scorpions to get to work.
WHO HAS DONE SO?

Focuses on fraud and commercial crime.
Hotline:
08600 10111

JHB
SAPS Commercial Branch 0118075320
Superintendant Heyman 0829007878

JHB-Commercialcrime@saps.co.za

hq.commercial@saps.org.za (no response from this)

________________________________

Below are two differing parties wanting to take action-

______________

Kevin Yeh on 2008/09/27 08:56:10 AM - Dealstream Action Group Affected clients are also welcome to email to me,
kyeh@worldonline.co.za
for further information. Currently we have 10 people in our group.

Dear fellow affected investors

Following my previous correspondence, I would like to inform you of a possible scam targeting affected Dealstream clients. An entity by the name of GFIA and certain individuals working with it are targeting affected Dealstream clients, asking them to sign a requisition form.

I am extremely suspicious of signing any form with GFIA or with any third party at this stage. The GFIA website seems to have been put up in a hurry, it lacks credibility.

I have been in contact with RMB, Investec and FSB. I was advised by FSB they are investigating the matter, and they have been to Dealstream’s offices to gather documents and information. I suggest we all wait until FSB makes a clear announcement on the matter. We should all speak to the regulator directly instead of attempting to use any third party to speak on our behalf at this stage. The toll-free number of FSB is 0800 110 443

Do not fall prey to any schemes that could want to make money off us, just because we are desperate to get our money back. Never sign anything if you don’t know who the counter party is.

_____________________________________________

This morning I was phoning around, to make some enquiries and to obtain assistance.

My first stop was Doug Reed, CEO of Voxtelecom, who is also affected by Dealstream. However, he was not available.

I then contacted RMB, who is the clearing member for Dealstream. Braam was sympathetic, but he could not really help me. All the futures contracts are now with them, but not CFD’s. He referred me to FSB for more info.

I then contacted FSB. A consultant said FSB has gone into Dealstream’s offices a few days ago to collect information and documents. They are currently investigating the matter. They will make a media announcement in due course.

Right now, what we can do is hope and wait.

______________.”

______________________________________________________________

Also those interested in taking some recourse, email this guy

www.troubleatdealstream.co.za


sales@investyourself.co.za
he says...
lets get a legal opinion. surely one of the institutions would have . .more been aware on what dealstreams actions were or . .more lack there of. also dealstream have . .more misrepresented themselves by claiming that ernst and young were shareholders, which is clearly not the case, as per ernst and young comments on this website. if dealstream misrepresented themselves and there creditors then i think they should be taken to task, if not for any moneytree value, then certainly on principle. why is that some persons if rumours are true can have there funds transfered to rmb from dealstream yet the rest of us have no say. spread the word to all creditors that we will seek legal advice and email me if you are interested in going forward once legal advice has been sought. .

Hi there everyone had a chat to GFIA and this is a little e-mail to let everyone know where we are to date. Please start watching the blog because we will update it as we know. Please note that the requisition form is not your actual claim and is therefore not legal and binding and you will require to fill in other documentation in this regard if GFIA get appointed and if in the future you incur any cost Mac form GFIA said that you would be notified and you can withdraw your claim at that point and then there would be no cost. Lets just do it step by step.

Regards

Bruce de Bruyn

082 8853 644

We are currently still anticipating a possible application for the liquidation of Dealstream Securities and will continue to file all the requisitions received from investors with the Master of the High Court. Although we have not received any formal communication in this regard, it seems that the Financial Services Board may still contemplate going the curatorship route with Dealstream Securities.

At this stage it is impossible to predict what the exact financial status of the company is. If Dealstream Securities is placed under liquidation or curatorship, the liquidator/ curator must take control of all the assets which would include the books and records. Only once that process has commenced, can the liquidator/ curator start to ascertain the financial position of the company and initiate appropriate investigations into the failure of the company.

Unfortunately this is the only update I have for you and your investors at this stage, but will keep you updated as further progress is noted. Thanks again for all the requisition forms received to date, it is appreciated. For those investors who would still like to submit their requisition forms, please scan and email to our Administration Manager: Madel Visser (madelv@gfia.co.za) or fax to us, at either (012) 361 0394 or (011) 482 4737.

Kind Regards

McComb Taylor

Divisional Director

GFIA Administrators (Pty) Ltd

and

Gobodo Forensic and Investigative Accounting (Pty) Ltd

Hi

I spoke yesterday to a representative at Investec and these are the questions regarding this whole mess and answers given - 011 286 9607

1) If an account was opened by Dealstream in the clients name at Investec, with a mandate to Dealstream, then surely the FSB or anyone else can not freeze this account as this account is not in the name of Dealstream. This account do not form part of Dealstream assets or liabilities and therefore not part of Dealstream at all. According to me I am suppose to be able to cancel Dealstream's mandate and take control of what cash is left in this account.

Answer - The accounts were frozen by the FSB, in order to finalise any open positions after the curator was appointed and then the accounts should be made available to the account holder.

Remark - This made sense except why can I not become a normal creditor in Dealstream's estate as RMB also took whatever the could.

2) Surely you can supply me the balance on my accounts as 2 of the 3 accounts was not in a trades. What do you want to hide.

Answer - If the FSB say we may not then we must listen. Wait until the curator was appointed and send your request to him.

Remark - maybe we must make a fraud case against Investec as they froze my account under the instruction of the FSB that has no jurisdiction over my account. Why not give me a transaction printout, so that I can at least determine the money missing, and then decide what route I want to go? Again not important enough like VOX?

3) Why can VOX and other major investors negotiate with RMB to cover their positions and us normal people are not allowed. Surely if Dealstream is liquidated then the short on RMB's side is also a normal creditor. Please then explain why RMB is allowed to finalise, maybe to the disadvantage of us, the open positions without talking to investors in Dealstream.

Answer - I do not know.

Remark - I did feel sorry for this person, as he was put in a situation where he did not know the any the answers and sound sincere. He did promise to bring my concerns to the attention of their public relations department. I do no think this will help at all as it was clearly shown by Investec and RMB the do only care for themselves.

Regards.

COMMENTS RE ABOVE
29 th Sep 2008
Dear X Dealstream Clients, ...Liquidation company for Dealstream ??

On 29 th Sept, a X Dealstream client was called by a "so called" liquidation company for Dealstream and needed to fax them a document in order to facilitate them getting their money back.

Anynone know details of this ...or is this a further SCAM?


is it this guy?
...from Moneyweb site.
Louis Fitz-gibbon
Louis you are vermin *&^%. stop praying on people who have already lost their savings. There will be 1c in the R in a liquidation and here you are trying to get these poor people to cough up for your benefit. back off.

Any help would be great for the victims.

louis fitz-gibbon stop being an ambulance chaser you low life. the cash is gone. P*** off. these people have lost enough already by angry on September 26 2008, 14:08 Find this comment inappropriate? Report it

Louis the Fly LEave poor Louis alone - he is still looking for his MoneyTree (expand his purile comment to uncover the money tree pearl). Good luck Louis. And be careful, don't chase a parked ambulance, you might hurt yourself

by 78 on September 26 2008, 16:06 Find this comment inappropriate? Report it

no flies on Louis check out his website - Louis also sells CFDs!! FANTASTIC - i bet they will have a 50% off sale next week. You go my boy by Louis Buffet on September 26 2008, 16:15

Dear Louis, trust you don't have some (all) of your clients' funds InvestYourself there ....

by Louis Fitz-Gibbon on September 27 2008, 17:00

___________________________________________________________________

RUSSELL LEIGH's (CEO of DEALSTREAM) personal details needed urgently for Police



INTERPOL- you can see him and hear his lies here.

http://multimedia.johncom.co.za/view_video.php?viewkey=4094fe9e0bc1de3f94ed

http://multimedia.johncom.co.za/view_video.php?viewkey=8714c029b37a6ad3006f





What is his ID number :

I.D No: 710115 5174 088 -possibly

Address
Res Add: 67 Dorothy Road Norwood Johannessburg 2192 - possibly

CELL NUMBERS

Russell cell - 083-627-4445
and also 082-782- 4328 (had as old no)

Jeanne Leigh - 082-351-7122

PS
Jeanne Leigh was fired from Global Trader more than 5 years ago for attempting to steal Global Traders client base for her husbands business dealstream. The court records are public for those who are interested.



Where was he living before returning to South Africa?


_______________
Dealstream employees
Bernard Willer

Dealstream Securities and , Snap Systems software Owner
Johannesburg Area, South Africa

* at Dealstream Securities
* Owner at Snap Systems
Education
* North-West University/Noordwes-Universiteit
*
Owner
Snap Systems



Bernard Willer’s Education

*
North-West University/Noordwes-Universiteit

1999 — 2001

ADDRESS?
TEL?
___________________



off SAFEX website...
Notices and Circulars
23 September 2008 - F1847 - Default of Member - Dealstream Securities (Pty) Ltd

ie they were a member

Dealstream's FSP number is listed as 29 541 on the FSB's site, but its record has been marked as cancelled.

The Financial Advisory and Intermediary Services Act (FAIS) department of the FSB is responsible for issuing licenses, assessing financial services firms and taking action against firms who fail to comply with FSB legislation.

___________________________________



[IMG]http://i33.tinypic.com/2s0cork.jpg[/IMG]

http://tinypic.com/view.php?pic=2s0cork&s=4

[IMG]http://i37.tinypic.com/2lvoen7.jpg[/IMG]

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http://tinypic.com/view.php?pic=2ik9pj4&s=4

[IMG]http://i34.tinypic.com/1z35w5i.jpg[/IMG]

http://tinypic.com/view.php?pic=x5a5u8&s=4



http://tinypic.com/view.php?pic=2psg8t2&s=4

[IMG]http://i33.tinypic.com/68c7za.jpg[/IMG]

______________________________
Elmarie Kruger, manager of capital markets at the FSB,

said yesterday the FSB's investigation into Dealstream would not take long.

Listed securities: stick with JSE-backed investments
This week Dealstream, a brokerage that dealt in derivatives, had to close doors and clients are likely to lose all money held by the firm. This highlights the importance of the instruments you are investing in and how that relates to the credit risk of the company. Dealstream traded in contracts for difference (CFDs). These are not managed by the JSE and effectively are contracts between two parties, with the brokerage carrying the risk. When trading CFDs, effectively the brokerage firm's credit risk is taken on. Shares or securities, such as single-stock futures, which are traded through the JSE, offer far more protection as there is the backing of the combined balance sheet of all the members of the JSE. Moreover, reputable JSE-registered stockbrokers would keep all clients' assets in a trust account so that they are protected from any claims against the stockbroker. The brokerage would be a member of the JSE Guarantee Fund, which holds assets in excess of R80-million and protects against a member (a stockbroker) defaulting. A client can institute a claim against such a broker through the JSE Guarantee Fund.