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 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.
Financial Services Editor
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South Africa: 'Silence' After FSB Call for Dealstream Probe
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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.
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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."
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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.
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