A broker must repay two pensioners more than R600 000 that they lost when investment entity Leaderguard went insolvent, said the Office of the Ombud for Financial Services Providers on Friday.
”Broker Wilma Willemse of Willemse Financial Services CC was ordered to compensate Pretoria East pensioners Charl Jakob and Brechtje Sophia du Plessis more than R600 000 that they had lost,” said the office in a statement.
Ombud Charles Pillai found that the Du Plessis, in their 70s, were not properly advised of the volatile nature of the financial product. Willemse had also not properly explained that the investment in Leaderguard was not guaranteed.
Pillai said Willemse was not legally authorised to render the financial service in question, was negligent and didn’t comply with the law when she recommended investing in Leaderguard.
Altogether 1 850 investors, mostly pensioners, lost 95% of their investments — R350-million — when Mauritius-based Leaderguard Spot Forex collapsed, resulting in South Africa’s largest foreign-currency trading scandal, said the ombud.
Pillai said this case mirrored an earlier Leaderguard matter in which it ordered broker Marius Naude of Kameeldrift West to repay Wonderboom pensioner Michael Denman Mackrory after he lost nearly R300 000.
Also on Friday, Pillai refused Naude leave to appeal against his order to repay Mackrory.
Pillai questioned the legality of a group called the Leaderguard Recovery Unit. He noted with ”alarm and a great deal of discomfort” that this unit was approaching ”already short-changed investors” and asking them to contribute to costs to ”put investors in control of Leaderguard”.
He said a letter from the unit to investors warned that they ran the risk of losing their investment if they didn’t pay.
Pillai said that lawyer Sean Sim, of Sim Attorneys, was apparently working with the unit while his firm was acting for respondents in complaints against Leaderguard, which was ”an obvious conflict of interest”. — Sapa