Cape Town - Investors have started a petition to the South African Institute of Chartered Accountants (Saica) demanding a refund from asset management firm Smart Billion Investments.
Yesterday, Smart Billion Investments directors were fined and debarred by the Financial Sector Conduct Authority (FSCA) for trading client funds without authorisation and failing to reimburse clients for losses they caused.
The petition, started by investor Busiswa Ramafoko, has garnered 122 signatures and was directed to Saica because the chief executive of Smart Billion Melusi Ntumba was registered as a chartered accountant.
Saica chief executive Freeman Nomvalo confirmed receiving a complaint but said the organisation does not not comment publicly on ongoing investigations.
“Saica only has the authority to discipline our members for improper conduct and does not have the authority to direct refunding of investors’ money.”
Nomvalo said any aggrieved investors would need to make use of available civil remedies through the courts in order to seek such a remedy.
He confirmed Saica took allegations against all individual members seriously.
The FSCA fined Ntumba R10 million and prohibited him from trading for 10 years. Fellow Smart Billion director Renault Kay was fined R500 000 and banned from trading for five years.
An investigation by the FSCA found both had contravened a number of financial sector laws and the Serious Commercial Crime Unit was investigating a criminal case against Smart Billion with assistance from the FSCA.
The FSCA said Smart Billion traded in contracts for differences (CFDs) which allow investors to trade the direction of securities over the very short-term and are especially popular in foreign exchange and commodities products such as currencies.
The trades were carried out on behalf of clients through an online trading platform, GT247 where Smart Billion opened a trading account in which it pooled client funds.
The FSCA said clients deposited funds for trading purposes into Smart Billion’s bank account of which only a portion were transferred to GT247, for trading purposes. “The balance of clients’ funds that remained in Smart Billion's bank account, was used to pay clients’ withdrawal requests.”
The FSCA said it considered it an aggravating factor that a very small amount of client funds were transferred to GT247, while the balance of the funds was utilised to repay clients and personal and business expenses.
Their investigation found that Ntumba, in his capacity as director, representative and chief executive of Smart Billion, contravened the Financial Investment Act by not observing the good faith and not exercising proper care and diligence with regards to client funds.
Suspending his authorisation to trade, the FSCA said it found he no longer met the fit and proper requirements as he had caused Smart Billion to contravene financial sector laws.
With regard to Kay, the FSCA found he only agreed to act as a director and key individual (KI) of Smart Billion in order to secure a Financial Advisory and Intermediary Services licence.
KIs are responsible for managing and overseeing the activities relating to the rendering of any financial service and are required to carry out their duties with due care, skill and diligence.
mwangi.githahu@inl.co.za