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Port Elizabeth - Documents filed at the Port Elizabeth High Court shows that Old Mutual paid a financial consultant R1.7m to entice him to leave his independent broking firm to join the life office’s ranks – only to break ties with him a year later after they found that he “does not comply with personal character qualities of honesty and integrity”. Now Old Mutual wants its money back.
Fin24 reported 2 weeks ago that Old Mutual debarred top consultant James Stern after a forensic investigation and disciplinary procedure. "We found discrepancies in his paperwork in so far as he duplicated customer signatures and altered postal addresses to mislead customers and misrepresent facts to Old Mutual," the company said.
According to documents to support its court application, Old Mutual’s Agency Franchise Division entered into an agreement with Stern on November 13 2012 in which Old Mutual paid Stern a once-off amount of R1.7m in what they termed an “establishment and restraint fee”.
Such a golden welcome is usually preserved for top producers to motivate them to move their clients’ existing investments to the agent’s new employer, as well as placing any new business at his new home. Stern received several accolades from different financial service providers when he was managing his own independent brokerage firm.
At the time of courting Stern, Old Mutual saw the R1.7m as a good investment. “Old Mutual is willing to pay the mandated agent the establishment and restraint fee to procure and retain the mandated agent’s services and expertise,” reads the 2012 agreement signed between the two parties.
This fee was subject to certain conditions, one of which stated that Stern must repay Old Mutual the R1.7m if the agreement is terminated within 3 years.
In addition, Old Mutual now claims another R67 734 from Stern, being a debit balance on his commission account with Old Mutual and R192 130 under a deed of suretyship signed in 2006 when Old Mutual signed a broking agreement with Stern’s previous brokerage firm.
Stern replied with an e-mail to Old Mutual’s demands stating that while he wishes to pay anything he has to pay, he is not in a position to repay these amounts. “Currently my debts are significantly greater than any assets and as a result of not working for the last number of months (I) have had no income.”
Which raises the question: What happened to the R1.7m Stern received a year ago?
Old Mutual embarked on a course of action to apply immediately for the provisional sequestration and eventually for the final sequestration of their former award winning agent.
Old Mutual lists amongst Stern's assets 5 rather expensive vehicles which he bought over the last few years, the last of which was bought in March 2013 for more than R578 000 to add to his fleet that was purchased since 2008 at a total cost of nearly R2.8m. He also owns fixed properties, one which he acquired for more than R2m in 2008.
The court documents argue that the respondent could at any time dispose of any of the assets, especially some of the vehicles. “He cannot be left free to himself to dispose of assets and dissipate the proceeds or surpluses arising therefrom to the detriment of concurrent creditors.”
An appointed trustee will be able to invoke legal mechanisms to preserve these assets, and to “accurately determine the financial position of the estate and investigate what happened to the R1 700 000 once-off payment and subsequent further commissions received in the past 12 months from Old Mutual.”
The application for provisional sequestration will be heard later this month and the application for final sequestration in March.
Fin24 reported 2 weeks ago that Old Mutual debarred top consultant James Stern after a forensic investigation and disciplinary procedure. "We found discrepancies in his paperwork in so far as he duplicated customer signatures and altered postal addresses to mislead customers and misrepresent facts to Old Mutual," the company said.
According to documents to support its court application, Old Mutual’s Agency Franchise Division entered into an agreement with Stern on November 13 2012 in which Old Mutual paid Stern a once-off amount of R1.7m in what they termed an “establishment and restraint fee”.
Such a golden welcome is usually preserved for top producers to motivate them to move their clients’ existing investments to the agent’s new employer, as well as placing any new business at his new home. Stern received several accolades from different financial service providers when he was managing his own independent brokerage firm.
At the time of courting Stern, Old Mutual saw the R1.7m as a good investment. “Old Mutual is willing to pay the mandated agent the establishment and restraint fee to procure and retain the mandated agent’s services and expertise,” reads the 2012 agreement signed between the two parties.
This fee was subject to certain conditions, one of which stated that Stern must repay Old Mutual the R1.7m if the agreement is terminated within 3 years.
In addition, Old Mutual now claims another R67 734 from Stern, being a debit balance on his commission account with Old Mutual and R192 130 under a deed of suretyship signed in 2006 when Old Mutual signed a broking agreement with Stern’s previous brokerage firm.
Stern replied with an e-mail to Old Mutual’s demands stating that while he wishes to pay anything he has to pay, he is not in a position to repay these amounts. “Currently my debts are significantly greater than any assets and as a result of not working for the last number of months (I) have had no income.”
Which raises the question: What happened to the R1.7m Stern received a year ago?
Old Mutual embarked on a course of action to apply immediately for the provisional sequestration and eventually for the final sequestration of their former award winning agent.
Old Mutual lists amongst Stern's assets 5 rather expensive vehicles which he bought over the last few years, the last of which was bought in March 2013 for more than R578 000 to add to his fleet that was purchased since 2008 at a total cost of nearly R2.8m. He also owns fixed properties, one which he acquired for more than R2m in 2008.
The court documents argue that the respondent could at any time dispose of any of the assets, especially some of the vehicles. “He cannot be left free to himself to dispose of assets and dissipate the proceeds or surpluses arising therefrom to the detriment of concurrent creditors.”
An appointed trustee will be able to invoke legal mechanisms to preserve these assets, and to “accurately determine the financial position of the estate and investigate what happened to the R1 700 000 once-off payment and subsequent further commissions received in the past 12 months from Old Mutual.”
The application for provisional sequestration will be heard later this month and the application for final sequestration in March.
