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Port Elizabeth - Sanlam has confirmed that it has started legal action against an errant financial adviser who has placed a great deal of business with the financial services company in the past.
James Robert Stern, who has won awards from Sanlam and Old Mutual as one of the best brokers doing business with them, has been debarred by Old Mutual late last year in a move which effectively meant that his license to practice as a financial planner and adviser has been cancelled by the Financial Services Board (FSB).
The FSB told Fin24 this week that it started an investigation into the matter when it came to their attention a few months ago. It confirmed that the investigation is ongoing.
Kobus Vlok, chief executive of distribution at Sanlam Private Finance, said that Sanlam has instituted legal proceedings against Stern to recover a debt on his commission account, which arose as recurring investments by some of his clients were discontinued. “Sanlam did not have a basis for any legal action until the recent termination of these investments.”
“Stern was never employed by Sanlam,” says Vlok. “He was contracted via an independent brokerage, Quantum, to place business with Sanlam.”
The authorisation to canvass investments and place them with Sanlam, or any other financial service provider, was terminated upon his debarment by the FSB.
Vlok did not confirm the amount that Sanlam wish to recover from Stern. Fin24 has heard that an amount of R5.3m was claimed from him.
The FSB said this week it decided to check on most of the policies written by Stern over a period of time to see if there were any cases in which regulations were broken.
Such an investigation will also show if there were any shortcomings in the procedures at any of the service providers where investments were placed and if anyone else made mistakes or did not adhere to procedures and regulations.
Several laws governing the financial industry and financial advisers lay down very strict procedures to follow when working with clients’ money.
A lot of these procedures are aimed at ensuring that several people need to check relevant paper work and carry out instructions independent from one another.
Effectively, any orders or requests by a broker on behalf of his clients are processed by another staff member of the institution and the actions would mostly need to be authorised by yet another person. This cumbersome administrative process should prevent mistakes and identify suspicious actions.
Which raises the question: Who is responsible when things go wrong?
The action by a group of clients from Port Elizabeth against Stern as first defendant and Old Mutual as an additional defendant in which the clients are claiming up to R100m in damages is seeking an answer to this question.
Attorneys for the applicants told Fin24 that the matter is still ongoing. However, they declined to answer questions as the matter is sub judice.
- Fin24
James Robert Stern, who has won awards from Sanlam and Old Mutual as one of the best brokers doing business with them, has been debarred by Old Mutual late last year in a move which effectively meant that his license to practice as a financial planner and adviser has been cancelled by the Financial Services Board (FSB).
The FSB told Fin24 this week that it started an investigation into the matter when it came to their attention a few months ago. It confirmed that the investigation is ongoing.
Kobus Vlok, chief executive of distribution at Sanlam Private Finance, said that Sanlam has instituted legal proceedings against Stern to recover a debt on his commission account, which arose as recurring investments by some of his clients were discontinued. “Sanlam did not have a basis for any legal action until the recent termination of these investments.”
“Stern was never employed by Sanlam,” says Vlok. “He was contracted via an independent brokerage, Quantum, to place business with Sanlam.”
The authorisation to canvass investments and place them with Sanlam, or any other financial service provider, was terminated upon his debarment by the FSB.
Vlok did not confirm the amount that Sanlam wish to recover from Stern. Fin24 has heard that an amount of R5.3m was claimed from him.
The FSB said this week it decided to check on most of the policies written by Stern over a period of time to see if there were any cases in which regulations were broken.
Such an investigation will also show if there were any shortcomings in the procedures at any of the service providers where investments were placed and if anyone else made mistakes or did not adhere to procedures and regulations.
Several laws governing the financial industry and financial advisers lay down very strict procedures to follow when working with clients’ money.
A lot of these procedures are aimed at ensuring that several people need to check relevant paper work and carry out instructions independent from one another.
Effectively, any orders or requests by a broker on behalf of his clients are processed by another staff member of the institution and the actions would mostly need to be authorised by yet another person. This cumbersome administrative process should prevent mistakes and identify suspicious actions.
Which raises the question: Who is responsible when things go wrong?
The action by a group of clients from Port Elizabeth against Stern as first defendant and Old Mutual as an additional defendant in which the clients are claiming up to R100m in damages is seeking an answer to this question.
Attorneys for the applicants told Fin24 that the matter is still ongoing. However, they declined to answer questions as the matter is sub judice.
- Fin24
