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Port Elizabeth - Directors of several entities trading under the Ledimar banner will have the opportunity this week to put forward evidence that their businesses are legitimate and that they are not operating a pyramid scheme, after the Financial Services Board (FSB) lodged an application to declare their activities illegal.
An FSB spokesperson confirmed to Fin24 that the case will be heard this week. The FSB conducted an in-depth investigation into the affairs of Ledimar Financial Services, Ledimar Stock Trading and Ledimar Investment Holdings and issued a warning to the public not to invest money with these entities or conduct financial services business with them.
The FSB said it has "enough evidence to prove our case and prevent the firm from doing business". However, the final decision rests with the court.
Ledimar has offices in Johannesburg city centre, Sandton, Rustenburg, Welkom and Mafikeng.
According to its website, Ledimar offers courses training people to make money by trading leveraged derivative instruments and foreign exchange. After a R7 000 course of a few weeks, clients earn a certificate with promises of high returns.
Ledimar claims to have "thousands" of satisfied clients, yet the link on their website to these clients leads nowhere.
The FSB believes Ledimar is operating a pyramid scheme.
Pyramid or Ponzi schemes take money from the public by offering huge returns on various investments, but in reality just pay the promised returns directly from the money received from the next investor. So if Ledimar's business is indeed a pyramid scheme, there would be no profitable investments in shares, future contracts, contracts for difference or foreign exchange transactions.
Eventually, Ponzi schemes run out of gullible investors and the last people to invest suffer huge losses.
Pyramid schemes are dressed up as legitimate businesses which can even fool clever business people and astute investors.
Examples are Bernard Madoff's so-called hedge fund which targeted billionaire businessmen worldwide, and Harry Tautenbach's health product import company which allegedly solicited investments from successful businessmen.
So, are Ledimar's activities those of a pyramid scheme?
A few weeks ago, Fin24 received a query from a user about an investment in Ledimar. He has been promised a return of 50% per month - possible when trading in the very volatile and highly leverage currency markets, but highly unlikely.
Fin24 has also discovered a sales plan, apparently written by a Ledimar consultant, which outlines how Ledimar proposes to target doctors and other health professionals for foreign exchange-traded investments.
According to this sales plan, consultants in the Rustenburg area aimed at selling R1m worth of investments per month within the first year by organising public presentations and through cold calling and referrals from existing clients.
It is illegal to give financial advice without registering as a financial consultant with the FSB, and without following prescribed procedures.
The SA Reserve Bank has recently launched a campaign to warn the public against pyramid schemes and other scams, due to the huge financial impact they can have. In some cases, allowing such schemes have ruined entire countries' economies.
- Fin24
An FSB spokesperson confirmed to Fin24 that the case will be heard this week. The FSB conducted an in-depth investigation into the affairs of Ledimar Financial Services, Ledimar Stock Trading and Ledimar Investment Holdings and issued a warning to the public not to invest money with these entities or conduct financial services business with them.
The FSB said it has "enough evidence to prove our case and prevent the firm from doing business". However, the final decision rests with the court.
Ledimar has offices in Johannesburg city centre, Sandton, Rustenburg, Welkom and Mafikeng.
According to its website, Ledimar offers courses training people to make money by trading leveraged derivative instruments and foreign exchange. After a R7 000 course of a few weeks, clients earn a certificate with promises of high returns.
Ledimar claims to have "thousands" of satisfied clients, yet the link on their website to these clients leads nowhere.
The FSB believes Ledimar is operating a pyramid scheme.
Pyramid or Ponzi schemes take money from the public by offering huge returns on various investments, but in reality just pay the promised returns directly from the money received from the next investor. So if Ledimar's business is indeed a pyramid scheme, there would be no profitable investments in shares, future contracts, contracts for difference or foreign exchange transactions.
Eventually, Ponzi schemes run out of gullible investors and the last people to invest suffer huge losses.
Pyramid schemes are dressed up as legitimate businesses which can even fool clever business people and astute investors.
Examples are Bernard Madoff's so-called hedge fund which targeted billionaire businessmen worldwide, and Harry Tautenbach's health product import company which allegedly solicited investments from successful businessmen.
So, are Ledimar's activities those of a pyramid scheme?
A few weeks ago, Fin24 received a query from a user about an investment in Ledimar. He has been promised a return of 50% per month - possible when trading in the very volatile and highly leverage currency markets, but highly unlikely.
Fin24 has also discovered a sales plan, apparently written by a Ledimar consultant, which outlines how Ledimar proposes to target doctors and other health professionals for foreign exchange-traded investments.
According to this sales plan, consultants in the Rustenburg area aimed at selling R1m worth of investments per month within the first year by organising public presentations and through cold calling and referrals from existing clients.
It is illegal to give financial advice without registering as a financial consultant with the FSB, and without following prescribed procedures.
The SA Reserve Bank has recently launched a campaign to warn the public against pyramid schemes and other scams, due to the huge financial impact they can have. In some cases, allowing such schemes have ruined entire countries' economies.
- Fin24
