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Johannesburg - A broker who persisted in telling his clients that their investments in Global Afrika Resource and Energy Corporation (Garek) and associated companies were "safe", was ordered by the ombudsman for Financial Advisory and Intermediary Services (Fais) to pay R140 000 back to three clients.
This is the second ruling against this broker, André van der Merwe of Uvongo.
Last month the previous Fais ombudsmen ordered Van der Merwe to pay R40 000 back to two investors. The Fais ombudsman's office has received at least 14 complaints about brokers selling shares in Garek and related companies.
All the investors invested money on the basis of high returns and promises of listings on three stock exchanges.
Garek was presented as a company holding assets worth R5.4bn.
No listings have taken place to date and prospectuses have never been published.
Noluntu Bam, who has occupied the post of Fais ombudsman for scarcely a week, says the value of the shares was inflated from the start.
In her ruling she said that Van der Merwe had failed to perform even the most basic due diligence on the companies, or did not properly understand the product, or was implicated in defrauding innocent investors.
Last year the Department of Trade and Industry published a damning report on Garek's activities after investigating its operations.
The department was unable to find any underlying assets in Garek and related companies and found that assets had been shifted between companies without the necessary authority or bookkeeping.
Of the total amount of R179.1m invested in these companies, R74m had been received from investors, and transfers between companies had amounted to R76.4m.
- Sake24.com
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