In light of the recent debacle
surrounding a certain unregistered and illegally administrated fund that is
currently being sequestrated - as
reported by moneyweb.co.za, we here at Rock Capital Management find it most
distressing that investors were so blatantly hoodwinked and therefore think it
prudent to not only warn investors about investing in non-registered - and therefore
non-regulated - collective investment schemes, or placing funds with
non-registered financial intermediaries and service providers.
Rock Capital Management would also
like to take the opportunity to highlight what accreditation investors should
look for when dealing with investment professionals.
First and foremost is registration
with the Financial Services Board (FSB). Every registered financial institution,
advisor or intermediary carries a FSB licence number which should at all times
be visible to clients on all official communications and documents as well as
be visibly displayed at their business premises.
The Functions of the FSB are to:
· Supervise the compliance with laws regulating financial
institutions and the provision of financial services;
· Advise the Minister on matters concerning financial
institutions and financial services; and
· Promote consumer education programmes and initiatives by
financial institutions and bodies representing the financial services industry.
If you would like to check if the
financial services provider that you are dealing with is in fact registered
with the FSB, you can search
the FSB website by using either their registered name or their FSB licence
number. Once you have found your financial services provider on the FSB
website, you can also see exactly which specific financial products and
services they are approved and registered to provide.
There are various categories of FSB
licences which carry differing requirements in order to obtain them. For
example; Rock Capital Management carries a Category IIA FSP licence, which
allows it to offer a wide range of investment and advisory services including
the operation and administration of Hedge Funds; but also poses on it the most
onerous of compliance requirements. What this means in laymen’s terms, is that
Rock Capital Management has very strict regulatory requirements and rules to
which it is must adhere at all times.
This should do well to put investors
at ease, however, there is more to be said on the topic. The custody of client
funds is also a very important factor to be taken into consideration. In order
to receive custody of clients’ funds and securities, financial services
providers need to be registered to do so. If they do not wish to hold clients’
funds and securities, they must appoint a registered custodian. In the case of
Rock Capital Management, there are appointed custodians, which are; PSG
Stockbrokers, 28E Capital and Allan
Gray.
Funds kept in the custody of these
registered custodians are held in the clients’ names and guaranteed by the JSE
Guarantee Fund with exception of Allan
Gray, as those funds are held in a collective investment scheme (unit trust)
and individual clients are the owners of units within the scheme. In other
words, all cash and securities in these accounts are safeguarded and held in
the clients’ name with the JSE, or held by Allan
Gray in a portfolio of shares that is unitized and these units are owned by
clients thus making them the beneficial owners of a portion of the securities
being held. This also means that no payments may or can be made to any account
other than the account that the clients have
supplied FICA documentation for, thus further ensuring the protection of funds.
Rock Capital Management would like to
encourage all investors to make sure that they are dealing with registered and
licensed financial advisors and intermediaries before they invest in any
products or make use of any services that such an advisor or intermediary may
offer.
Should you have any queries or simply
seek assistance with finding out if your financial services provider is in fact
registered and licensed to perform the specific financial services that they
are offering, please feel free to contact Rock Capital Management on 086 111
7625 and we would be happy to assist.
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