Losses mount for Lorna Jane investors as Stringfellow loses licence provisionally
Confirmed losses now at R168m, while investors tally up R190m
The Financial Sector Conduct Authority (FSCA) has provisionally withdrawn the licence of Stringfellow Financial Services, the company through which investors’ confirmed losses amount to R168m.
Johannesburg-based financial adviser and investment manager Thomas Stringfellow was arrested on fraud charges last month and released on bail.
Stringfellow was allegedly advising clients to invest in loan agreements to fund Lorna Jane SA, a franchise of Australian women’s sportswear company Lorna Jane. The stores have closed and online accounts and the website are no longer active.
Investors who spoke to Money in July said they were guaranteed returns of 14% a year in dividends, possibly more.
Unfortunately this appears to have been a huge overpromise. The loan scheme collapsed in June 2019, and instead of high returns many investors have lost money.
Initial reports suggested over R100m had been lost. But FSCA divisional executive of Investigations and Enforcement, Brandon Topham, told Money the verified amount is R168m, but “we are still counting”.
An investor who started a Whatsapp group of affected investors said the investment losses the group, now numbering 112, has tallied up are now R190m.
In a statement confirming the suspension of Stringfellow’s licence this week, the FSCA said it is “investigating allegations of misappropriation of investments and incorrect financial advice” given by Stringfellow who is the director, representative and key individual of Stringfellow Financial Services.
Acording to Topham “the investigation is progressing well.”
“We received crucial evidence from the compliance officer, auditors and accountants. The clients we interviewed and management of Stringfellow have also been quite helpful.”
Topham also said that Stringfellow sold his share in Stringfellow Advisory Services, a financial advisory practice.
The shareholding was sold to John Holder on December 26 2018, who is now the sole shareholder and director and trades as Sanctuary Advisory Solutions.
Stringfellow Advisory practice is not under investigation, Topham says, but a R1.3m loan from the Stringfellow Group to the firm is being investigated.
Topham confirmed that Stringfellow attended an interview with the FSCA.
The investor who set up the group to organise affected investors told Money they had set up a fund to help “those who are on their bare bones - this month we have helped seven people make ends meet”.
The group of investors met with FSCA head of investigations Gerhard van Deventer in July and is now waiting to see if there are assets in the estate before taking further action.
“It will cost money to take action. We are very hesitant to apply for sequestration or liquidation if there are no assets – it means we just end up losing more money. As soon as we know the financial situation we will take a decision,” the investor said.