Claims and complaints mount against Silver Seed Capital
The Fais ombud orders executives to reimburse another investor, with interest
Silver Seed Capital, which has swindled several investors out of their money, has again incurred the wrath of the ombud for financial services providers (Fais).
A total of 13 complaints have been received by the Fais ombud and so far, eight determinations have been issued.
In the latest determination against Silver Seed Capital and its Cape-based representatives Sandro Manuel Azevedo Veloza of Durbanville, and John Law of Rondebosch, the ombud has ordered that they jointly and severally repay the R152,000 plus interest which Rudi Roelofse invested on the advice of Law.
Roelofse was told his investment would be for a fixed term of 12 months, that it would grow at a guaranteed rate of 12%, that there were no costs involved and that he would have no access to his money during the term of the investment.
When the investor’s wife inquired about the investment return being above the norm, Law acknowledged that the return was higher than usual. He said it was because it was a promotional product that Silver Seed Capital used to grow its business to cater for private clients, and added that the capital and return was underwritten by Silver Seed Capital.
At the end of the 12-month investment period, Roelofse asked for the promised R170,240, but his request was met with silence. A lawyer’s letter also did not produce results. Roelofse then approached the Fais Ombud.
In his determination, Fais Ombud Naresh Tulsie said Law never disclosed to Roelofse that his investment would be made into unlisted shares of a business called UG2 Ltd.
“There is sufficient information to demonstrate that the respondent had not been candid with the complainant about the nature of the investment, in that he was, in fact, purchasing unlisted shares,” Tulsie said.
The ombud found that Veloza and Law, who were directors of Silver Seed Capital, were also directors of UG2 Platinum. This conflict of interest was not disclosed to the investor.
In addition, Veloza and Law withheld other pertinent information, which would have placed Roelofse in a position to make an informed decision before making the investment, Tulsie said in the determination.
In his e-mail response to queries about the investment, Law did not caution Roelofse that liquidity was not the only concern but that there was also a high risk that he could lose his capital, Tulsie added.
The ombud also found that consultants did earn commission, that they earned more than 30% of their commission from one product and that, according to one of the forms, Silver Seed may have an interest of 15% or more in UG2.
In direct contravention of the Fais code of conduct, Veloza and Law failed to provide Roelofse with details of the underlying assets of the investment and any investment and other risks associated with the product.
They also failed to investigate Roelofse’s financial situation, financial product experience and objectives to provide him with appropriate financial advice, another contravention of the code.
It has been almost six years since Roelofse was meant to receive what the investment promised and it is evident that the respondents caused his loss. There is no record of what happened to Roelofse’s funds, Tulsie said.