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FSB fines 2 collective investment schemes

04 December 2009 Financial Services Board (FSB)

The Financial Services Board (FSB) has fined two collective investment schemes a total of R30 000 for not having sufficient capital and exceeding investment limits.

In the first case, The Registrar of Collective Investment Schemes referred a case against NewFunds (Pty) Limited (NewFunds) to the FSB’s Enforcement Committee.

The referral relates to a contravention of section 88(1) of the Collective Investment Schemes Control Act, No 45 of 2002 (the Act), in that NewFunds failed to maintain sufficient liquid capital as determined in terms of Notice 2072 of 2003, issued in terms of section 88(1) of the Act. The contravention relates to NewFunds’ liquid capital as at 30September 2009.

The Registrar took into account that NewFunds co-operated fully during the investigation and the enforcement action, that the contravention was a bona fide oversight, that no prejudice resulted from the contravention, and that NewFunds has not contravened the Act before. Consequently, the Registrar agreed to a penalty of R20000, which penalty was imposed by the Enforcement Committee on NewFunds on 2December 2009.

In the other case the Registrar of Collective Investment Schemes also referred Coris Capital Collective Investment Managers Limited (Coris Capital) to the Enforcement Committee.

The referral relates to a contravention of paragraph 3(4)(a) of Notice 1503 of 2005, issued in terms of sections 40, 46 and 85 of the Collective Investment Schemes Control Act, No 45 of 2002. The contravention relates to the investment of Gryphon Dividend Income Fund in Prudential Dividend Income Fund, as at 30June 2009. Notice 1503 inter alia prescribes that: “A manager may include in a portfolio, participatory interests in portfolios (‘underlying portfolio’) of collective investment schemes in securities or of foreign collective investment schemes to a maximum aggregate value of 20 per cent of the market value of the first-mentioned portfolio …

The Registrar took into account that Coris Capital co-operated fully during the investigation and the enforcement action, that the non-compliance was rectified, that no prejudice resulted from the contravention, and that Coris Capital has not contravened the Act before. Consequently, the Registrar agreed to a penalty of R10000, which penalty was imposed by the Enforcement Committee on Coris Capital on 30November 2009.

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