The Financial Services Board (FSB) recently announced that it has rejected the licence applications of ten financial services providers (FSPs), including an application by forex dealer Leaderguard Securities (Pty) Ltd.
The FSB has issued about 9 300 licences in terms of the Financial Advisory and Intermediary Services (FAIS) Act, 2002, since October last year, and declined ten.
The licences issued to two FSPs, M R Dennis, trading as M R Dennis and Associates, and Kenstead Investment Holdings Limited, have meanwhile been provisionally suspended by the FSB.
Gerry Anderson, the FSB's deputy executive officer of market conduct and consumer education, says FSPs whose applications are unsuccessful are entitled to appeal to the FSB Appeal Board, an independent tribunal, if the applicant is unhappy about the decision by the Registrar.
He added that none of the applicants who had been declined had lodged appeals so far.
The unsuccessful applicants are African Assistance Company (Pty) Ltd, Blue Pointer Trading 4 (Pty) Ltd, Christine Patricia Cameron, Leaderguard Securities (Pty) Ltd, Nolan Loxton, NW Solutions CC, Philip Henry Lorenzo Chambers, Stanley Makgate and the Financial Boutique 2004 CC.
A tenth applicant, Kerford (Pty) Ltd, whose licence had been declined and who had lodged an appeal, has since formally withdrawn from the appeal process.
"The FSB had declined the application by Leaderguard Securities as its activities did not comply with the code of conduct for forex services providers. In addition, the company had been placed in provisional liquidation on 23 March 2005. We have appointed external inspectors to conduct an investigation into the affairs of Leaderguard and all its intermediaries," Anderson said.
It seems that Leaderguard Spot Forex, the company based in Mauritius through which clients traded, wants to make a compromise proposal to investors.
"FSPs who give clients advice on the compromise proposal should act with caution not to contravene their licensing conditions or any exemption granted to them in terms of the authorisation. Clients are warned not to waive their rights in entering into a compromise proposal," Anderson warned.
Regarding the suspensions, Anderson said the licences of M R Dennis and Kenstead Investment Holdings Limited have been provisionally suspended after numerous complaints from investors. M R Dennis was placed under provisional sequestration on 15 April and is operating under provisional trustees.
A notice on the suspension of authorisation of both FSPs had been published in the Government Gazette on 29 April.
"As far as the FSB is concerned, neither M R Dennis nor Kenstead Investment Holdings are authorised to act as FSPs in terms of the FAIS Act," Anderson said.
Clients who would like to provide details to the FSB to assist with the Leaderguard investigation, or who wish to enquire about the progress of licence applications, may call the FSB call centre at 0800 202087.
This media release is made in the interests of investor protection.
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