Earlier this week, South Africa financial news feed Moneyweb accused the firm of putting investors’ money in funds which have not been approved by The Financial Services Board (FSB) under section 65 of the Collective Investment Schemes Control Act (Cisca).
The publication claims to have seen deVere client documents which show it has been using offshore funds including MitonOptimal’s Special Situations Fund and Strategic Growth Fund Plus, and GAM’s MPS Growth Strategy Fund and MPS Balanced Strategy Fund.
If correct, deVere could be breaching the Cisca rules, which carries a maximum penalty of five years in prison, according to Moneyweb.
However, deVere spokesperson George Prior slammed the claims as “unsubstantiated”, blaming a disgruntled employee, who the firm is currently taking legal action against.
“It’s a sad reflection of some within the SA finance industry when they feel compelled to attack a proactive, forward-thinking, successful company."
“We believe that these unfounded allegations are being made to serve the private interest of the personal and potentially unlawful conduct of a discontented former employee whose contract we terminated, and with whom we are currently in litigation with in respect of that termination, and who now has a rival company and with whom further litigation may follow,” he told International Adviser.
He added that any complaints over the use of unlicensed offshore funds relate to the clients of this former deVere employee, who was subsequently fired.
“It must be stressed that all of the complaints are from clients who were clients of the former deVere employee, during the period when he was their adviser in our company, before having his contract terminated by us,” said Prior.
He also said the accusations were part of a smear campaign by former employees and rival firms looking to attack deVere’s operations in South Africa by “setting up fake sites and even creating fake client complaints”.
Earlier this year, deVere Acuma, the firm’s South Africa advisory unit, admitted that it had failed to disclose commission charges of nearly £65,000 ($81,114, €75,198) taken from a client’s portfolio over four years.
In its defence, deVere said it was under no obligation to inform the client because they had chosen to invest via offshore trusts, based in Guernsey.
“It’s a sad reflection of some within the SA finance industry when they feel compelled to attack a proactive, forward-thinking, successful company such as deVere through press manipulation, which is fully authorised, regulated and licenced,” said Prior.
“Indeed, we are constantly improving processes and are satisfied that our record of advising is extremely good.
“It can be reasonably assumed this is from disgruntled former employees whose contracts we terminated and/or rival firms,” he added.