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MONEYWEB: Gerry Anderson joins us now. He’s the deputy chief executive for Market Conduct and Consumer Education at the Financial Services Board. Gerry, a big win today for the FSB and for citizens of South Africa generally, when the High Court dismissed an application by a previously FSB-approved investment manager. Now the company’s name is Platinum Asset Management. I see also in the court case against the Financial Services Board was an organisation called Anglo Rand – is that any relation to the stockbroking firm, Anglo Rand?
GERRY ANDERSON: No, not at all, Alec. Good evening.
MONEYWEB: All right, it’s got nothing to do with them.
GERRY ANDERSON: No.
MONEYWEB: Well that’s pretty important that we make that distinction.
GERRY ANDERSON: They have something to do with them, but it’s nothing to do with the stock or the well-known stockbroking firm.
MONEYWEB: Oh, so what is the relationship?
GERRY ANDERSON: It was a relationship between Platinum and Anglo Rand.
MONEYWEB: All right, that’s the relationship that matters here. Just to start with Platinum Asset Management, how did they become a Financial Services-approved investment manager in the first place?
GERRY ANDERSON: They applied to do asset management business like a normal asset manager, and they passed fit and proper, and they were approved. But they weren’t doing asset management as we understand it – they were actually dormant until they joined up with Anglo Rand.
MONEYWEB: And then we had a boiler-room type operation. Won’t you explain how that works?
GERRY ANDERSON: Well, Alec, we didn’t know that at the time, but we got indications from clients that Anglo Rand was doing certain dealings from the name of, or allied to, a Canadian company where they were simply flogging shares, soliciting investors and selling shares at very high prices with hard-selling techniques.
MONEYWEB: And boiler rooms are quite well known around the world for ripping off the public generally, aren’t they?
GERRY ANDERSON: That’s correct.
MONEYWEB: How did you in fact end up in court with them, because I see they were suing you?
GERRY ANDERSON: Yes, what happened was we found out about this connection, and we kept on getting client complaints. And a foreign regulator or two also approached us in writing saying that their citizens are being targeted in their jurisdictions. We asked them to give us the information, and they didn’t give us the information. We asked them what is their relationship with this boiler-room organisation based in Canada, and they said they’ve got no relationship. So we decided to conduct an inspection into their activities.
MONEYWEB: And you found out that there is a relationship and, as a consequence, you have now no longer approved them as an investment manager. What does that mean?
GERRY ANDERSON: Well, it’s not as simple as that. They are approved under the old Stock Exchange Control Act, and the investment managers actually were transferred on application by them from that regulatory environment to the FAIS regulatory environment, and Platinum was involved with these court cases; they didn’t seek approval.
MONEYWEB: Gerry, just so that we can understand this in basic terms – in other words, if you’re a member of the public and someone from Platinum Asset Management phones you, trying to sell you shares, you should say “No thank you”?
GERRY ANDERSON: Absolutely. I use the word “protracted” in the press release – this has been quite a protracted battle because they challenged our right to inspect their activities.
MONEYWEB: And what about Anglo Rand, the stockbroking operation – can you still deal with them?
GERRY ANDERSON: No, they’ve got no relationship whatsoever.
MONEYWEB: Gerry Anderson, deputy chief executive at the Financial Services Board, giving us some good news there. Another one of the bad guys is out of the game. But really just take a tip from this. If somebody phones you up and tries to sell you shares in any unlisted company, any unlisted company in South Africa, tell them to take a hike, because the chances are the person who is phoning you up might be working for one of these boiler-room operations, which is where they offload worthless shares at a high price on an unsuspecting public, or else they might be working for an unlisted company, taking a huge percentage of the money that you supposedly invested in an unlisted company. David?
DAVID SHAPIRO: Yes, Alec, there’s one at the moment, with an African name, suggesting that they are going to get a share in I think Cell C and list, but Cell C have denied any relationship with them. So just be careful, if anybody phones you about a possible share in Cell C.
MONEYWEB: There’s a whole stock exchange full of listed companies that have information that you can go and test and check. Don’t get swallowed in by these nefarious characters. This has been the Moneyweb Power Hour brought to you by First National Bank.