Allegations that the director of an advisory firm misappropriated clients funds has prompted the Financial Sector Conduct Authority (FSCA) to provisionally withdraw Stringfellow Financial Services’ licence.
The watchdog said that Thomas Stringfellow allegedly raised funds from his clients to invest in women’s sportswear business Leigh LJ (which trades as Lorna Jane), where he served as its managing director.
The exact amount of misappropriated funds is unknown at this stage, but indications are that it is in excess of ZAR100m (£5.72m, $6.93m, €6.27m).
It is not known how many people were invested.
Scheme
The investment scheme offered clients a return of 14% per year.
While this may have been an obvious alarm bell for investors in the UK, it is worth noting that the base rate of the South African Reserve Bank in July 2019 was 6.5%.
Some clients opted to receive monthly returns and did receive their money until the scheme collapsed in June 2019.
Others chose not to receive monthly returns but to invest the money for a specific period with the option to withdraw the money and interest at the end of the period.
Police involvement
International Adviser reported in July that Stringfellow was arrested on 11 July 2019 and the FSCA confirmed on 31 July that he has been charged with one count of fraud by the South African Police Services (Saps).
The watchdog said in a statement: “Since Mr Stringfellow is a representative and key individual of an authorised FSP (someone that is authorised to sell financial products), the FSCA has decided to provisionally withdraw the license of Stringfellow Financial Services, pending the outcome of the investigation.
“As the market regulator, we look to maintain the integrity of the financial sector by ensuring that all regulated entities, their key individuals and representatives always act in the best interest of their clients.
“We will keep the public updated on this investigation as more information becomes available.”
Stringfellow Investment Specialists’ website is currently down, and its LinkedIn page has also been deleted.
