South African financial adviser arrested for fraud

He reportedly encouraged clients to put money into unregulated investments with ZAR100m potentially lost

The chief executive of an investment firm in South Africa is facing fraud charges for allegedly misappropriating client funds, according to local media reports.

Thomas Stringfellow, who founded Stringfellow Investment Specialists in 2005, was arrested last week after handing himself over to the police.

His company claimed to have more than ZAR800m (£45.4m, $57.2m, €50.7m) of assets under management.

“We can confirm that the Financial Sector Conduct Authority (FSCA) has an investigation underway into the allegations of misappropriation of investments and incorrect financial advice given by Mr Thomas Stringfellow, an authorised financial adviser,” a spokesperson for the FSCA told International Adviser.

“Our investigation concerns possible breaches of financial sector regulations. The South African police also have a concurrent investigation into allegations of fraud, and we will continue to co-operate with them in this regard.

“The exact amount of misappropriated funds is unknown at this stage, but indications are that it is in excess of ZAR100m,” the spokesperson added.

Athletic women

Investors, many of whom were pensioners, were reportedly encouraged to pull around ZAR100m from two Stringfellow funds of funds to invest in unregulated schemes.

Some of the money, however, is believed to have gone into Lorna Jame, a sportswear company from Australia.

Stringfellow and his wife ran the South Africa-based shops, as managing director and director, respectively.

The money is believed to have been invested in loan agreements to finance the brand, which appears to have now gone out of business in South Africa.

Stringfellow not only guaranteed the capital invested, but also promised annual dividends of 14%. He even went so far as to say investors could get 20%.

It is not clear whether the FSCA will be able to recover the ZAR100m.