|
To view the newspaper clipping, click here
CAVEAT EMPTOR
The RMB GUARANTEED FUND which did not work!
So you thought that your money was safe out there in the hands of major
financial institutions who offer you guarantees ? Think again dear investor –
all is NOT a bed of roses ! Read on and be wary.
If ever there was an article which was prevalent in today’s world of crashing
markets etc., then this is it. In case you did not pick up on it, Bruce Cameron
of Saturday Star “Personal Finance” fame also had a go on the back of this
little scenario - copy of the relevant bit’s of his article attached.
This is a case of “caveat emptor” (or “buyer beware” for the uninitiated).
With world markets looking decidedly sick, and no immediate relief in sight, so
called “Guaranteed” funds are in abundance. Now don’t get me wrong, there are
some really great guarantees around, and 95% of them do what they set out to do.
However, the odd one sneaks into the pile every once in a while, with some
slight of hand wording hidden in the fine print, which can make them dangerous.
One of these was a 3 year guaranteed fund that RMB (Rand Merchant bank) came
up with some time back. In this case, they used the term “Minimum Guarantee on
Initial Investment” throughout the documentation – on the application; on the
contract document issued to the client; on the quotation etc. NO-WHERE, however,
did they refer to a small clause that stated something to the effect that,
should the distributions from the underlying portfolio NOT cover the cost of the
guarantee, the investor must foot the bill. This was hidden / couched in some
fancy terminology in the application form !
Imagine the look of horror on the face of my 70 year old client (and this a
genuine case, RMB investment No. 00020739 – documentation available for
inspection), who had been sold this “guarantee” in good faith by a broker for R
200 000 3 years ago, to find out that, not only was there zero growth, but she
only received R 190 000 back from her “minimum investment guaranteed” fund. When
we approached the CEO, Mr Gert Vorster of RMB, he glibly passed the buck back to
the broker, stating that he should have picked up on the wording of the various
clauses and warned her.
OK, technically they are correct, but trust me when I tell you that the
wording was so innocently stated in the documents, that it still did not appear
as if there was ANY risk, and I honestly cannot hold the broker to blame – this
was a clear case of misrepresentation, and I personally find it iniquitous that
a company of RMB’s standing in the financial world will (a) submit a product
such as this, and then (b) take no blame for defrauding (and this IS fraud in my
language) this investor of her money. If ever there was a product which
reinforces the old “under the mattress” type of investment, this is it !
Naturally all of us want protection for our hard earned funds, and especially
when one is in your twilight years (or as one client refers to it – you are in
the “departure lounge” !) and have not got the time nor facility to go back and
recoup losses. If one cannot rely on the reputable (sic) firms to offer us
security, or at the very least, honesty and integrity, then what can we have
left (other than Brantam of course) ?
If RMB do not like the tone of this note, then I challenge ANYONE to come and
read the documentation that I have on file and tell me that there is not a clear
cut case of misrepresentation. If any one of you can, like Mr Gert Vorster, the
CEO of RMB Investment Services, look me in the eye and deny that the client was
not misrepresented, then you have a thicker skin than a Rhino !
CAVEAT EMPTOR my friends – it is a tough market, so please be
careful.
To view the newspaper clipping, click here
|
