The FSCA has fined and debarred the directors of N-e-FG Administrators (Pty) Ltd, which collapsed three years ago, leaving at least R470 million in members’ retirement savings unaccounted for.
It fined N-e-FG founder Stephanus Cornelius (Corné) Jansen van Rensburg and managing director Frederick (Eric) Young du Preez R30 million each and debarred them for 30 years each.
Jeremia Jesaja Steyn Jansen van Rensburg was fined R8m and debarred for 20 years, and Elia Jansen van Rensburg has been debarred for 10 years.
The FSCA’s regulatory action against N-e-FG’s key persons followed a two-year investigation into N-e-FG Administrators, which later rebranded as Phahamisa Administrators (Pty) Ltd, N-e-FG Fund Management (Pty) Ltd, and The Wealth Strategist (Pty) Ltd.
In a statement on Monday, the Authority said its investigation found that clients’ funds were invested without the requisite mandate from clients, and investments were made in unregulated entities. The FSCA also found that some of N-e-FG’s key persons had an interest in the entities in which clients’ funds were invested.
The investigated parties contravened the provisions of the Financial Advisory and Intermediary Services Act, the Financial Institutions (Protection of Funds) Act, the Financial Sector Regulation Act, the General Code of Conduct for Authorised FSPs and Representatives, and the Determination of Fit and Proper Requirements for FSPs, the Authority said.
The FSCA has handed over its investigation report to the National Prosecution Authority (NPA) and will “actively assist” the NPA if requested.
Corné Jansen van Rensburg, 54, founded the N-e-FG group of companies in 1999. “N-e-FG” stands for “New-e-conomy Financial Group”. The group provided retirement fund administration, wealth management, investment planning, and advisory services. Du Preez, 45, joined the group in 2002 and was named chief investment officer six years later.
The FSCA provisionally suspended the FAIS licences of N-e-FG Administrators and N-e-FG Fund Management in September 2021, when N-e-FG commenced business rescue proceedings.
The Authority stripped the N-e-FG entities of their licences in December 2021, citing contraventions of the FAIS Act, the Fit and Proper Requirements, and the General Code of Conduct.
The FSCA placed N-e-FG Administrators under statutory management on 30 May 2022, saying it was concerned about the retirement benefits administrator’s failure to manage the funds it administers responsibly. It was also investigating N-e-FG’s conduct relating to certain life insurance annuity policies.
Read: FSCA appoints statutory manager for N-e-FG Administrators
The statutory manager, Krishen Sukdev, reported that retirement fund assets held by N-e-FG on behalf of members were not invested according to the investment mandates but were invested “in high-risk assets outside the given mandates”. Furthermore, members were misled about where their money or assets were invested and the value of their investments.
Read: Retirement fund members at ‘serious risk’ of losing R470 million in assets
The estimated value of missing money or assets is R470m. But the FSCA said in February last year there was a high risk of further losses because the whereabouts and value of all the assets was unknown or appeared to be unrealisable.
Read: Investigation into N-e-FG Administrators is ‘at an advanced stage’
In May this year, the FSCA withdrew the licence of The Wealth Strategist, whose directors were also directors of N-e-FG Fund Management and N-e-FG Administrators. The Wealth Strategist closed when N-e-FG collapsed.
The Authority said it withdrew The Wealth Strategist’s licence because of several compliance failures. These included continuing to do financial services business with N-e-FG Fund Management even though it was fully aware that the latter’s licence had been withdrawn.
Furthermore, the company did not act against one of its representatives who admitted to having forged fund reports, creating an impression that the reports were prepared by various fund managers licensed by the FSCA, the Authority said.
Read: FSCA withdraws licence of FSP linked to collapsed N-e-FG
