The FSCA has sanctioned Thomas Stringfellow and his companies after an investigation found that he operated an illegal investment scheme and misappropriated client funds between 1 May 2013 and 30 June 2019.
The Authority this week withdrew the licence of Stringfellow Financial Services, imposed a R20 million administrative penalty on Stringfellow Financial Services and a R15m penalty on Stringfellow Group, and debarred Stringfellow for 20 years “from providing, or being involved in the provision of, financial products or financial services, acting as a key person of a financial institution, and providing any services to a financial institution, whether under outsourcing arrangements or otherwise”.
In addition, the regulator has opened a criminal case with the Directorate for Priority Crime Investigation.
The FSCA said Stringfellow and Stringfellow Financial Services contravened:
- Sections 7(1)(a) and 13(3) of the FAIS Act;
- Sections 2, 3(1)(a)(i), 3(1)(d), 8(1)(a) to (d) and 11 of the General Code of Conduct; and
- Section 11 of the Banks Act.
It said Stringfellow Group contravened section 7(1)(a) of the FAIS Act and section 11 of the Banks Act.
The FSCA said Stringfellow Financial Services, Stringfellow Group and Stringfellow were invited to make submissions regarding the administrative sanctions but opted not to do so.
Sportswear investment scheme
The FSCA provisionally withdrew Stringfellow Financial Services’ licence in July 2019 while investigating allegations of misappropriated investments and incorrect financial advice.
Stringfellow allegedly raised a substantial amount of money from his clients to fund the South African franchise of Australian women’s sportswear retailer Lorna Jane.
Stringfellow apparently advised clients to invest in loan agreements to fund the franchise. Clients were told their capital was guaranteed and to expect dividends of 14% a year.
The scheme collapsed in June 2019, and the FSCA said more than R100m in clients’ funds may have been lost.
Stringfellow was arrested in July 2019 and charged with one count of fraud. He was released on bail but rearrested in February 2021, when he failed to appear in court.
Stringfellow also ran two unit trusts, the Stringfellow BCI Stable Fund of Funds and the Stringfellow BCI Flexible Fund of Funds, under the licence of Boutique Collective Investments (BCI). According to their fact sheets, at the end of May 2019, the funds’ combined assets under management was just under R130m.
In 2015, the Stringfellow BCI Stable Fund of Funds received a certificate at the Raging Bull Awards for being the top performing South African multi-asset low equity fund over three years to the end of 2014.
BCI terminated its contract with Stringfellow at the end of June 2019, when it became aware of the problems in the business and took over the management of the funds.
Hi there, I was a victim in this case and would appreciate a follow up article.