I had a surprising number of you readers reply to my Thoughts last week regarding that Ponzi scheme I wrote about, saying you know someone who was in it and lost all their money, or who were lucky enough to have withdrawn their funds in time. I just want to make a few additional comments regarding all this.
The ‘brokerage’ was…is…. a Trust, with Trustees to make decisions and taking ‘due care’ – already a lower level of regulatory control than if it was a Company. It seems that Investors into this structure paid their money to the Trust’s Bank account and not directly to the investment manager. My point here is never pay your money to the broker’s / brokerage’s bank account. If you are asked to pay your funds to the Brokerage’s Bank account, that’s a red flag.
When you ask myself or Adrienne or Jacki to help you do an additional investment, we always either give you the banking details of Allan Gray or Marriott or our offshore investment managers etc, so that you can do the EFT directly to them, or we create those instructions whereby they withdraw the funds from your bank account. Money paid first to the brokerage’s account has time to sit before they do the pay-away to the investment manager, and then, maybe it doesn’t even get paid-away, or maybe it’s not being paid away to an investment manager at all, but becoming part of an ‘investment structure’, that has different variables to it. All difficult to track. And that’s what happened here….. someone had the ability to do things with the money coming in.
This week’s Daily Maverick had an interest article on this scheme. Plus there are other big investment managers making comments as to if and how they had any dealings with one of the underlying investment managers that did seem to receive funds. I follow with interest.