Ina Opperman

By Ina Opperman

Business Journalist

BHI Trust: FSCA expands scope of investigation to financial services providers

About 2 000 investors lost about R3 billion in BHI Trust that aledgedly used money from new investors to pay interest to earlier investors.

The Financial Sector Conduct Authority (FSCA) has expanded the scope of its investigation of BHI Trust to include financial services providers who may have encouraged investors to invest in the Trust’s products.

The trust was provisionally sequestrated on 25 October in an application brought by Cawood Attorneys. BHI Trust trustee and fund manager, Craig Warriner, recently handed himself over to police, admitting to fraud. He appeared in the Palm Ridge Magistrate’s Court south of Johannesburg and was remanded in custody, according to Moneyweb.

The FSCA confirmed in a statement that it has expanded the scope of its investigation regarding the financial sectors laws and parties involved.

It is also looking into authorised financial services providers that may have advised or assisted their clients to invest in BHI Trust products.

“The main focus of this part of the investigation is to determine whether these providers acted with due care and diligence and considered suitability and risk when advising their clients. It is also not permissible for financial services providers to recommend financial products that are not issued by licensed entities.”

ALSO READ: BHI Trust: provisional trustees trying to find and recover missing funds

FSCA is not saying ‘a regulated entity contravened the law’

However, the FSCA pointed out that its decision to extend the investigation should not be understood to convey that any regulated entity has contravened the law. If there are material developments in the matter, then the FSCA will update the public.

The FSCA also expanded its investigation to include the activities of the BHI Trust and Warriner, as well as other people connected to the Trust and is liaising with the criminal prosecuting authorities regarding its investigation.

In addition, the FSCA emphasised that it is only empowered by law to investigate contraventions of financial sector laws and not to look into matters such as common law fraud.

“While the investigation is receiving urgent attention, the FSCA is not in a position to specify the duration of the expanded investigation, the identities of additional parties being investigated, or what further contraventions may be uncovered,” the FSCA said.

Subject to the FSCA’s information sharing obligations, it is also unable to comment on any findings or possible intended regulatory actions that may arise from the investigation, as it is ongoing and subject to due process and confidentiality constraints.

Furthermore, the FSCA said it cannot comment on whether investors will be able to recover any of their funds.

“There have been reports claiming that the BHI Trust was “backed by” and “registered with the FSCA”. The FSCA would like to clarify that neither the BHI Trust nor Warriner were licensed with the FSCA in any manner.”

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