Registrar of banks inspects syndication firm PIC
November 1, 2010
By Roy Cokayne
Cape Times Business Report
The registrar of banks has appointed inspectors to investigate the affairs of PIC Syndications, a property syndication promotion and marketing company.
PIC Syndications has also had discussions with the registrar of financial services providers over alleged contraventions of the Financial Advisory and Intermediary Services (Fais) Act.
Michael Blackbeard, the deputy registrar of banks, confirmed last week he had appointed inspectors to investigate PIC Syndications' funding model and said he was awaiting their report. Ben van der Linde, the managing director of PIC Syndications, said the inspectors were appointed almost two years ago.
Van der Linde said PIC felt that much of the registrar's concern was probably well-founded and it had therefore pledged its full co-operation. There had been several meetings with the inspectors, requested documentation was supplied and more detailed information given on aspects of its business model.
Van der Linde stressed PIC had acted in good faith and with complete transparency.
He said the investigation revolved around two core questions: do the relevant companies accept deposits and do their activities represent the business of a bank?
Van der Linde added that PIC had obtained a legal opinion on its funding model from a widely respected expert on the Banks Act, who concluded that no deposits were taken by PIC or any of its Highveld syndication companies and it did not contravene the Banks Act.
He said the full report was handed to the inspectors.
The registrar of banks in September appointed two statutory managers to Sharemax Investments to manage the repayment of investments from all its 33 syndications after an investigation concluded that Sharemax's funding model contravened the Banks Act.
Business Report is in possession of a letter sent by the Financial Services Board (FSB) to PIC Syndications last year alleging it may be conducting a financial services business in contravention of the Fais Act.
The letter said the registrar had studied the PIC prospectus and was satisfied the PIC offering required authorisation for both shares and debentures, but PIC was only authorised for shares and therefore in contravention of the Fais Act.
Gerry Anderson, the deputy registrar for financial services providers at the FSB, said he could not comment on the contents of a letter between the FSB and any regulated entity.
However, Anderson confirmed PIC currently had a valid licence as a financial services provider and was authorised to engage with clients for, among other things, shares and debentures.
Van der Linde said PIC was of the opinion that it did not offer debentures, and had "agreed to disagree" with the FSB on this issue but to avoid the possibility of contravening the Fais Act had registered for both shares and debentures with the FSB.
