THE FINANCIAL SERVICES BOARD OF SOUTH AFRICA AND LEADERGUARD SPOT FOREX

THE FINANCIAL SERVICES BOARD OF SOUTH AFRICA AND LEADERGUARD SPOT FOREX

We – a small group of professionals who invested in Leaderguard Spot Forex – do not always agree with the South African FAIS Ombud Mr. Charles Pillai in the matter of the fraudulent behaviour of the Directors of Leaderguard Spot Forex. We have a problem in as much as the Ombud seems to have concentrated his efforts upon brokers of the Leaderguard products and their lack of due diligence within the FIAS Act.

In our view the majority of brokers with whom we have had dealings, simply believed what Leaderguard Securities had advertised and promoted in respect to Leaderguard Spot Forex. For example they believed, with their investors, that a Leaderguard mandate applied. An investor could not lose more than 20% of his or her deposited funds. There are many other examples which could be quoted.

More recently, the Ombud has focused his attention on what we believe to be a more significant culprit in investor loss - and that is lack of suspicion, as well as lack of due diligence on the part of the Financial Services Board of South Africa.

In respect to FSB the Ombud now recognizes that :

The principal failure of the regulatory authority (FSB) was the exemption granted to Leaderguard Spot Forex – as a late applicant for a trading or operating licence in South Africa. The Ombud claims that in order to clear a back log of applications the FSB had “delegated” its authority to grant such a licence to the Forex Investment Association (FSA). (We are not sure that delegation is quite the right word).

The FSB however has asserted that the Ombud is wrong and that such bodies “merely assisted” in the processing of applications. In our view this remains a significant blunder on the part of the Financial Services Board of South Africa. At no time has the FSB explained the nature of this assistance or in fact the other bodies that might have been involved in providing this aid. In our opinion the FSB remains guilty of involving a third party in a process of licensing an activity for which they were solely responsible. The Ombud is in this analysis quite right.

In the case of Leaderguard (as already noted) the assistance and licensing was sought from the Forex Investment Association. Obviously the FSB did not know (or did not seek to know) that:

This was an association that was in part founded by Leaderguard
This was an association headed by Chris Dela Guerre (CEO) who was also a compliance officer for Leaderguard.
Mr. Dela Guerre was a Director of Leaderguard Securities a sister to Leaderguard Spot Forex as well as being a Director of the Leaderguard Game Farm (which was purchased and operated from Leaderguard Spot Forex funds).
Mr. Dela Guerre was also a Leaderguard beneficiary. Funds were regularly dispensed from LSF accounts to the “Dela Guerre Famille Trust”

Clearly the Leaderguard licensing process was in no way influenced by this particular third party!!! How could anybody think that Mr. Dela Guerre had any influence in the Leaderguard Licensing process?

As noted by the FAIS Ombud there is an absolute and total conflict of interest in the granting of a licence to Leaderguard. The FSB is guilty no matter whether the responsibility for licensing was either delegated or assisted. Neither should have occurred!