FSCA warns consumers about investments with these unregistered entities

The Financial Sector Conduct Authority (FSCA) is warning consumers to watch out for people who promise to recover money lost from investments with Banxso, as well as with three other entities that claim to offer investments with unrealistically high returns.

The FSCA warns consumers to act with caution when dealing with people who claim they assist investors who lost funds invested with Banxso.

In a statement issued on Wednesday, the FSCA says it received complaints from consumers who said they were contacted by people claiming that they were investigating Banxso and that they located funds belonging to investors.

These people used different names and entities, and also falsely claimed to be representing legitimate entities and regulators.

“The public is advised to be on the lookout for the tell-tale danger signs when dealing with people offering to claim or recover funds on behalf of clients. These red flags include requiring clients’ personal details, financial information, access to bank accounts or crypto wallets and requiring payment of funds for investments to be paid back,” the FSCA says.

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Also watch out for Gold Earnings Hub and Africa Gold Capital

The FSCA also warns consumers to be cautious when conducting financial services business with Gold Earnings Hub and Africa Gold Capital, saying that it learned that Gold Earnings and Africa Gold may be providing financial services to the public without authorisation.

Gold Earnings and Africa Gold offer consumers investments promising unrealistic returns of 46% on investments between R2 000 and R100 000. Gold Earnings and Africa Gold use images and videos of well-known people such as Dr Patrice Motsepe, executive chairman of African Rainbow Minerals (ARM).

“In the deep-fake videos, Motsepe promotes the investments from Gold Earnings and Africa Gold. The videos appear to be fraudulent deep-fake videos. ARM has confirmed that neither it nor Motsepe have any association or relationship with Gold Earnings and Africa Gold.

“ARM and Motsepe have condemned the actions of Gold Earnings and Africa Gold and are considering civil and/or criminal action.”

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No authorisation for impersonators

The FSCA emphasises that the impersonators are not authorised in terms of any financial sector law to provide financial services to the public. The impersonators could not be contacted for comment, the FSCA says.

To avoid unnecessary risk, consumers should refrain from accepting financial advice, assistance, or investment offers from individuals or entities not authorised by the FSCA. Authorised financial services providers must clearly display their authorisation status in their documentation. If this is not present, consumers should first investigate further before making any payments, the authority says.

“The FSCA urges the public to be vigilant when investing. The number of fraudulent schemes is increasing, with South Africans losing millions each year to these operations. Some illegal schemes may appear legitimate, making it crucial to identify warning signs.

“Key red flags include promises of unrealistic returns and claims that an FSCA licence is unnecessary. In case of doubt, the public is encouraged to consult an authorised financial services provider.”

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CMFX Trading offers unrealistic returns of R23 000 from R6 000 investment

The FSCA also warns consumers to be cautious when conducting financial services business with CMFX Trading, as it has come to its attention that CMFX Trading is soliciting funds from members of the public for investment purposes while promising unrealistic returns.

“CMFX offers to trade in Bitcoin on behalf of members of the public and promises guaranteed profits. CMFX Trading is promising investors returns of up to R23 000 from an initial investment of R6 000 within three days.”

The authority points out that trading profits cannot be guaranteed, and an offer of unrealistic returns must be regarded with great suspicion.

“While the FSCA does not comment on the specifics of CMFX Trading’s business, it must be noted that CMFX Trading is not authorised in terms of any financial sector law to provide financial services to the public in South Africa. The FSCA could not contact CMFX Trading for comment.”

To avoid unnecessary risk, the FSCA says consumers should not accept financial advice, assistance, or investment offers from individuals or entities not authorised by the FSCA. The public is also strongly urged to exercise caution when considering investment or trading offers on social media platforms or any unsolicited offers.

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How to check if someone is registered with the FSCA

The FSCA says it is highly recommended that consumers verify:

• That an entity or individual is authorised by the FSCA to provide financial products and services, including giving recommendations about how to invest;
• What category of advice the person is registered to provide, as there are instances where companies or people are registered to provide basic advice for a low-risk product and then offer advice on far more complex and risky products;
• That the financial service provider (FSP) number the entity or individual offering financial services uses matches the name of the FSP on the FSCA database.

You can confirm the status and FSP number of a service provider or a person who claims to be an authorised service provider by calling the FSCA on its toll-free number, 0800 110 443, or doing an online search for the authorised financial institution by license category here or search for a financial institution that is an authorised FSP in terms of the FAIS Act here.