Investors in Livestock Wealth face delay as FSCA reviews investment model

More than 3 000 investors in crowd-farming venture Livestock Wealth will have to wait a few weeks longer to hear if the Financial Sector Conduct Authority (FSCA) approves the investment and business model.

The FSCA has apparently completed its investigation and will share its findings with and ask comments from Livestock Wealth towards the end of June. The investigation follows a warning from the FSCA in January against the company that offers investments in cattle, macadamia trees and vegetable farming.

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The warning from the financial sector watchdog stated that the public should be cautious when dealing with Livestock Wealth Financial Services (Pty) Ltd and Livestock Wealth (Pty) Ltd.

“It has come to the attention of the FSCA that Livestock Wealth may be unlawfully offering members of the public investment into livestock and/or agricultural product(s), offering profitable returns upon maturity of the livestock and/or agricultural product(s),” the FSCA said, using the usual wording when warning people against dubious investment schemes.

The FSCA pointed out that Livestock Wealth is not authorised to render any financial-services-related business, and was using the financial services credentials of Livestock Wealth Financial Services on its website.

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It says Livestock Wealth Financial Services is licensed to render Category I financial products and services, but that its sister company Livestock Wealth isn’t. It said in January: “The FSCA emphasises that the investigations are not completed and the FSCA has made no findings to date.”

Unfair

It seems Livestock Wealth is unhappy with what it sees as a change of opinion on the side of the FSCA. Ntuthuko Shezi, founder and CEO of Livestock Wealth, says the FSCA’s press release created a lot of concern among investors and the public.

The company published a long rebuttal of the FSCA’s sudden interest in Livestock Wealth on its website, saying the FSCA refused to register the company as a financial services provider when it launched in 2015.

“When we launched Livestock Wealth, we approached the FSCA for registration,” the company says, publishing a string of email communication between Livestock Wealth and the Financial Services Board (FSB) as the FSCA was known then.

“They refused to register us saying ‘There is no financial product’ in the selling and ownership of agricultural assets.

“They even refused requests for voluntary registration.”

‘Surprise and disappointment’

“We are cooperating fully with the FSCA, as we have from the beginning, to address any issues raised and have the matter resolved speedily,” says Shezi.

“Livestock Wealth has always had a very warm relationship with the regulator. In July 2021 we were the main speaker at their event on Alternative Finance in SA. Later that year, we featured in their video of alternative finance where they hailed our position as leaders in this space.

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“We would like to inform our investors, partner farmers and wider audience of the timeline of our interactions with the FSCA, which supports our surprise and disappointment with the manner in which the press statements were made,” he adds.

Shezi says “we got our” FSCA licence in 2021, referring to the Category 1 licence which allows the sale of long- and short-term insurance products, investment products, medical aid products and similar.

Livestock Wealth believes the approval of the licence was based on an approved business plan and allows its crowd-farming business to exist within the regulatory framework.

Shezi says the FSCA requested that the company remove the FSP licence number from the Livestock Wealth website in October 2023.

“We immediately complied and updated our front page with new content on 28 October 2023.

“On 24 January, we were taken by surprise by the press release saying we did not remove the FSP number from the site.

“The removal had happened 90 days before the issuing of the press release.

“It still does not make sense how the regulator could issue public sanction about a request we had already complied with,” says Shezi.

“Further, our operation is in line with the business plan that the FSCA approved for them to approve our [licence] application.”

Shezi says he met with the FSCA in February and requested that the regulator modify its press release to bring context to the consumer.

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“This request was denied. This meeting was important because the FSCA had still not reached a finding on whether we are conducting a financial services business in light of previous decisions that we were not,” he adds.

“A directive from the FSCA would therefore have been of assistance, but we were told to wait for the outcome of the investigation.”

Reassurance

Meanwhile, Livestock Wealth has been trying to reassure its investors through regular updates and by sending them additional information.

“We have invited them to visit our farms to physically see their assets in cows, macadamia trees and vegetables and interact with the farmers,” says Shezi.

“We are hosting a harvest day on the 8 June at our citrus farm in Musina, Limpopo and everyone is invited. Since 2015, we’ve had more than R140 million of investment and not a single person has ever lost their investment.”

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Livestock Wealth says it will continue to do what it aims to do – work with its partner farmers to produce vegetables, cattle and macadamia nuts on investors’ behalf.

“We are on track to harvest over R10 million of oranges for the export market from our farm in Musina,” it says.

“We remain committed to working with the FSCA in creating a regulatory environment that protects the public while encouraging innovation. SA has unique challenges and we have proved over the last ten years that a South African solution to investing in agriculture has global appeal.”

The FSCA did not respond to queries for further comment on the matter.

This article was republished from Moneyweb. Read the original here