The brevity of the few standard paragraphs the Financial Sector Conduct Authority (FSCA) issued a few days ago to warn the public against doing business with Karatbars International belies its importance.
In fact, the warning can apply to all the agents and representatives currently marketing Karatbars products – if the products are marketed to the public as investments.
Neither Karatbars International GmbH or a local office of the company, nor any of its representatives, are registered to sell financial products in SA or offer members of the public financial advice. Any agent or representative that sells Karatbars as investments will need to register with the FSCA and adhere to all the requirements of the relevant legislation.
Brandon Topham, divisional executive for investigation and enforcement at the FSCA, says Karatbars and its agents are prohibited from selling or promoting investments which fall within the definition of a financial product. “Questions exist as to whether or not this is the case,” he says. “We await further information from the company.”
Topham adds that the FSCA did not receive any additional information from Karatbars as claimed by its legal representatives in media reports following the publication of the warning by the financial services watchdog.
“We are not able to conclude at this stage whether the company is selling or advising on investments which qualify as financial products or providing financial services as defined by our financial sector laws. If it is, it would be in contravention of the Financial Advisory and Intermediary Services [Fais] Act and the Financial Sector Regulation [FSR] Act.
“We can only advise the public that Karatbars is not a registered financial service provider and cannot sell or advise on investments,” says Topham.
However, the fact that…