The Financial Sector Conduct Authority (FSCA) says it has concluded its investigation into Livestock Wealth Financial Services (Mother Company) and Livestock Wealth, finding no evidence that the companies conducted unregistered financial business.
The FSCA last January warned the public to exercise caution when dealing with Livestock Wealth, following concerns that the company appeared to be unlawfully offering investments to members of the public.
Responding to ITWeb’s questions, the financial regulator says it was particularly concerned that Livestock Wealth was using the financial service provider (FSP) number of Livestock Wealth Financial Services on its website, potentially giving the impression that it was a licensed FSP.
Following a thorough investigation, the FSCA confirmed that Livestock Wealth and its director and founder Ntuthuko Shezi were offering, soliciting and advertising investments in agricultural products that are not classified as financial products.
As such, no FSP licence was required to operate in this area, it says.
“The FSCA did not find evidence of the investigated parties having conducted unregistered business. However, the FSCA did impose administrative penalties of R50 000 each on Livestock Wealth and Mr Shezi.
“The penalties relate to the display of Livestock Wealth Financial Services’ FSP licence on the Livestock Wealth website, which could have misled the public into thinking the company was an authorised FSP.
“This was found to contravene section 111(4) of the Financial Sector Regulation Act, No 9 of 2017, read with section 8(9)(b) of the Financial Advisory and Intermediary Services Act, No 37 of 2002, and Regulation 3(b) of the Financial Advisory and Intermediary Services Regulations, 2003,” states the FSCA.
The FSCA says it also noted that the FSP licence of Livestock Wealth Financial Services has lapsed, as the company had been dormant for some time.
Turbulent days
The regulator points out that both Livestock Wealth and Shezi fully cooperated with the investigation.
“The FSCA’s findings reassure the public that, while the presentation of licensing information was misleading, Livestock Wealth did not operate without the necessary regulatory approvals for its business activities,” says the FSCA.
Founded in 2015, Livestock Wealth says it has helped thousands of people to invest in tangible agricultural assets, such as cattle-breeding, free-range oxen, organic garden tunnels and macadamia nut trees via its platform, at an interest that is higher than mainstream investment options.
Through connecting its network of small-scale partner farmers to online investors, the business model offers investors an opportunity to invest in agricultural assets, which are not influenced by financial market trends.
In a statement released yesterday, Livestock Wealth says it welcomes the successful conclusion of the FSCA investigation.
“We are happy to report that the lengthy investigation and detailed analysis of our business and business model confirmed that the sale of agricultural products by Livestock Wealth did not contravene the FAIS Act, as had been suggested in their [the FSCA’s] previous press release,” says Livestock Wealth.
“The investigation found no unlawful activity by Livestock Wealth regarding their investor products and dealings with investors. In particular, there was no misappropriation of investor funds, and all such funds had been properly accounted for.”
According to Shezi, the press coverage and mention of unlawful activities created an impression that Livestock Wealth was running a Ponzi-type scheme. The company made full disclosure to the FSCA about its financial systems, including bank accounts, and accounted for every transaction involving investor funds, he notes.
Discussing the R50 000 fine imposed by the FSCA, he says the company submitted clear evidence demonstrating that the display of the FSP number of Livestock FSP was aligned with the business plan approved by the FSCA in October 2021, when it granted the Livestock FSP licence.
“Despite our continued belief that we acted in line with the approved business plan, we elected not to appeal the ruling at the Financial Services Tribunal and have paid the fines in full. We concluded that our immediate focus is better directed toward rebuilding trust, strengthening our market presence, and continuing to deliver value to our stakeholders,” says Shezi.
The past 24 months have been among the most challenging in the company’s journey, as it operated under a cloud of public scrutiny, he continues.
“We extend our sincere appreciation to our bankers, investors, farmers, partners and staff for their resilience, confidence and continued partnership through this period,” Shezi states.
“With the investigation now concluded, Livestock Wealth is entering its next chapter with renewed commitment and clarity of purpose. Our mission to end inequality and transform investment access − particularly within agriculture − remains firmly at the centre of our work. We are energised and focused on building a stronger future for all who journey with us.”
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