Lottery Winner Loses in Standard Bank Investment

January 5 - A R20 million lottery winner, who was referred to the Standard Bank Financial Consultancy division to see how to properly invest his windfall, lost a lot of his money after he received inappropriate advice by one of the brokers.

The SBFC provides investment and insurance product advice to customers who have larger than average sums to invest.

The customer was first advised to put his money into standard investment schemes, generating commission of about R600K for Standard Bank.

The broker, Arno Drockel stood to take home 50% of the commission after being placed at the top of the SBFC's list of new business production.

However, Drockel instead convinced the winner to withdraw from the standard investments and instead put his money in a risky diamond exploration venture, Channel Mining.

Channel Mining's share prices dropped rapidly before the company was eventually suspended.

As things stand, no replacement advisors have been found to pull the company out of the trouble it finds itself in.

This is not the first time that Standard Bank brokers have been accused of putting their own desire for higher commission ahead of their client's financial wellbeing.

The FAIS ombudsman has criticized at least one broker in a previous case regarding bad investments.

However, the director of SBFC, Keith Ferguson reacted to these claims and said that most occurred five years ago.

 "SBFC has an enviable record with the FAIS Ombud. SBFC has concluded over 300,000 new transactions over the last three years, and during that time the FAIS Ombud has not issued a single adverse finding against SBFC," he said.