SA authority warns against marketing scheme

South Africa's Financial Sector Conduct Authority (FSCA) has warned the public to exercise caution when dealing with GS Partners. This follows similar warnings against the firm in the US and Canada for violations of securities laws. ‘GS Partners is not licensed under any financial sector law to provide financial products or financial services in SA. The FSCA is concerned about the unrealistic returns offered by GS Partners, and is conducting a preliminary investigation into its activities in South Africa,’ it said. Moneyweb reports that GS Partners and its affiliates have been criticised of operating a multi-level marketing scheme that appeared to offer unrealistic returns while rewarding agents with generous commissions for introducing new investors. The company extensively used sports stars, among them former Springbok hero Victor Matfield, to market its investments. A cease and desist order issued by the Texas State Securities Board this month highlighted this aspect of its business model: ‘GSP has been claiming that various athletes have also endorsed, promoted or otherwise supported the investments, the operations of GSB Group, and/or Lydian World. These athletes include boxer Floyd Mayweather and footballers Roberto Carlos, Mario Yepes, David Trezeguet, Michel Salgado, and (former SA football star) Lucas Radebe.’