Wolves at the door

Noseweek Issue #98, 1st December 2007   


Wolves at the door

Investing in property finance is not as safe as houses. Fedbond has been breaking the law and ripping off its investors, mostly pensioners, for years.

Four years ago the Financial Services Board launched a major investigation into the illegal activities of Fedbond, a registered financial institution that solicits investments from the public in participation mortgage bonds. The FSB went as far as applying to court to have Fedbond’s licence withdrawn, and, when this failed, announced it was taking its case to the Appeal Court. Last month, days before the case was to be heard, Finance Minister

Trevor Manuel ordered the FSB to withdraw its appeal, freeing Fedbond to reopen for business. It’s done so with a vengeance, offering investors “millionaire” rates of interest.

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