South African Ponzi King banned for 30 years

The Financial Sector Conduct Authority (FSCA) has banned Craig Warriner, who ran the BHI Trust, from providing financial services to individuals and companies. 

Warriner used the BHI Trust to steal millions from his investors in a fraudulent scheme similar to what Bernie Madoff used to defraud clients.

In October last year, he handed himself over to police last week and appeared in the Palm Ridge Magistrates Court in Katlehong, where he represented himself.

Warriner’s marketing message to his elite clientele was that he was an expert day trader who focused on two stocks – BHP Billiton and Anglo American.

He claimed to “understand their price movements so well that he was guaranteed to make small profits daily, which were immediately banked”.

City Press reported that the investment scheme involved over 2,000 clients who invested over R3 billion.

It added that many investors trusted Warriner with their life savings, and many high-profile financial advisers placed large amounts into the scheme.

Initially, details about Warriner, BHI Trust, and the scheme were sketchy. He had no social media presence, and his company was not well-known publicly.

Warriner is a St Stithians private school old boy, which gave him access to many wealthy people and good connections. He leveraged this to get many fellow old boys and parents to invest in the BHI Trust.

What makes the situation particularly problematic is that it goes far further than only a group of people who have lost money.

Sasfin Securities’ David Shapiro explained that the case’s complexity means it will be difficult for those who have lost money to get it back.

Investors who have received distributions of any kind from Warriner over the last 15 years are also likely to have to give that money back.

Some investors claimed that the BHI Trust was registered with the FSCA along with many other asset management companies with funds in the Trust. 

The investor’s funds were held in a JSE Trust Account with a JSE-registered broker, according to documentation seen by BizNews. 

However, the FSCA said in a statement at the time that neither BHI Trust nor Warriner are authorised as financial services providers or licensed as collective investment schemes managers.

It also said it is investigating other individuals linked to the scheme, and they weren’t licensed either.

Following an FSCA investigation of the conduct of the BHI Trust and Warriner from 7 February 2013 to 30 September 2023, the authority banned him from providing financial services.

The investigation found that BHI Trust and Warriner acted as discretionary Financial Services Providers (FSPs), exercising discretion in buying and selling securities on behalf of clients. 

They were, therefore, required to be authorised as a Category II FSP. They were not so authorised, the authority said. 

Therefore, the BHI Trust and Warriner contravened section 7(1) of the Financial Advisory and Intermediaries Service Act No. 37 of 2002 (FAIS Act). 

Moreover, Warriner, in his capacity as a trustee of the BHI Trust, rendered financial services to clients on behalf of the BHI Trust while it was not authorised as an FSP, therefore contravening section 13(1)(a) of the FAIS Act.

On 7 May 2024 the FSCA debarred Warriner for a period of 30 years. Warriner is prohibited from:

• Providing, or being involved in the provision of, financial services;
• Acting as a key person in a financial institution; 
• Providing specified financial services to a financial institution, whether under outsourcing arrangements or otherwise.

The FSCA recommended that members of the public always check, using the authority’s database, whether an entity or individual is authorised by it to provide financial products.