Hi everyone. I was just wondering what the legalities were regarding stock tips if there is any. I am primarily looking at those websites, and there are numerous, that provide you with stock tips whether on technical or fundamental. Like red hot penny shares tell you which shares they think are good buys etc. Do they have to be registered witht he JSE in order to punt stocks. Is there any legal bind on them should someone sue them for the tips they give. I just have found it very interesting the amount of people who follow these tips and wonder what backing these "punters" have on their tips. Any input will be valued.
The word "TIP" means that its not a certainty in my book. Websters one discription... "information as for betting,speculation,or other action often used with a useful hint,suggestion or idea."On this chat forum we are not supposed to give tips(see rules).That is why i always i always say "in my opinion only" and always say if i hold a share and if i think something is worth holding i say for my watchlist.
I have just read the rules myself for the 1st time. Maybe someone from standard bank (simon) can maybe inform us of what happens to people punting shares. Is it illegal or is it just against the ethics of the forum. Things like this interest me. I do subscribe to a newsletter as this is how i got involved in share trading. Took their tips as i knew nothing. But i just wondered what the legalities were behind such shre punting which im sure this is what all these newsletters and even forums are.
speak to the FSB re this.....they reckon that if you are ofering advice regarding a particular financial instrument such as a share, ssf or whatever you need to be registered with the FSB....this issue is something which the FSB will be talking about quite a bit....SFM in their infinite wisdom chose to remove the thread which dealt with this issue.... I think they are totally out of touch with the degree to which "paid for" advice is causing investors to make totally inappropriate decisions....we are not talking a few rands either...in many cases 100 s of throusands....
according to the FSB ....Any person..."providing any service of furnishing of advice, providing an intermediary service or both....is in contravention of the law if they are not registered with the FSB...."ADVICE Means any recommendation, guidance or proposal of a financial nature, by any means or medium..." I have stated before that I believe that SFM has neglected its duty by not giving it's clients guidance on this issue...
I have read the FSB materials and the way I understand it (in more common words) is that if you PAY for financial advice then the person giving that advice (tips or whatever it will be called) must be registered with the FSB. Therefore, if you are NOT PAYING for the advice then they do not need to be registered. Correct me if I am wrong, but this means that giving tips on this or any other forum is not illegal, so long as you are not charging people for it. It might (and in my opinion IS) against the good ethics of the forum.
yes you are right regarding ideas generated by a forum such as this...if however I were to market myself as an someone who is able to provide advice on specific financial products (such as equities) I need to be registered...whether I obtain a fee for the advice or not....it is often people that offer so called impartial advice for no fee that are the most tendentious in their advice because they have an agenda...It could be argued that their is an even greater need for registration if a fee is being charged ....at the moment no standards exist for technical analysts in South Africa....the TA association has been invited to join the International Federation but has declined so anyone can set themselves up as an analyst or equities expert despite having no training....I have asked the questions to them directly ...basically I was told ...who the hell are you to question us...as far as accreditation of courses an trainers goes...this simply does not happen.
Richie, my opinion is that all 'tips' are to be treated with caution. You will find on this forum that a 'DRD is set to fly' tip is usually followed by a 'why do you think so' posting, especially if it is unqualified. A lot of furumites do a lot more research than myself and if you look at smallcaps.co.za all punts have a note about whether they hold the share. But then again, there's an argument for why investors write these newsletters, which may or may not make as much as if they invested the printing costs in the JSE instead.