Atwealth (Pty) Ltd & others v Kernick & others

The Kernicks, a married couple and their close corporation, sought investment advice from Ms Andrea Moolman, a financial advisor employed first by Atwealth (Pty) Ltd and later by Vaidro 172 CC. Between 2009 and 2012, following presentations, emails and recommendations by Ms Moolman, they invested substantial sums in hedge-fund related products linked to Abante Capital, including the Relative Value Arbitrage Fund (RVAF) and MAT Worldwide. The investments ultimately failed, as the funds operated in a manner akin to a Ponzi scheme, paying returns from investor capital rather than genuine profits. The Kernicks alleged that Ms Moolman negligently advised them, breached her statutory and common-law duties as a financial advisor (including duties under the FAIS Act and its Code of Conduct), and caused their financial losses. The High Court upheld their claims, finding the appellants liable for damages.

The appeal was upheld with costs. The order of the High Court was set aside and replaced with an order dismissing the action with costs.

This case clarifies that claims against financial advisors for investment losses must be grounded in the full requirements of delict, not merely in alleged breaches of the FAIS Act or its Codes of Conduct. It reinforces that statutory non-compliance does not automatically result in civil liability and emphasises the need for proper proof of negligence and causation. The judgment is significant for delineating the relationship between regulatory duties under financial services legislation and common-law delictual liability.