The toxic sidekicks of financial advisors have put retail investors in a bind

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At first glance, nothing should have gone wrong. The offer for a high-interest investment came from financial advisors working for reputable networks offering only regulated financial products. But it went wrong.

It turned out that the offered investments were just a private “side hustle” of the advisers, who used the brand name and contacts gained from their employer to spread high-risk and unregulated products. However, this only came to light when investors realized that their money was in serious jeopardy. The stories happened years ago, but the truth about them only started to emerge now, when the recipients of money from small investors got into trouble.

At the beginning of the first charted story, Jana Denková was a financial advisor working at the time for the Fincetrum & Swiss Life Select network, currently just called Swiss Life Select. On the other side was the small investor Petra L. (the name of the investor has been edited, editor’s note), who wanted to evaluate free investment funds.

Counselor Denková helped Petra L. with regular regulated investments, for example in funds under the supervision of the Czech National Bank. However, at some point, the adviser came with an offer of an attractive investment promising high returns. They were to be handled by Galibier Capital, officially appearing as a firm from Hong Kong, mediating investments in the world financial markets through the trader APL Markets from Belize.

Jana Denková pointed out to Petru L. that she offers the investment through Galibier Capital privately, not as a product from Swiss Life Select. Nevertheless, for example, the power of attorney in favor of the advisor was signed by Petra L. in the offices of the advisory network, the investor claims.

“The role of the investment advisor was absolutely essential. It was she who introduced me to the fund, motivated me to invest with annual reports and documents of high valuation for the last few years, and last but not least, she repeated several times that she herself is their satisfied client, who guarantees that this valuation is really taking place and that everything works absolutely without problems,” described Petra L.

“For me, Swiss Life was a guarantee of the competence and trustworthiness of its employees. In the past, the counselor has already helped me negotiate a better interest rate when negotiating a mortgage loan. Also under the banner and in the office of Swiss Life,” added Petra L.

Petra L. signed the investment agreement through Galibier Capital in 2020. She sent the smallest possible amount of 300,000 crowns to the investment account. However, after a year, an unexpected message came through adviser Denková that the investor accounts could not be accessed. At first, she justified this situation with a hacker attack on Galibier Capital. These reasons were later joined by the arguments of the effects of the covid pandemic, and in the spring of 2022, the consequences of the war in Ukraine.

“After the whole alleged hacking thing broke out, the advisor continued to communicate very actively and kept me hopeful that everything would turn out well. She repeatedly assured me that the fund had her full confidence. After I indicated that I wanted to take legal action and actively pursue my claims, she completely cut off contact,” noted Petra L.

The editors of SZ Byznys repeatedly tried to get the opinion of advisor Jana Denková. However, she did not respond to messages or e-mails, she does not pick up the phone.

The advisory network Swiss Life Select strongly distanced itself from Denková. At the same time, the company pointed out that it terminated cooperation with the consultant already in 2020 due to a gross breach of contractual agreements.

“Our company does not tolerate negotiating products outside the official product range. Such behavior by consultants is considered a violation of internal rules. The company was harmed by Mrs. Denková’s actions, which is why she filed a criminal complaint in the matter,” said the head of Swiss Life Select’s legal department, Lukáš Pácl.

The second mapped case also had a similar course. At its beginning, Jiří Dvořák was a financial advisor working under the banner of the well-known financial consulting group Partners. His long-time client was the small investor Lucie K. (the name has been changed). She also wanted to invest free money in investments mediated by financial advisors and protect it from inflation.

The investment was in the form of a loan to the Czech company Incore Investments. She undertook to regularly pay a fixed income. She promised that the capital from the investors would be invested in shares in other companies and thus earn from their development. But as it turned out later, many of the acquisitions undertaken by Incore Investments were of a dubious nature.

Lucie K. sent almost three million crowns to Incore Investments with the help of consultant Jiří Dvořák.

“I have known advisor Jiří Dvořák since 2015. He was very accommodating and willing. In addition, the fact that everything was happening under the banner of Partners was a guarantee for me that I could believe it,” Lucie K said now.

Last June, however, Incore Investments filed for bankruptcy. Although the company gave small investors hope for higher satisfaction of their claims through reorganization, it eventually went bankrupt. Creditors’ prospects of getting their money back are not good.

Lawyer Lucie K. Martin Dirhan believes that the Partners group should be held responsible for Dvořák’s actions.

“The entrepreneur is generally responsible for all persons he uses in the course of his business, regardless of whether they are his employees or perform activities for him on the basis of another contractual relationship,” the lawyer said.

However, Partners defends itself by saying that Dvořák distributed unregulated financial products outside of his cooperation with Partners, and moreover without their knowledge. In addition, Partners alleges, based on later discovery, that Dvořák alerted clients to the fact that he was privately distributing these products outside of Partners.

“We immediately terminated cooperation with Mr. Dvořák at the moment of discovery for a gross violation of the mandate agreement and obligations, on August 3, 2022,” responded Petr Borkovec, head of the Partners group.

“Partners cannot bear the risk of default (failure, editor’s note) for very risky investments, which it did not arrange itself and which it intensively warns against. Given that the clients knew that this was not the activity of Partners and given how intensively the company and its representatives communicate in the media and on social networks a negative attitude towards the sale of bonds, we do not feel responsible for these investments of theirs that did not go through us. Borkovec added.

The editors of SZ Byznys also gave the advisor Jiří Dvořák room for comments. However, he did not respond to the questions sent and did not pick up the phone.