Investors soon learned all was not right with the fund when the company's unit price plummeted after the listing and the net asset value followed suit.

Now the company plans to recoup millions of rand from vendors, promoters, the previous fund manager, certain property brokers, a number of former directors and the original property valuer.

The Financial Mail reported recently that it appeared most Arnold properties had been 20%-25% overvalued. Indeed, leading property asset managers told the magazine it was widely known in the industry that such overvaluations were widespread.

A-Prop hopes by its course of action to set a benchmark and encourage a revaluation of how property funds are put together, promoted and listed on the JSE Securities Exchange SA.

Perhaps it is also time for investors to start scrutinising who the promoters of new listings are, and to delve a little into their histories. It is common knowledge that promoters' fees are stripped from the funds before listing, and some commentators believe it would be a good idea for SA to adopt a performance-based system for promoters' fees, where promoters would be paid only if the companies' units held up after listing. There is bound to be stiff resistance to implementing such a system in SA.

Meanwhile, investors would be well advised to avoid new listings that do not have the support of prominent financial institutions or other bodies of stature. Part of the current problem is that the promoters and management of new funds do not have sufficient track record or reputations to lose if associated with such debacles.