Illustrative image : Sources | The Financial Sector Conduct Authority sing at the offices. (Photo: Twitter) | The Financial Sector Conduct Authority. (Photo: Banxso website) 
After a lengthy investigation spanning more than a year, the Financial Sector Conduct Authority (FSCA) finally slapped trading platform Banxso with penalties of more than R2-billion and fined its directors to the tune of a collective R35-million.
Hundreds, possibly thousands, of people lost huge sums of money after “investing” in Banxso. The online trading company’s trading licence remains suspended.
Read more: Seven articles already published by Daily Maverick about Banxso
The FSCA has imposed a massive R2-billion administrative penalty on Banxso, and its directors, Harel Adam Sekler and Warwick David Sneider, jointly and severally.
A further R16-million has been imposed on Banxso for other contraventions.
In addition to the above fines, the FSCA has fined director Manuel de Andrade R20-million, while two key individuals - Mohammed Bux and Henry James Simpson - have been fined R10-million and R5-million, respectively.
But that’s not all.
30-year debarments
Sekler, Sneider, De Andrade and Bux have all been debarred for a period of 30 years each, while Simpson has been debarred for a period of 10 years.
The 30-year debarment is the maximum debarment period ever imposed by the FSCA on an adviser. Other advisers that have been slapped with 30-year debarments in the last year have been Craig Warriner and SC Jansen van Rensburg.
The FSCA’s extensive investigation into Banxso over the course of more than a year found Banxso and its key persons, inter alia, misappropriated client funds, provided false and/or misleading information to clients and to the FSCA, promised clients unrealistic returns and failed to act in the best interests of its clients.
The FSCA concluded that Banxso and its key persons materially contravened various provisions of the:
- Financial Sector Regulation Act;
- Financial Advisory and Intermediaries Services Act;
- General Code of Conduct for Authorised Financial Services Providers and Representatives;
- Financial Institutions (Protection of Funds) Act;
- Determination of Fit and Proper Requirements for Financial Services Providers; and
- The Financial Markets Act Regulations.
“This (investigation) included an assessment of the extent to which client funds were misappropriated; the gains accumulated through misleading practices; and the overall economic advantage obtained as a result of the misconduct. The FSCA also considered the seriousness, deliberateness, extent and impact of the conduct on clients, and on the integrity of the financial sector. These factors collectively informed the quantum of the penalties and serve as a strong deterrent against similar misconduct in the market,” the FSCA said on Tuesday afternoon.
There’s more to come.
Given the seriousness and extent of the misconduct, the FSCA has decided to report the matter to the South African Police Service (SAPS) and to share all the evidence obtained during the investigation with SAPS. The regulatory body has emphasised that it will also provide active assistance to SAPS, if requested.
Afrimarkets Capital
Sneider and Sekler are both also directors of Afrimarkets Capital.
In a separate ruling, the FSCA also finalised the withdrawal of Afrimarkets Capital’s licence. The licence had been provisionally withdrawn on 4 July this year, following an investigation. After the company’s licence was provisionally withdrawn, Afrimarkets was given the opportunity to defend itself. However, the FSCA investigation found that Afrimarkets misappropriated client funds, provided advice to clients while it was not authorised to do so, provided false and/or misleading information to clients and to the FSCA, promised clients unrealistic returns and failed to act in the best interests of its clients.
“The FSCA is of the view that Afrimarkets materially contravened various financial sector laws, and no longer meets the fit and proper requirements to operate as a financial services provider,” it said.
Banxso response
In a statement issued a few hours after the FSCA ruling was released, Banxso “stakeholders” said: “Our legal teams have been immediately engaged and are conducting a comprehensive review of the findings, the process followed and the basis for the penalties imposed.”
The Banxso statement noted: “We are not in a position to detail our legal strategy at this stage, but we can confirm that we are exploring all available mechanisms to address what we believe to be fundamental concerns with this outcome.” DM