In one of its biggest enforcement actions ever, the Financial Sector Conduct Authority (FSCA) has imposed R2 billion in administrative penalties on online trading platform Banxso and two of its directors.
The Authority also issued further penalties:
- R16 million on Banxso for additional contraventions
- R20 million on another director
- R10 million and R5 million on two Key Individuals
- Debarments: all barred for 30 years, except one Key Individual who received a 10-year debarment
What the FSCA found
The FSCA’s investigation found that Banxso and certain key persons misused client money, misled clients and the regulator, promised unrealistic returns and failed to put clients’ interests first.
The misconduct led to contraventions of several core regulatory frameworks – including the Financial Advice and Intermediary Services (FAIS) Act, the General Code of Conduct, the Fit and Proper Requirements and the Financial Institutions (Protection of Funds) Act.
How the penalties were determined
When setting the fines, the FSCA considered how much Banxso and its key persons benefited from the misconduct – including the value of misappropriated client funds and gains made through misleading practices. The Authority said “the seriousness, deliberateness, extent and impact of the conduct on clients and on the integrity of the financial sector” informed the size of the fines, adding that the penalties are intended to deter similar behaviour across the market.
Next steps
The FSCA has also referred the matter to the South African Police Service and will share all evidence gathered during its investigation.