On 12 September 2019, the Financial Sector Conduct Authority (FSCA) imposed an administrative penalty of R100 million on MET Collective Investments (Pty) Ltd (METCI). This decision followed an investigation into METCI, after one of its unit trust funds, the Third Circle MET Target Return Fund, lost significant value during the period 8 to 11 December 2015.
The R100 million administrative penalty was due to METCI contravening various provisions of different financial sector laws including the Collective Investments Schemes Control Act (CISCA), Board Notices 90 and 92 of 2014, and the Financial Institutions (Protection of Funds) Act. The FSCA found that METCI was reckless in that it failed to administer the CIS scheme with due care, skill and diligence.
METCI applied to the Financial Services Tribunal for a reconsideration of the FSCA’s decision on a number of grounds and on 29 July 2020, the Tribunal handed down its decision setting aside the FSCA’s finding that METCI was reckless. The Tribunal also reduced the administrative penalty imposed by the FSCA to R30 million, of which R10 million was remitted.
In a Press Release, the FSCA stated that it is of the view that the Tribunal’s decision sends out a strong message to CIS managers to ensure that white label portfolios are properly managed.
To read the Financial Services Tribunal decision, click here.
To read the article previously published on the FSCA decision, click here.