The Financial Sector Conduct Authority (FSCA) has imposed one of its largest-yet penalties, fining Banxso and its former directors Harel Sekler and Warwick Sneider R2bn for misappropriating client funds in what it says was a vast Ponzi scheme.
The regulator last year provisionally withdrew Banxso’s licence after allegations of wrongdoing emerged against the online trading platform.
As more evidence became known, the FSCA in July made the provisional withdrawal final after its investigation found Banxso contravened various financial sector laws in a material manner and that it no longer met the fit and proper requirements to be a financial services provider.
The investigation findings included that Banxso misappropriated client funds, provided false and/or misleading information to clients and to the FSCA, and did not act in the best interests of clients.
The regulator on Tuesday said it had also barred Sekler, Sneider and the company’s other key staffers, Manuel de Andrade and Mohammed Bux, from conducting any financial services businesses in South Africa for 30 years.
Another official, Henry Simpson, was barred for 10 years. For their part, De Andrade and Bux were fined R20m and R10m, respectively, while Simpson will have to fork out R5m.
“In arriving at the administrative penalties, the authority considered the financial benefit that Banxso and its key persons derived from their unlawful conduct,” the regulator said.
The FSCA has decided to report the matter and share all the evidence obtained during the investigation with the SAPS.
— FSCA
“This 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,” it said.
“These factors collectively informed the quantum of the penalties and serve as a strong deterrent against similar misconduct in the market. Given the seriousness and extent of the misconduct, the FSCA has decided to report the matter and share all the evidence obtained during the investigation with the SAPS.”
The R2bn penalty is the largest in recent memory, following the R475m penalty on the late Markus Jooste for market abuse in 2024.
One of the victims of Banxso’s misdeeds is a pensioner who lost about R500,000 as an investor in Contracts for Difference, a platform managed by Banxso.
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