The Financial Services Tribunal (FST) has upheld the R1.18-million penalty and five-year debarment imposed on Pierre Rasmus Erasmus for operating as a financial services provider without authorisation.
In his reconsideration application, Erasmus said the sanctions were “shockingly inappropriate and disproportionate given the alleged transgressions” and his personal circumstances.
The Financial Sector Conduct Authority sanctioned Erasmus in April this year. It said he materially contravened section 7(1)(a) of the Financial Advisory and Intermediary Services Act by providing financial services and advice from January 2021 to April 2023 without authorisation.
The Authority said its investigation found that Erasmus collected funds from members of the public and used them to trade in contracts for difference (CFDs), incurring substantial losses. Furthermore, Erasmus provided clients with trading signals, and they traded in CFDs based on his advice.
The FSCA notified Erasmus that it intended to debar him for 10 years and fine him R1.2m. It reduced the debarment period by five years and the fine by R20 000 following representations by Erasmus.
In his reconsideration application, Erasmus sought to have the sanctions set aside, or to have both the penalty and the period of debarment reduced.
Erasmus contended that he did not contravene the FAIS Act, because:
- He did not render financial services as a regular feature of his business, and he did not provide advice.
- He did not have formal business relationships with clients, and these relationships were more appropriately described as friendships.
Concerning the sanctions, Erasmus said the FSCA failed to consider the mitigating factors in his representations, and his age and lack of education. He said he was not afforded an opportunity to test the evidence of the witnesses.
The Tribunal said the evidence that Erasmus materially contravened the FAIS Act was beyond dispute.
“Whether this was an unwitting contravention is immaterial, and the facts instead lean toward disregarding the relevant financial sector laws. In the circumstances, the jurisdictional facts necessary for the FSCA to have imposed the administrative penalty and to have debarred the applicant are present, and this Tribunal cannot gainsay the decision taken by the FSCA in this regard,” the FST said.
Regarding the sanctions, the Tribunal said it is not permitted, simply as a matter of course, to interfere with the exercise of the FCSA’s discretion.
To interfere, the Tribunal must find that the decision was reached on one or more of the following grounds: capriciously or arbitrarily; not for substantial reasons; in a biased fashion; or based on a wrong principle. None of these factors was present.
As a result, the Tribunal dismissed the application.
