The Financial Services Tribunal has halved an administrative penalty imposed on former Momentum Securities trader and portfolio manager after finding a narrow but material basis for intervention: the Financial Sector Conduct Authority had, in part, applied a wrong principle when determining the R500 000 sanction.
In its decision dated 21 September 2026, the Tribunal reduced the penalty to R250 000 but confirmed the finding that the applicant, Leonard Dateline, participated in a practice that created, or was likely to create, an artificial price for Texton Property Fund Limited shares.
Dateline did not dispute the contravention in the reconsideration proceedings. The sole issue before the Tribunal was whether the R500 000 penalty was justified, reasonable, and proportionate, or should be set aside or reduced.
FSCA found trades supported Texton’s share price
The FSCA investigated trading by Dateline, and trading facilitated by him, in Texton shares.
The Tribunal decision says the FSCA identified 68 transactions. According to the regulator’s analysis, Dateline acted without a client mandate or contrary to his client’s instructions on at least 11 or 12 occasions. The balance of the transactions were executed on client instructions but were regarded by the FSCA as small in value, without a credible commercial rationale, and designed to support or increase Texton’s share price.
In written representations dated 2 March 2026, Dateline denied contravening section 80 of the Financial Markets Act (FMA). As an alternative to no sanction, he proposed an administrative penalty of R5 000.
The FSCA imposed a R500 000 administrative penalty in an order signed on 31 March 2026. The order was published on the regulator’s website on 9 April 2026, the date the Tribunal identifies as the date of the decision under reconsideration.
The FSCA’s order cites contraventions of sections 80(1)(a) and (b) of the FMA and identifies the contravention period as 29 November 2018 to 19 February 2020.
The Tribunal decision addresses and confirms a contravention of section 80(1)(a), while describing the FSCA’s investigation as covering trading from 29 November 2018 to 6 October 2020. It later refers to a course of conduct spanning about 23 months.
Dateline challenged the size of the penalty
Dateline admitted responsibility on 20 April 2026, after the FSCA had imposed the penalty, and proposed that it be reduced to R60 000. In the reconsideration proceedings, he said he did not “stubbornly dispute the factual finding of a technical contravention”.
He argued that the R500 000 penalty was disproportionate and harsh and did not give sufficient weight to what he described as the absence of market detriment and significant personal gain, as well as his financial inability to pay the penalty.
The FSCA maintained that it had properly exercised its discretion under section 167 of the Financial Sector Regulation Act (FSRA), had considered the relevant aggravating and mitigating factors, and that Dateline had not established a recognised basis for the Tribunal to interfere. It also submitted that affordability was not a relevant consideration when fixing an administrative penalty.
Dateline applied simultaneously to suspend the penalty pending the reconsideration proceedings. The FSCA did not oppose the application, and the Tribunal confirmed on 22 May 2026 that the reconsideration application automatically suspended the penalty.
Tribunal’s power to interfere was limited
The Tribunal said it could not substitute its preferred penalty merely because it might have reached a different figure from the FSCA.
Applying the test established in Mwale and Another v The Prudential Authority and Another, it said intervention was permitted only if the FSCA had failed to bring an unbiased judgment to bear, had not acted for substantial reasons, had acted capriciously, or had exercised its discretion on a wrong principle.
The Tribunal found that Dateline had established a narrow but material basis for intervention under the fourth ground.
Cost recovery improperly influenced penalty
The FSCA’s submissions recorded that it had incurred investigation costs of R721 475.90, an amount exceeding the R500 000 penalty. The regulator said the penalty would have been substantially higher if it had been determined solely with reference to its entitlement to recover those costs.
The Tribunal said this indicated that the investigation costs had operated, at least indirectly, as a factor tending to increase the penalty. Because cost recovery is not among the factors listed in section 167(2) of the FSRA, the FSCA had applied a wrong principle to that extent.
The statutory considerations include the nature, duration, seriousness, and extent of a contravention; any loss or damage; the financial or commercial benefit obtained; previous contraventions; the effect on the financial system; and whether the conduct was deliberate or reckless.
Trader’s commission distinguished from client’s investment value
The Tribunal found that the FSCA had not assessed Dateline’s financial benefit separately from that attributed to his client and related entities.
Dateline earned R39 322.72 in brokerage commission from the transactions, which the Tribunal treated as his own quantified financial benefit. The FSCA said his client and related entities derived an increase of about R157 217 in investment value for every one cent that Texton traded above its previous traded price.
The Tribunal described the disparity between Dateline’s R39 322.72 benefit and the R500 000 penalty, about 12.5 times that amount, as stark. It said the penalty appeared to have been calibrated to a scale of benefit that Dateline did not receive, which sat uneasily with the statutory requirement to consider the financial or commercial benefit obtained by the transgressor.
This did not mean an administrative penalty had to correspond mathematically to the transgressor’s gain. The problem was that the FSCA had not made a distinct and reasoned assessment of Dateline’s financial benefit.
Deterrence had to be balanced against proportionality
The Tribunal said manipulation is detrimental to the financial system even where its wider effects cannot be quantified.
Although the absence of precisely quantified harm did not affect Dateline’s liability, the loss and financial benefit established on the record remained relevant when determining a proportionate penalty.
The Tribunal accepted that affordability was not a relevant consideration in fixing an administrative penalty. It expressly declined to adopt Dateline’s proposed figure of R60 000 or his reasoning based on his financial circumstances.
The Tribunal held that the need for deterrence had to be balanced against proportionality rather than replace it.
Tribunal considers Dateline’s degree of personal initiative
In determining the substituted penalty, the Tribunal considered the extent to which Dateline acted on his own initiative rather than at his client’s direction.
This did not disturb the finding that Dateline knowingly participated in a practice that created, or was likely to create, an artificial price for Texton shares. However, it was relevant to the extent to which the conduct was deliberate on his own initiative rather than undertaken at his client’s direction.
The Tribunal weighed Dateline’s co-operation during the investigation and his eventual reporting of concerns, although it noted that he had delayed escalating those concerns internally and had continued to deny wrongdoing until after the penalty decision. It also considered his previously unblemished record over about 30 years and the personal and financial hardship following his dismissal.
The Tribunal gave limited weight to Dateline’s expressions of remorse because he had not fully explained why he participated in the trading despite his early concerns. It said the reduction was not premised on remorse or rehabilitation.
The Tribunal said the reduction was not premised on remorse or rehabilitation.
Penalty reduced to R250 000
The Tribunal found the R500 000 penalty disproportionate when measured against the loss and financial benefit established on the record. It nevertheless concluded that a substantial penalty remained necessary.
It regarded the matter as involving a course of conduct spanning about 23 months, undertaken by an experienced market professional who had failed in his gatekeeper function. A penalty was also required to reflect the seriousness of the conduct and serve as a general deterrent.
The Tribunal set aside the R500 000 penalty and substituted a penalty of R250 000. It said the amount appropriately balanced the proportionality concerns it had identified against the seriousness and duration of the conduct, Dateline’s experience and gatekeeper role, and the need for deterrence.
