The Financial Services Tribunal (FST) has dismissed a reconsideration application by Mareo-John Nel, who was fined and debarred for providing financial services without authorisation – after being sanctioned for the same contravention previously.
In November last year, Moonstone reported that the FSCA imposed a R1-million fine on Nel and debarred him for 15 years. The Authority said Nel breached section 7(1)(a) of the Financial Advisory and Intermediary Services Act by offering forex derivative trading without authorisation.
This finding followed an investigation into a complaint about Nel’s trading activities, which was received after he had signed an enforceable undertaking in February 2021 – when he was 22 years old. This undertaking was a means for Nel to remedy his unlawful conduct committed between January 2018 and September 2020.
Nel, trading under the name Simply FX Limited Group – an unregistered entity – offered clients a “guaranteed return” of 30% a month.
Between 1 January 2018 and 23 September 2020, Nel reportedly received about R3 096 300 from clients, primarily friends and acquaintances, promising to trade forex on their behalf in exchange for a commission. By September 2020, Nel had repaid R1 113 500 to clients, but about R2 030 800 remained outstanding.
In terms of the enforceable undertaking, Nel agreed to stop providing unauthorised financial services and to reimburse all his clients and pay the fine by 30 April 2021. However, the clients were only reimbursed by 20 July 2023, and Nel paid the fine in September 2023.
Then in October 2021, the FSCA received a complaint about Nel – also regarding unauthorised trading activities. This prompted a second investigation, which found that Nel had again contravened section 7(1) of the FAIS Act, between 17 May and 23 December 2021.
In February 2023, the FSCA issued Nel with a notice of intended regulatory action. The notice outlined two proposed measures: a 15-year debarment and a fine of R2m.
Nel submitted representations to the FSCA, seeking to mitigate the proposed sanctions. His submissions included the personal hardship caused by the loss of his mother, his age of 25 years and the responsibility of supporting a young family, and repaying the investors, including four individuals identified during the second investigation.
As a result of Nel’s submissions, the FSCA reduced the administrative penalty to R1m, but the debarment was left unchanged. This decision, finalised in November 2024, formed the basis of Nel’s application to the Tribunal.
Submissions to the Tribunal
Nel contended that the sanctions were excessive when viewed against mitigating factors he had previously submitted to the FSCA. He highlighted his youthfulness and immaturity as factors that should mitigate the debarment order entirely or at least its 15-year term.
Nel said he never denied his unlawful conduct and had proactively offered to rectify it by repaying all losses suffered by investors. He substantiated this claim by noting that he had fully repaid all the investors affected by the first investigation and settled the R100 000 penalty.
He further argued that the conduct in the second investigation was closely linked to the first, because it arose from his efforts to generate funds to meet the terms of the enforceable undertaking – namely, repaying investors and the initial penalty.
Nel said all the investors involved were known to him personally and were aware of the FSCA’s investigation into his activities. He expressed a strong personal motivation to remain in the financial sector, describing it as his “deep desire” and a constitutional right, while committing to lawful conduct moving forward.
Nel characterised the 15-year debarment as harsh, arguing that although it served as a deterrent, this purpose should not justify unreasonably severe sanctions. He went further to propose that no debarment was necessary, asserting he had learned a “hard lesson” from the ordeal; alternatively, he requested a significantly shorter debarment period.
Finally, Nel addressed the financial burden of the R1m penalty, stating that having repaid the investors, he was now under severe financial constraints, rendering the penalty unaffordable. He requested a reduction to a more reasonable amount to prevent insolvency.
No grounds to interfere with the decision
The Tribunal’s ruling – delivered last month – was grounded in the statutory provisions that delineate the FSCA’s authority to impose debarments and administrative penalties.
Section 153 of the Financial Sector Regulation Act outlines the conditions under which the FSCA may debar a natural person. These include instances where an individual has contravened a financial sector law in a material way (section 153(1)(a)) or materially contravened an enforceable undertaking accepted by the responsible authority (section 153(1)(b)).
The Tribunal drew on its own precedent to clarify the jurisdictional thresholds for the sanctions imposed on Nel. It has previously held that the imposition of an administrative penalty requires only a “contravention” of a financial sector law, whereas a debarment necessitates that such a contravention be “in a material way”.
Nel conceded to two key violations: contravening the FAIS Act by providing financial services without authorisation and breaching an enforceable undertaking in which he had committed to cease such unlawful conduct. The Tribunal determined that these contraventions were material, satisfying the jurisdictional facts required for both the administrative penalty and the debarment.
In his submissions to the Tribunal, Nel reiterated the same grounds he had presented to the FSCA. However, the FST clarified the limits of its authority in reviewing the FSCA’s discretionary decisions. It stated that it cannot interfere unless the FSCA failed to bring an unbiased judgment, lacked substantial reasons, exercised its discretion capriciously, or applied a wrong principle.
The Tribunal assessed Nel’s arguments and found no evidence to support any of these conditions. Nel did not demonstrate that the FSCA’s decision-making process was flawed or improperly executed.
As a result, the Tribunal concluded there was no basis to interfere with the FSCA’s exercise of its discretion, effectively upholding the R1m penalty and 15-year debarment.
