The Financial Sector Conduct Authority has taken regulatory action against Bhaca Green (Pty) Ltd, Songeziwe Mbalo, and Lungile Mgilane following the conclusion of an investigation into the company’s activities.
The Authority debarred Mbalo for 20 years. In addition, it imposed administrative penalties totalling R9 million on Mbalo and Bhaca Green, jointly and severally. A further penalty of R50 000 was imposed on Mgilane, the FSCA said in a statement on Tuesday.
The regulatory action followed an investigation by the FSCA into Bhaca Green, Mbalo, and Mgilane. The investigation found that Mgilane rendered financial services to clients on behalf of Bhaca Green and Mbalo. At the time, neither Mbalo nor Bhaca Green was authorised as a financial services provider. This conduct was found to constitute a contravention of section 13(1)(a) of the Financial Advisory and Intermediary Services Act.
Furthermore, the investigation found that between January 2019 and December 2020, Mbalo and Bhaca Green collected funds from investors with the stated purpose of trading in foreign exchange on their behalf.
The FSCA found that most of the funds were used to pay purported returns to other investors and to cover Mbalo’s personal expenses. Only a small fraction of the funds was reportedly used for the intended trading activities.
The FSCA determined that this conduct constituted a contravention of section 7(1) of the FAIS Act, because Mbalo and Bhaca Green acted as unauthorised Category II FSPs. The regulator noted that they offered and/or rendered advice, as well as intermediary services, in respect of forex products without the necessary authorisation.
Given the seriousness and extent of the misconduct, the FSCA said it has referred the matter to the South African Police Service. All evidence obtained during the investigation will be shared with SAPS, and the Authority will actively assist the police if requested.
