The Financial Sector Conduct Authority (FSCA) has decided to impose an administrative penalty of R300 000 on Mr Joy Praise Kgaphola (Mr Kgaphola) and debar him for a period of 20 years. The FSCA’s decision follows an investigation into the conduct of Datum RS (Pty) Ltd (Datum) and Mr Kgaphola, who was Datum’s sole director.
The investigation found that Datum and Mr Kgaphola used Datum’s social media accounts to solicit investments from members of the public. On these social media accounts, they offered to trade in derivative instruments and crypto assets on behalf of the public.
They also advertised various investment packages that promised unrealistically high returns payable within five or eight days of investment. One such package offered a return of R1000 within eight days of investment of R300. The conduct constituted an offer to render financial services for which authorisation under the Financial Advisory and Intermediary Services Act No. 37 of 2002 (FAIS Act) was required. Datum and Mr Kgaphola were not authorised to offer or to render financial services in the manner that they did.
The investigation further found that clients deposited approximately R129 000 into Mr Kgaphola’s personal bank accounts. Contrary to the representations made to clients, Mr Kgaphola did not invest the clients’ funds in derivative instruments. Mr Kgaphola misappropriated the clients’ fund and used them for personal purchases.
The FSCA found that Datum and Mr Kgaphola contravened, in a material way, the following financial sector laws:
- Section 7(1)(a) of the FAIS Act;
- Section 8(9)(c) of the FAIS Act, read with section 3(b) of the FAIS Regulations; and
- Section 3(a) of the FAIS Regulations.
The FSCA will now formally bring this matter to the attention of the criminal authorities because it seems likely that several offences have been committed.
The FSCA cautions the public against engaging with individuals or entities that are operating without proper authorisation. Conducting financial services with unlicensed providers exposes consumers to significant risk, including the potential loss of funds.