Prominent South African trading platform hit with R2 billion fine

South African trading platform Banxso and its directors have been hit by administrative penalties of R2 billion from the Financial Sector Conduct Authority (FSCA). 

This stems from an investigation into the company’s activities from the FSCA that began in April 2024. 

The company had been under fire for “benefiting” from deep fake ads featuring billionaires Elon Musk, Johann Rupert and Nicky Oppenheimer. Some investors who clicked on the ads have reported losses totalling millions.

The company also had high-profile sponsorships with Bafana Bafana and Dricus du Plessis. 

The FSCA began investigating the company earlier in April 2024 for possible contraventions of financial sector laws following complaints regarding Banxso’s conduct.

This followed reports that Banxso appeared to be profiting from ‘deepfake’ adverts, which promised profits of up to R300,000 a month from an investment of R4,700.

Banxso’s chief operating officer, Manuel de Andrade, has stated that the company has no connection to the adverts and claimed it was a victim of hacking.

The FSCA also flagged promises of unrealistic returns and a failure to conduct the required risk and needs analyses prior to directing clients towards specific products.

In October 2024, the FSCA provisionally withdrew the company’s licence to operate and seized its bank accounts following preliminary findings.

The investigation continued and has now been concluded, resulting in the FSCA slapping Banxso and its directors, Harel Adam Sekler and Warwick David Sneider, with administrative penalties of R2 billion. 

In a statement, the FSCA said that a further R16 million in penalties has been imposed on Banxso for other contraventions. 

The regulator also imposed a fine of R20 million on Manuel de Andrade, another director of Banxso, and R10 million on Mohamed Bux. Henry Simpson was fined R5 million. 

“Messrs Sekler, Sneider, de Andrade and Bux have all been debarred for a period of 30 years each, while Simpson has been debarred for a period of 10 years,’ the FSCA said. 

The regulatory action follows an extensive investigation by the FSCA in respect of Banxso. 

“The investigation found that Banxso and its key persons, inter alia, misappropriated client funds, provided false and/or misleading information to clients and to the FSCA, promised clients unrealistic returns and failed to act in the best interests of its clients,” the regulator said. 

The FSCA concluded that Banxso and its key persons materially contravened various provisions of the –

• Financial Sector Regulation Act, No. 9 of 2017;
• Financial Advisory and Intermediaries Services Act, No. 37 of 2002;
• General Code of Conduct for Authorised Financial Services Providers and Representatives, 2003;
• Financial Institutions (Protection of Funds) Act, No. 28 of 2001;
• Determination of Fit and Proper Requirements for Financial Services Providers, 2017; and the Financial Markets Act Regulations, 2018.

In arriving at the administrative penalties, the Authority considered the financial benefit that Banxso and its key persons derived from their unlawful conduct. 

This included an assessment of the extent to which client funds were misappropriated, the gains accumulated through misleading practices, and the overall economic advantage obtained as a result of the misconduct.

The regulator said it also considered the seriousness, deliberateness, extent, and impact of the conduct on clients and on the integrity of the financial sector. 

“These factors collectively informed the quantum of the penalties and serve as a strong deterrent against similar misconduct in the market,” the FSCA said. 

The regulator has also reported the matter to the South African Police Service and has shared all the evidence it has obtained during the investigation with relevatn authoirites.

Banxso has previously strongly denied all allegations of financial misappropriation and maladministration.