The financial services tribunal in South Africa has upheld a penalty handed down by the Financial Sector Conduct Authority (FSCA) to 36One Asset Management.
The regulator imposed a fine of ZAR350,000 (£18,555, $24,355, €21,992) following the publication of some unapproved offshore funds on 36One’s website, periodic newsletters and presentations made to clients between August 2015 and March 2018.
But the asset management firm disputed the penalty, as it claimed that no investment materialised from the publications, and that it did not intentionally request its clients to invest in the offshore funds.
But the tribunal sided with the FSCA.
Breaching the law
According to the Collective Investment Scheme Control Act 2002, the soliciting of investments in offshore hedge funds should only be carried out if approved by the regulator.
If this is not the case, the legislation criminalises the promotion of investments in these unapproved or unregulated investment vehicles.
“The significance of the risk posed by soliciting investment in unapproved or unregulated funds cannot be over-emphasised in a society like ours, this is why this ruling is so important,” the regulator said.
The financial services tribunal also agreed the fine was appropriate, as the FSCA “sought to strike a balance between effective deterrence from contravention of financial sector laws and unreasonably harsh penalties”.
Additionally, the FSCA has sent out a warning to the public about a firm using the logo of South African media company Moneyweb to promote investments.
Moneyweb Corporate Bank, trading as Moneyweb Private Bank, is not authorised by the regulator and cannot carry out any financial advice or intermediary services.
According to the watchdog, the fraudulent company is “unlawfully operating as a financial services provider by rendering financial services without authorisation”.
This could lead to a ZAR10m fine or up to 10 years in prison.