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- SA's financial services watchdog has fined Praesidium Advisory Services director Craig Massyn R20 million and barred him from the industry for two decades.
- The regulator found Massyn's forex investments were 'similar' to a Ponzi scheme.
- The FSCA has asked the police to probe Massyn and his two co-directors for fraud and theft.
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South Africa's financial regulator has fined the directors of the Praesidium group of companies millions of rands and barred them from the financial services industry for offering investments "similar in nature to a Ponzi scheme".
The Financial Sector Conduct Authority (FSCA) announced on Monday that its investigation of Praesidium Advisory Services, Praesidium Wealth and Praesidium Sentinel concluded that the companies contravened numerous financial sector laws. All three have already been liquidated.
In addition to the fines and debarments announced on Monday, the FSCA said it would refer the matter to police as it "seems likely that several offences have been committed, including fraud and theft."
No licences, consistent losses
The FCSA’s probe, which has been ongoing since September 2020, chiefly focused on foreign currency trades undertaken by Praesidium Advisory Services.
It found that the group traded forex on behalf of clients without having a licence. It also did not have the correct licence to receive client funds to invest in forex instruments.
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Praesidium Advisory Services paid over the funds it received to two companies called Octox and Imagina FX, which were not authorised financial services providers. Both companies were linked to Praesidium director Craig Massyn.
According to the FSCA, Massyn "controlled" clients' bank accounts via Octox and traded their funds via the Imagina FX trading platform.
But Massyn was unsuccessful as a trader and consistently incurred losses. Instead of paying clients from forex profits as he professed to do, the FSCA found Massyn paid them from the money they had invested:
Massyn has been fined R20 million and barred from the financial services industry for 20 years.
His two co-directors, Andrew Cunningham-Moorat and Brett Bukes, were fined R2.5 million and R6.5 million respectively. Both were barred for 10 years.
The lesser sanctions against Cunningham-Moorat and Bukes appear to relate to the fact that only Massyn traded on behalf of clients.
"Once the client funds were paid over to Octox and Imagina, Cunningham-Moorat and Bukes lost all control and oversight over the clients' monies," said the FSCA.
"Massyn controlled and had access to clients' funds in the Octox bank accounts and on the trading platform. Massyn conducted all the trading."
Two employees of Praesidium, Cindy Lee Schuster and Ryan van Niekerk, were both fined R300 000 and barred for five years.
