MBOMBELA – A former Lowvelder has to pay back friends and acquaintances, some of whom are city residents, after he received deposits from them to trade in forex on their behalf without being registered as an authorised financial services provider.

Maréo-John Nel (22) not only has to pay back the investors, but was also fined R100 000 by the Financial Sector Conduct Authority (FSCA), who found Nel to be in contravention of the Financial Advisory and Intermediary Services Act (FAIS).

The FSCA has imposed an administrative penalty in the amount of R 100 000.00 on Mr. Mareo-John Nel.

Read the full statement here: https://t.co/LpxKvmD8Kb pic.twitter.com/kffYzwFmy6

— FSCA South Africa (@fscasouthafrica) February 9, 2021

“Nel was in contravention of section 7(1) of the FAIS Act,” said Gerhard van Deventer, head of enforcement at the FSCA. Someone found guilty of such a contravention in a court of law will end up with a criminal record.
“However, we did not refer the matter to the police or National Prosecuting Authority. We considered it sufficient to deal with it on an administrative basis,” said Van Deventer.

According to the signed undertaking between Nel and the FSCA, Nel offered clients a guaranteed return of 30 per cent per month on their investment, collecting approximately R3 096 300 from them.

He was, according to the FSCA, conducting his business under the same name as Simply FX. Neither Nel nor Simply FX was authorised to provide financial services.

The FSCA found that the above amount was received from 2018 to 2020. Some of these funds were invested by clients and by September 2020, he had paid out R1 113 500 to them, but R2 030 800 is still owed.

Nel admitted to the FSCA that he had taken deposits from clients to trade in forex on their behalf. He also admitted to providing unauthorised financial services.

The investigation into the affairs of Nel followed a complaint received by the FSCA on January 30.
As a result of the outcome of the investigation and an admission of its findings, Nel provided the FSCA with an enforceable undertaking.

He undertook to return all funds received from his clients on or before April 30 and to immediately cease and refrain from providing unauthorised financial services. Proof of payments has to be provided by May 10.
Nel also signed to agree that the findings of this investigation be published by the FSCA.

However, after he had signed the enforceable undertaking, allegations surfaced that Nel claimed to have paid an investor R200 000 and followed it up with a falsified proof of payment. Van Deventer said the matter of the falsified proof of payment was reported to the FSCA.

“However, at the time the investigation was completed and we have already signed an agreement with Nel. The client should report the matter directly to the police,” said Van Deventer.

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Should Nel not return the funds before the said date, civil execution steps such as attachment of assets and sequestration may follow, and the matter may be handed over to the police.

“The R100 000 penalty is no more than a token. Our real desire is that he pays back the investors, and it will enjoy preference in our actions,” said Van Deventer.

Criminal prosecution may follow if Nel does not immediately cease and refrain from providing unauthorised financial services.

“It then becomes a serious case because and he will be regarded a repeat offender,” Van Deventer said.
He explained that in the beginning, Nel had committed some of the clients’ funds to a forex broker, JP Markets.

“JP Markets was investigated by us, had their licence withdrawn and the person who ran the business was debarred, and we liquidated the financial service provider. They conducted financial services outside their licence parameters,” he said.

Van Deventer added that later, prior to the investigations being finalised, Nel simply kept the money instead of investing it. Apart from the common law offences this may constitute, Van Deventer indicated that this was also a contravention of section 7(1) of the FAIS Act.

“We refer to it as unregistered business. It is quite prevalent in the industry and is usually detrimental to the public, as can be seen in this case. Trading in forex derivative pairs requires advanced skills,” explained Van Deventer.

He added that according to Nel, he had never meant to harm any of his clients.
“It is hard to imagine that he was not aware. You will have to be seriously isolated not to know.
“Having said that, the law holds you responsible to know the relevant rules when you enter any type of business,” he said. Nel, however, told Lowvelder that he never had been aware of the contravention.

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“My intentions were always to help people with the knowledge that I have of the markets. I never used the funds for personal gain.
“It was only used to make a profit and to better many people’s financial situations. I understand the implications of my actions, and I had stepped on many people’s toes.

“I am very sorry about that. I will forgive myself only when when I had refunded every investor. I also understand that my mistake is going to cost me, but like most things in life, it’s not about how hard you fall but how well you can rise again,” Nel said.

He said that after he had repaid his investors, he intends to obtain the necessary licence to help people in need, in the right way.