FSCA crackdown: Two firms barred from taking new client funds

South Africa's financial watchdog, the FSCA, has taken significant action against two trading firms, FXNovus and The Grand Trading, barring them from accepting new client funds due to concerns over their operations being controlled from overseas. The FSCA also issued warnings and is investigating two additional firms, Sanus Financial Services and Geefx, over alleged unauthorised examination certificates.

The FSCA's scrutiny of trading platforms, investment offers and financial qualifications has led to the withdrawal of their licences and the prohibition of further financial services business. Both FXNovus (FSP 50963) and The Grand Trading (FSP 53871) faced provisional licence withdrawals after the regulator found that their financial services were directed, monitored and controlled by people based in Cyprus, without proper establishment of their roles and authority.

The FSCA has given the companies an opportunity to make representations before the withdrawal becomes final.

The FSCA's investigation into Sanus Financial Services, which provides intermediary services involving derivative instruments and short-term deposits, follows a surge in complaints from clients. The regulator is examining whether financial sector legislation has been contravened, focusing on directors Nicolaas Louw, Bradley Bickham Distras, and sole key individual Annette Smyth.

The FSCA has also warned consumers about unsolicited investment opportunities, particularly those promoted through social media, urging caution due to warning signs such as unrealistic returns, pressure to make urgent payments, and demands for additional money before investments can be withdrawn. The regulator has also taken action against Sandile Arnold Ngubane and EduMe for unlawfully producing and selling regulatory examination certificates, emphasizing that only the approved examination body, Moonstone Information Refinery, is authorized to administer these examinations.