The Financial Sector Conduct Authority has debarred two directors of Smart Billion Investments and fined one of them R10 million after investigating a complaint alleging that the company traded client funds without authorisation and failed to reimburse losses it caused to its clients.
Smart Billion traded in contracts for differences (CFDs) on behalf of clients through an online trading platform, GT247. Smart Billion opened a trading account at GT247, pooled client funds, and traded it in the name of Smart Billion.
Clients deposited funds for trading purposes into Smart Billion's bank account, but only "a miniscule amount" was transferred to GT247 for trading purposes. The balance of the client funds that remained in Smart Billion's bank account was used to pay clients' withdrawal requests, as well as personal and business expenses.
The FSCA has accordingly imposed an administrative penalty of R500 000 on Renault Otto Kay and debarred him for a period of five years, and imposed an administrative penalty of R10 million on Melusi Christian Ntumba and debarred him for a period of 10 years.
For the FSCA it was an aggravating factor that Kay, as a director and "key individual" did not perform his responsibilities to ensure that Smart Billion had the necessary operational ability as required by law. Ntumba, in his capacity as director and CEO of Smart, did not observe the utmost good faith and did not exercise proper care and diligence with regards to client funds.
With assistance from the FSCA, the Serious Commercial Crime Unit is investigating a criminal case against Smart Billion.