Financial Services Tribunal overturns R2.5m fine against deVere CEO Nigel Green

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  • The Financial Services Tribunal has set aside a R2.5m fine levied against deVere CEO Nigel Green.
  • The assessment body concluded it couldn't simply substitute its own decision on Green's disbarment amid errors from the FSCA, referring this back to the authority.
  • Green maintains the FSCA appears to have lost its impartiality and objectivity, seemingly on a mission to discredit him.
  • For more financial news, go to the News24 Business front page.

The Financial Sector Tribunal has overturned a decision to levy a R2.5 million fine against founder and CEO of deVere Nigel Green related to the marketing of unapproved foreign collective investment schemes. 

It has also set aside his five-year disbarment as a director, though this matter has been referred back to the regulator.

In 2022, the Financial Sector Conduct Authority (FSCA) levied a R10 million fine against Brite Advisors SA - formerly deVere SA - and withdrew its license. It also made a finding against Green, who was a non-resident director of deVere SA from 2008 to 2015.

The regulator took issue with deVere SA's offering to its clients of access to unapproved offshore investments. The FSCA said Green was as a key person responsible for deVere's SA operations and decision-making which led to the solicitation, although he maintained he was not involved in the day-to-day management of the group.

The advisory firm had also argued deVere SA at no stage handled client funds, with clients just choosing whether or not to act on their advice.

Ruling

The Tribunal's decision, handed down on 4 January, considered how the FSCA had erred in maintaining that Green failed to comply with section 2(a) of the Financial Institutions (Protection of Funds) Act, rather than 2(b).

2(a) refers to a requirement that institutions or individuals "observe the utmost good faith and exercise proper care and diligence" with regards to funds, while 2(b) concerns the discharge of powers and duties. Green had not been asked to respond to allegations he contravened 2(b), and the FSCA had initially thought he contravened a different section to that of 2(a), the judgement reads.

While counsel for the FSCA had argued the Tribunal could substitute the authority's decision with that of its own, the Tribunal said that while it could do so with regards to the penalty, the "incongruity and irony" is that it cannot do so with regards to disbarment, even if relying on the same facts. The Tribunal can only dismiss the disbarment application, set it aside, or refer it back to the authority for reconsideration.

"Even if we limit the inquiry to the penalty, the said competence of the Tribunal cannot mean that if the applicant stood accused of having contravened x, the Tribunal could find that the applicant contravened y," the judgement reads.

Response

Founded in 2002, the deVere Group is an independent advisor for specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world, over 80 000 clients and $12 billion (R203 billion) under advisement. The deVere Group disposed of its local shareholding during November 2019.

Green said in a statement on 5 January that he had fully cooperated with the authority during the inspections, and consistently refuted the allegations against him. 

"It’s clear that the case was overturned on the basis of both factual inaccuracies in the FSCA’s case against me and an incorrect application of laws," he said, adding the Tribunal came "to the only sensible conclusion".

"In addition, the FSCA was criticised by the Judge at the Tribunal for changing the alleged offences of which I was accused on several occasions - even up to two weeks before the case was heard - and for failing to understand its own laws."

"By doing this, the regulator was shown to be on a mission to discredit me, come what may."

"In this case, the South African financial regulator appears to have lost the objectivity and impartiality expected of a public body discharging a public function," said Green.

The FSCA said it will consider whether to take the case on appeal, firstly with reference to the penalty, while it would now reconsider the debarment.

"The FSCA is considering the judgement and will decide on the way forward. In the meantime, it is incorrect as stated by Mr Green in his media release, that the case is closed," the authority said.

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