The Financial Sector Conduct Authority (FSCA) has come down hard on Bhaca Green (Pty) Ltd, issuing a massive R9 million fine and a 20-year industry debarment against its director for running an unauthorised forex trading scheme that misused investor money. The case has been escalated to the police for potential criminal prosecution.
The regulatory action sees Mr Songeziwe Mbalo debarred for two decades and hit with an administrative penalty of R9 million, imposed jointly and severally on him and Bhaca Green.
A further penalty of R50,000 was imposed on Mr Lungile Mgilane for rendering financial services on behalf of the unauthorised entity.
The investigation revealed a scheme where Bhaca Green and Mbalo collected funds from investors ostensibly to trade in forex on their behalf. However, the reality was starkly different.
“The majority of the funds received from investors were used to pay purported returns to other investors and to cover Mbalo’s personal expenses, with only a small fraction used for trading purposes,” the FSCA stated. This operation constituted unauthorised financial services provision.
The FSCA further found that “Mgilane rendered financial services to clients on behalf of Bhaca Green and Mbalo” while neither was authorised as a Financial Services Provider (FSP), a direct contravention of the law.
Due to the serious nature of the misconduct, which mirrors a Ponzi-style scheme, the regulator has taken the significant step of involving law enforcement. “The FSCA will provide active assistance to SAPS, if requested,” confirming the matter is now in the hands of the South African Police Service.
This enforcement action highlights the FSCA’s continued crackdown on unlicensed operators in the high-risk forex trading space, where investor funds are particularly vulnerable to misappropriation under the guise of complex financial products.
