Markus Jooste loses key part of appeal against FSCA insider trading fine

The Financial Services Tribunal has upheld one of the key rulings by the Financial Sector Conduct Authority (FSCA) against disgraced former Steinhoff International Holdings CEO Markus Jooste in relation to insider trading and contravening the Financial Markets Act.

However, another related FSCA ruling involving Ocsan Investment Enterprises was dismissed by the tribunal, and consequently against Jooste.

This was confirmed in a brief FSCA statement on the matter on Wednesday afternoon.  The financial watchdog gave no indication on how the tribunal’s decision would impact the authority’s fines of around R241 million against Jooste and three other individuals that was announced in October last year.

Read:
FSCA fines Markus Jooste, three others around R241m
Jooste may dodge FSCA’s R161.6m fine for a while yet

The FSCA claimed contraventions of Section 78(1), Section 78 (4) (a) and Section 78 (5) of the Financial Markets Act (19 of 2012) at the time. However, Jooste and Ocsan Investment Enterprises (controlled by Jooste’s long-time acquaintance, the late Ockie Oosthuizen) later appealed the FSCA rulings and fines.

It is part of a much more complex investigation by the authority into the Steinhoff corporate scandal.

“The FSCA notes the decision of the Financial Services Tribunal… regarding insider trading contraventions in respect of Steinhoff International Holdings N.V. shares,” the financial regulator said in its statement.

“The tribunal has confirmed the decision of the FSCA that Mr Markus Jooste contravened Section 78(5) of the Financial Markets Act in that he encouraged persons to trade in Steinhoff shares whilst he was in possession of inside information regarding Steinhoff,” the FSCA added.

“The tribunal has however referred the determination of an appropriate penalty to the FSCA for consideration with reference to its findings concerning the basis on which the administrative penalty was calculated,” the authority further pointed out.

“The tribunal dismissed the finding of the FSCA that Ocsan Investment Enterprises… through its former director traded on inside information in contravention of section 78(1) of the Financial Markets Act, stating that the content of the SMS sent was not sufficiently specific or precise to qualify as inside information as envisaged by the Financial Markets Act,” the FSCA highlighted.

“Thus, the administrative penalty against Ocsan was set aside. Consequently, Mr Jooste was also found not to have contravened Section 78(4) of the Financial Markets Act in respect of trades by certain other persons,” the watchdog added.

From the FSCA’s statement, it is clear that Jooste still faces a sizeable fine for contravening at least part of the Financial Markets Act.

Jooste’s initial portion of the FSCA’s fine amounted to around R161.6 million.

It is the largest insider trading fine levied by the FSCA, dwarfing the previous record of R24 million slapped on Deutsche Bank in 2019.