South African FSB Fines Lefika Securities and Two Managers $325,000

South Africa’s independent regulator, the Financial Services Board (FSB), today fined Lefika Securities Pty Ltd R500 000 ($35,993) and two of its directors R4 million ($288,000). The managers admitted to participating ‘mostly out of naivety’ in manipulating the prices of four shares between January 5 2009 and March 31 2010.

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Back in 2009, Nazeem Hendricks and Cheune Mohlaba were involved in manipulative share transactions while they were serving as portfolio managers by Argon Asset Management, an FSB-registered financial services business.

More specifically, Hendricks and Mohlaba manipulated the prices of listed companies including Afgri (JSE:AFR), Metair and Palabora Mining between January 5 2009 and March 31 2009. They manipulated the price of Comair (JSE:COM) between March 3 2010 and March 31 2010. The roguish trades were executed through Lefika Securities Pty Ltd, which is an authorized security trading firm .

Tebogo and Rebecca admitted their wrongdoing before the enforcement committee and agreed to surrender their trading licences and resign as directors of Lefika.

In deciding the sanctions, the FSB took into account several mitigating factors including that Tebogo and Rebecca had no regulatory precedents and that they were not involved in devising the scheme. In addition, the order notes that they did not benefit financially in any material matter and “have been adversely affected by the investigation and the enforcement actions.”

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The FSB always reminds consumers who wish to conduct financial services with an institution or person to check beforehand with the FSB on either a toll free number or on the website www.fsb.co.za. The FSB is an independent institution, established by statute to oversee the South African non-banking financial services industry in the public interest, and fully funded by fees and levies imposed on this industry.