The Financial Sector Conduct Authority (FSCA) has finally seen its persistent efforts against short-seller Viceroy Research pay off. This follows Viceroy's 2018 report, which accused Capitec of predatory lending, causing the bank's share price to plummet on the JSE.
The high court delivered a legal victory to the regulator last week, ruling that it was indeed within the regulator's power to pursue and fine Viceroy.
A recent High Court judgment has significantly strengthened the Financial Sector Conduct Authority's (FSCA) ability to hold offshore entities accountable for harming South African financial services groups.
The judgment overturns an earlier decision by the Financial Services Tribunal, which had sided with US-based Viceroy Research. The tribunal had ruled that the FSCA lacked jurisdiction over Viceroy partners Aiden Lau, Fraser John Perring, and Gabriel Bernade because they are foreign litigants not domiciled in South Africa. This decision effectively shielded Viceroy from facing penalties from South African authorities.
However, Judge Nicolene Janse van Nieuwenhuizen's ruling found the tribunal erred in its interpretation. The High Court's decision empowers the FSCA to pursue the R50 million fine it imposed on Viceroy and its partners for their "damaging" and "false" report on Capitec's business practices.
The judgment emphasized the critical need for robust regulation, stating: "The misinformation that was widely distributed and publicised in SA by the respondents had a disastrous effect on one of SA’s prominent financial institutions."
It further added, "To absolve the respondents from being liable for their conduct merely because they will at no stage be physically present in SA is not in the interest of justice." The court also noted that the R50 million administrative penalty would be a welcome boost to South Africa's "dire economic circumstances" and "ever-shrinking fiscus."