FSCA has another go at fining Markus Jooste

The FSCA has imposed a revised administrative penalty of R20 million on Markus Jooste for breaches of section 78(5) of the Financial Markets Act (FMA).

This comes a year after the Financial Services Tribunal (FST) set aside the fine of nearly R162m the regulator imposed on the former Steinhoff chief executive for insider trading.

Read: Tribunal overturns Markus Jooste’s R162m fine

The revised fine is some 88% lower than the original penalty.

The FSCA said Jooste must pay the R20m fine by 6 January 2023.

In October 2020, the FSCA fined Jooste for breaches of section 78(4)(a) and section 78(5) of the FMA.

Section 78(4)(a) prohibits an insider from disclosing inside information to another person.

In December 2021, the FST found that Jooste did not contravene section 78(4)(a), because the information he provided in an SMS sent to Jaap du Toit, Gerhardus Burger, Marthinus Swiegelaar and the late Ockert Oosthuizen to encourage them to sell their Steinhoff shares was “vague and imprecise”.

The SMS was sent days before Steinhoff alerted shareholders on 5 December 2017 of its accounting irregularities and that Jooste had resigned, causing its shares to crash.

The FST ordered the FSCA to come up with a more appropriate penalty for Jooste’s contravention of section 78(5) of the FMA, which prohibits an insider from encouraging or discouraging another person to deal in securities to which the inside information relates.

The tribunal also advised the FSCA to consider alternative dates to calculate the losses avoided by the trades of Burger and Oosthuizen.

In a statement on Wednesday, the FSCA said R1m of the R20m fine was levied for encouraging Du Toit to sell his Steinhoff shares. Notwithstanding the disclosure and encouragement, Du Toit did not act on the contents of the SMS, the Authority said.

In arriving at the new administrative penalty, the FSCA said it had considered, among other factors, the amounts of the losses avoided by the recipients of the warning SMS as a result of the offending transactions, Jooste’s level of co-operation during the investigation, the seriousness of the breaches, the need to deter such conduct, as well as Jooste’s submissions regarding the merits of the case against him, including his submissions regarding an appropriate penalty.

Read: How the FSCA decides on the size of an administrative penalty

In October, the South African Reserve Bank obtained a court order to attach more than R1.4 billion in assets linked to Jooste for alleged violations of the exchange control regulations.

Read: Did grey-listing threat hasten Sarb to act against Markus Jooste?

Jooste faces trial in Germany next year on charges of accounting fraud. In November, the public prosecutor’s office in the southern German town of Oldenburg said it had indicted four people on charges of accounting fraud. The statement did not name Jooste but referred to the 61-year-old former chief executive of Steinhoff International Holdings until 2017.