The Financial Sector Conduct Authority has come down hard on repeat offender Mareo Nel, an unlicensed forex trader, imposing a R1-million fine and barring him from the financial services industry for 15 years. Nel may also face prosecution.
In a statement, the Authority said Nel breached section 7(1)(a) of the Financial Advisory and Intermediary Services Act by offering forex derivative trading without the necessary authorisation. This finding followed an investigation into a client complaint about Nel’s unauthorised trading activities, which was received six months after he had signed an enforceable undertaking on 30 April 2021.
Gerhard van Deventer, the FSCA’s executive in charge of enforcement, explained to Moonstone that the complaint, received on 20 October 2021, involved Nel offering to trade forex derivatives on behalf of the complainant.
“The complainant could not recover her funds from Nel,” Van Deventer said.
This isn’t Nel’s first run-in with the regulator. In February 2021, at just 22 years old, he admitted to similar misconduct, acknowledging that he had accepted client deposits for forex trading without the proper licensing. As part of an enforceable undertaking, Nel agreed to refund clients and pay a R100 000 fine by 30 April 2021, and he committed to ceasing the provision of unauthorised financial services.
At the time, the FSCA noted that: “Given that the proposal would benefit the investors, the FSCA has decided to apply some leniency with reference to the administrative sanctions and impose an administrative penalty of R100 000 on Mr Nel in terms of section 167(1)(a) of the Financial Sector Regulation Act, 9 of 2017.”
According to Van Deventer, the attorneys acting for Nel confirmed that he paid back his clients.
“And I can confirm that his administrative penalty was paid. However, he continued to render financial services unlawfully after signing the enforceable undertaking. As such, he breached one of the undertakings.”
This indicates that Nel continued his unauthorised activities after the FSCA imposed sanctions.
Anyone convicted under section 7(1) of the FAIS Act faces a criminal record. Although Nel avoided this outcome in 2021 by signing the enforceable undertaking, he may not be so fortunate this time. Van Deventer said the FSCA has referred the matter to the police.
Although information on Nel’s latest contravention is scant, the enforceable undertaking provides a detailed account of the FSCA’s initial investigation.
On 30 January 2020, the FSCA received a complaint alleging that Nel (who also goes by the name Mareo-John) was misrepresenting himself as a representative of an authorised FSP and accepting client investments. Nel, trading under the name Simply FX Limited Group – an unregistered entity –was offering clients a guaranteed return of 30% a month. Neither Nel nor Simply FX was authorised to provide financial services.
The complaint included an investment agreement purportedly used by Nel, setting minimum and maximum investment amounts at R50 000 and R800 000, respectively. Client funds were allegedly deposited into a trading account, with Nel responsible for generating profits through forex trading. Nel, however, claimed he only used this agreement with one client.
Between 1 January 2018 and 23 September 2020, Nel reportedly received about R3 096 300 from clients, primarily friends and acquaintances, promising to trade forex on their behalf in exchange for a commission. By September 2020, Nel had repaid R1 113 500 to clients, but about R2 030 800 remained outstanding.
According to an article published in the Lowvelder on 23 May 2021, Nel, who hails from the Lowveld, missed the 30 April 2021 deadline. Markus Saayman, Nel’s attorney at the time, told Lowvelder that Nel had submitted a proposal to the FSCA before the April 30 deadline, seeking a repayment plan for the investor deposits. At the time, Van Deventer told the newspaper that the FSCA was considering the proposal “with the investors’ interests as our primary focus”.
A press release dated 14 November 2023 and published on barchart.com, a financial market data platform, details how “Mareo-John Nel, A Popular Trader From South Africa, Pays Back His Investors in Record Time”.
The press release was published by CB Herald, a news and media distribution company based in New York. It offers services such as press release distribution, web distribution, and targeted media campaigns.
It recounts how Nel initially made significant profits from forex trading and was approached by friends and family to manage their investments. “Nel caved in and decided to help some of his close friends and close relatives.”
According to the press release, in 2019 “the funds invested in him got lost in the forex market, and he also provided proof of him losing quite a substantial amount”.
The press release explains that after losing nearly all his assets, Nel negotiated a repayment plan with regulators, agreeing to pay R30 000 a month, which would have taken about nine years to repay both investors and his fine.
However, the article highlights that Nel “worked hard, saved money, and paid back all the investors’ money in record time”. It also states that he paid the FSCA fine, and today, he is seen as “a shining example of an exemplary character who took responsibility and ensured no one suffered because of him”.
