On 12 May 2015, the Registrar decided to debar the appellant, Mr Francois Pens Ellis, for a period of two years in terms of section 14A (1) (a) of the FAIS Act.
The Registrar concluded that there was satisfactory proof that the appellant no longer complied with the fit and proper requirements, particularly the honesty and integrity components. She relied on two sets of facts, namely those relating to the appellant’s actions as an employee of Standard Bank and, secondly, his involvement with a concern known as Mayfair Mining (Pty) Ltd.
Background
The appellant was initially employed by Mayfair Mining and upon its demise he entered the employ of Standard Bank as an FSP. The Bank initiated disciplinary proceedings against him for (a) misconduct relating to the irregular use of documents signed in blank by clients and photocopying documents contrary to the bank’s policy; (b) misconduct by having obtained a personal loan from a client which breached the Bank’s conflict of interest policy and his conditions of employment; and (c) the failure to disclose his outside business interests as required by the Bank’s policy.
He was found guilty on all three counts on 28 October 2014, and the disciplinary board found that, apart from being guilty of the allegations, he had “not acted in a manner becoming of a FAIS representative, and as such has not acted in a fit and proper mariner in this regard” and recommended his summary dismissal. He was dismissed.
The Bank gave the required notice to the Registrar but the notice itself did not reflect the findings of the board accurately because it said that he no longer complied with the fit and proper requirements because of a lack of honesty and integrity. However, the full decision of the disciplinary board was also provided.
A month later, on 28 November 2014, the appellant successfully applied to be removed from the list of debarred representatives and to be re-appointed. A similar application was made by Odin Financial Services (Pty) Ltd and for him to be an authorised representative and director of Olin.
He was reappointed on 19 December 2014 as a representative of Olin, and his debarment was removed on 7 January 2015, based on confirmation by Olin that the requirements for reappointment of a debarred representative were met.
Appeal Board Judgment
“Standard Bank was not amused by this sudden volte face by the Registrar and raised its objection. It would appear that only after this objection did the Registrar give proper attention to the matter and on 18 March 2015 the appellant was notified of possible debarment action. In spite of his response he was debarred on 12 May 2015.”
“As to the Standard Bank matter, the Registrar said both in the warning letter and the letter recording her decision that it was established that the appellant had been found “guilty of dishonesty” and breach of company policy for arranging a loan agreement with a bank customer.”
“The appellant takes issue with the finding — quite rightly. The appellant was not charged with or found guilty of dishonesty. The Registrar did not read the decision properly. There was however much in the decision which could have been held against the appellant by the Registrar but which was not.”
“If one assumes in favour of the Registrar that the decision was capable of meaning that he had been found guilty of dishonesty, the decision to lift the debarment within a matter of weeks is incomprehensible.”
“We accordingly find that the Registrar misdirected herself on a material factual matter.”
Turning to the appellant’s involvement at Mayfair Mining, the Board notes that it was a Ponzi scheme:
“Although he pretended that his job involved merely answering telephone enquiries from clients, he was a (or “the”) senior investment manager. He solicited clients to invest in Mayfair Mining and participated in unregistered financial services related business contrary to the Act. It is not in dispute that he in this regard contravened section 7 of the Act by acting as an FSP and a representative without the necessary licence or appointment.”
“The funds were then dissipated by both (if one believes the appellant) Mayfair Mining and the appellant. The investors lost all. In short, at least some of the funds were appropriated by the appellant for his personal use.”
“The appellant concealed these facts from the Registrar critically during his application for re-admission, and the Registrar was accordingly entitled to conclude that he is a “person with proclivities of dishonesty” and to reach the decision she did in spite of the misdirections referred to.”
The Board found that the appellant “…is on his own (often conflicting) version guilty of two crimes involving dishonesty.”
“The appeal thus cannot succeed and must be dismissed.”
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