Markus Jooste penalised R20m by the FSCA

The Financial Sector Conduct Authority (FSCA) has imposed a revised administrative penalty of R20 million on former Steinhoff International CEO Markus Jooste.

In a statement issued on Wednesday, the FSCA said this is for breaching section 78 (5) of the Financial Markets Act, Act 19 of 2012 (the Financial Markets Act).

Jooste had advised several people by SMS to sell their Steinhoff shares, just days before the company alerted shareholders on 5 December 2017 to its accounting irregularities and that Jooste had quit, causing its shares to crash.

The FSCA said R1 million of the penalty was levied for Jooste encouraging PSG founder and director Jaap du Toit to sell his Steinhoff shares, even though Du Toit never acted on the warning. “The provision prohibits an insider from encouraging or discouraging another person to deal in securities which the inside information relates to,” it explained.

Background

On 29 October 2020, the FSCA imposed a R161 568 068 administrative penalty on Jooste for breaching section 78 (4) (a) and section 78 (5) of the Financial Markets Act.

However, over a year later the Financial Sector Tribunal set this penalty aside on 13 December 2021. Section 78 (4) (a) of the Financial Markets Act prohibits an insider from disclosing inside information to another person; the tribunal  found that Jooste had not contravened this rule, as the information he provided via SMS to Du Toit, Dr Gerhardus Burger, Marthinus Swiegelaar and the late Ockert Oosthuizen “was vague and imprecise.”

The tribunal had thus asked the FSCA to determine an appropriate administrative penalty for Jooste’s contravention of section 78 (5), and advised it to consider alternative dates to calculate the losses avoided by the trades of Dr Burger and Mr Oosthuizen.

Read: Markus Jooste loses key part of appeal against FSCA insider trading fine

“In arriving at the amount of the new administrative penalty, and in line with the decision of the tribunal, the FSCA considered amongst other factors, the amounts of the losses avoided by the recipients of the warning SMS as a result of the offending transactions, Mr Jooste’s level of cooperation during the investigation, the seriousness of the breaches, the need to deter such conduct as well as Mr Jooste’s submissions regarding the merits of the case against him including his submissions regarding an appropriate penalty,” the FSCA stated on Wednesday.

Wheels of justice…

It’s been a rough year for the former Steinhoff boss.

In October, the South African Reserve Bank (Sarb) secured a court order to attach Jooste’s assets for violating foreign exchange control rules. Jooste’s Lanzerac house and wine farm in Stellenbosch and another house in Hermanus in the Western Cape were seized, along with other assets.

Read:
Sarb spent years probing Jooste
‘The wheels of justice are eventually beginning to turn’: Christo Wiese

Based on a statement by the Oldenburg regional court in November, it seems Jooste and three other people will go on trial in Germany next year on charges of accounting fraud. Jooste denies the allegations.

Read: Steinhoff’s Jooste set for fraud trial in Germany next year

Th FSCA says the penalty is payable on/before 6 January 2022. Moneyweb has asked the authority for clarity on this and will update this article accordingly.