Introduction
On 9 July 2025, the Gauteng Division of the High Court delivered a landmark judgment in Financial Sector Conduct Authority v Financial Services Tribunal and Others (009838/2023) [2025] ZAGPPHC 675, addressing the question whether the Financial Sector Conduct Authority (hereinafter referred to as “the FSCA”) could impose an administrative penalty on foreign individuals and entities (“peregrini”) in terms of the Financial Markets Act 19 of 2012 (“FMA”). This article aims to provide insight into the interaction between modern digital realities and legal development, as well as to explore the far-reaching implications of this judgement on finance and banking law.
A legal analysis of FSCA v FST
Factual background
In January 2018, the Fifth Respondent (hereinafter referred to as “Viceroy”), a US-based investigative financial research group, published a scathing report on Capitec Bank, which alluded to systemic risks, accounting irregularities and predatory lending practices (FSCA 2021). Regrettably, this report precipitated a stark decline in the price of Capitec’s shares and a temporary R25 billion slash in its market capitalisation (Moonstone Information Refinery 2025).
This financial nightmare sparked an investigation by the FSCA into Viceroy’s publication, in which it ultimately concluded that Viceroy’s conduct amounted to “false, misleading or deceptive statements, promises or forecasts regarding material facts about Capitec, as envisaged in section 81 of the FMA. Consequently, the FSCA imposed a whopping R50 million administrative penalty on Viceroy and respondents, who are its partners.
Thereafter, the respondents sought a reconsideration of the FSCA’s decision, contending that although the FSCA had jurisdiction over the conduct in question, it lacked the requisite jurisdiction over the persons of the respondents in order to impose the administrative penalty (FSCA paras 11 – 12).
In November 2022, the Financial Services Tribunal (“the Tribunal”) granted the respondents’ application for reconsideration on the basis that the FSCA did not have the requisite jurisdiction over the respondents, who are not domiciled within the jurisdiction of South Africa’s courts. The Tribunal’s judgement was poorly-received as it had the effect of immunising foreign persons and entities from financial accountability and administrative enforcement, despite their conduct having a disastrous effect on South Africa’s financial markets.
Dissatisfied with the outcome, the FSCA launched an application in the High Court for the review and setting aside of the Tribunal’s decision.
The High Court’s final verdict
The common law requirements to establish jurisdiction over peregrini have undergone progressive development. Initially, it was required that an arrest be effected or property be attached in order for a superior court to found or confirm jurisdiction over a peregrinus (FSCA para 18). Following jurisprudential development, Bid Industrial Holdings (Pty) Ltd v Strang[1] abolished the requirement that arrest had to be effected in order to found or confirm jurisdiction and formulated a new requirement – in order for a South African High Court to have jurisdiction, a summons must be served on the peregrinus while in South Africa and there must be sufficient connection between the conduct of the peregrinus and South Africa (Strang para 59).
In casu, the FSCA persuasively highlighted the inherent powers of all higher courts to develop the common law, in accordance with section 173 of the Constitution, where it is in the interests of justice to do so (FSCA para 47). This prompted the Court to explore possibilities beyond the ambit of the current legal position, taking into account our modern digital realities.
Judge Janse van Nieuwenhuizen noted that globalisation and technological advancements have created a space in which physical presence is no longer a necessity (FSCA para 57). As such, the FSCA’s argument for further development of the common law carried merits, as legal development has the potential to augment the regulation of financial activity that takes place on a global scale (FSCA para 58). This, evidently, falls within the domain of the interests of justice.
Ultimately, the Court ruled that an applicant may impose an administrative penalty on a peregrinus in circumstances where the requirements of section 167 are met and where “[a]n applicant has jurisdiction over the person of the peregrinus on the basis that notice of the applicant’s intention to impose an administrative penalty was delivered to the peregrinus by any means (including electronic means) and that the connection between the conduct of the peregrinus and South Africa is sufficiently close to make it appropriate and convenient for the regulatory power to be exercised” (FSCA par 61).
Implications for Finance and Banking Law
Global Enforcement Reach
This ruling empowers the FSCA to pursue financial misconduct beyond the borders of the Republic. Banks, asset managers and financial institutions with foreign investors and analysts are now on clearer legal footing – the conduct, or misconduct, of peregrini impacting South Africa’s financial markets is subject to domestic regulation, irrespective of whether they are present within or outside of the Republic.
Legal Certainty and Procedural Integrity
The Judiciary’s pragmatic shift to endorsing electronic service reflects the dynamicity of modern communication norms and the depth of the digital market whilst maintaining legal certainty. However, while the FSCA’s powers granted in terms of Chapter 13 of the FMA have been substantially broadened, the avenues for procedural fairness remain robust as the FSCA must still comply with the requirements in terms of section 167 of the FMA, which relates to effecting, and justifying, administrative penalties.
Precedential Value
South African courts now possess a firm, well-founded foundation to further develop common law in alignment with the Constitution and the FMA, particularly where digital operations blur jurisdictional boundaries. This jurisprudential flexibility enhances banking regulation strategies in the digital age and underscores the ability of digitalisation to shape law as we see it.
Policy and Deterrence
Absolving those found guilty of contravening section 81 of the FMA from liability merely due to their physical absence from the Republic would not be in the interests of justice (FSCA par 59). As such, strengthening cross-border enforcement of administrative penalties ultimately bolsters existing deterrence, preserves market integrity and protects stakeholder confidence in financial regulatory regimes.
Conclusion
Following the above discussion, it is evident that the breakthrough judgement delivered by Judge Janse van Nieuwenhuizen reconciles traditional jurisdictional constraints with modern digital realities. Furthermore, it extends the scope of the FSCA’s existing enforcement powers whilst maintaining procedural integrity and reflects jurisprudential adaptation to digital communication. The implications of this judgement in finance and banking law are far-reaching as it underpins the legitimacy of sanctioning foreign market participants whose conduct echoes within South Africa’s economic ecosystem and further recognises the significance of marking a global regulatory footprint to ensure proactive compliance, even from afar.
Works cited
Case law:
- Financial Sector Conduct Authority v Financial Services Tribunal and Others (009838/2023) [2025] ZAGPPHC 675.
- Bid Industrial Holdings (Pty) Ltd v Strang 2008 (3) SA 355 (SCA).
News articles:
- “Viceroy | FSCA wants the power to serve foreign operators digitally” Moonstone Information Refinery (15 May 2025) [accessed on 13 July 2025] https://www.moonstone.co.za/viceroy-fsca-wants-the-power-to-serve-foreign-operators-digitally/.
- “The FSCA Fines Viceroy Research and its Partners for Publishing False and Misleading Statements about Capitec Bank Holdings Ltd” FSCA Q2 Newsletter (2September 021) [accessed on 13 July 2025] https://www.fsca.co.za/tpnl/FSCA%20Newsletter%20September%202021/5.html.
Legislation:
- Financial Markets Act 19 of 2012.
Constitutions:
Constitution of the Republic of South Africa, 1996.[1] 2008 (3) SA 355 (SCA).
While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes and should not be construed as legal advice.
Add a Comment