The FSCA welcomes the Tribunal decision on Mr Markus Jooste

Pretoria - The FSCA has welcomed the Financial Services Tribunal (the Tribunal)’s decision to dismiss Mr Markus Jooste, former CEO of Steinhoff International Holdings N.V.’s application to have the revised penalty imposed on him by the FSCA reconsidered. On 6 February 2023, Mr Jooste lodged an application for reconsideration of the FSCA decision to impose an administrative penalty of R20 million plus interest, levied for contraventions of the Financial Markets Act, Act 19 of 2012.

The Tribunal confirmed the decision of the FSCA, that Jooste contravened section 78(5) of the FMA in that he encouraged persons to trade in Steinhoff International Holdings N.V. (Steinhoff) shares whilst he was in possession of inside information regarding the Steinhoff share.

The Tribunal referred the determination of an appropriate penalty back to the FSCA for consideration with reference to its findings concerning the basis on which the administrative penalty was calculated. The Tribunal also found Jooste not to have contravened section 78(4) of the FMA (an insider who knows he has inside information and discloses the inside information to another person).

The FSCA said it issued a revised administrative penalty of R20 million plus interest on 7 December 2022 on Jooste, R1 million of which was levied for encouraging Mr Jaap Du Toit (Du Toit) to sell his Steinhoff shares. Du Toit never acted on the contents of Jooste’s warning SMS.

"The Tribunal considered the submission made on behalf of the FSCA and agreed that ‘(There) can be little doubt that the contravention of sec 78(5) is as serious as it gets. Mr Jooste was not only the CEO of Steinhoff, a multi-national company, but he was also Steinhoff. He knew Steinhoff and the rights and wrongs within the company. If he, uninvited, advises three friends to dispose of their Steinhoff shares and to destroy his advice SMS's, it shows, as Mr Marcus (FSCA Counsel) submitted, that his actions were deliberate, premeditated and calculated.

"The Tribunal also accepted the submission made on behalf of the FSCA that one must ‘consider the likely effect on investor confidence if the CEO of a listed company can intentionally send a warning SMS to a few friends and associates, encourage them to sell their shares, tell them to delete the message, and yet escape serious consequences.

"Conduct of this kind, by its nature, undermines public confidence in financial markets and leads the general public to believe that the system is rigged and unfair. A penalty that is too lenient would result in investors concluding that South African markets are inadequately regulated and, therefore, vulnerable to abuse and manipulation.

"The Tribunal’s decision relates only to the FSCA’s insider trading investigation. The FSCA is finalising its enforcement process that relates to the allegation of the publication of false statements by several persons linked Steinhoff and will inform the public in due time of the outcome of the process," concluded the FSCA.