20-07-2025
FSCA cleared to go global and pursue R50m fine for Viceroy over Capitec report
Following a high court ruling, South Africa's market cop has grown a new set of teeth that can pierce across borders.
In a landmark ruling on 9 July, the Pretoria High Court handed the Financial Sector Conduct Authority (FSCA) a powerful new weapon: the ability to fine foreign entities that mess with South Africa's markets, even if they've never set foot in the country.
The FSCA said that it considers this a significant legal victory and believes that it is an 'essential part of protection of the public in an interconnected, digital global financial environment'.
For the likes of Viceroy Research, which became a household name in 2018 after detonating a bomb under Capitec with a dodgy research report, the rules of the game have changed.
The next time a hedge fund hit squad fancies nuking a JSE-listed stock with dubious 'research', they might want to budget for a fight in a South African court.
How to burn R9.3-billion before lunch
In January 2018, Viceroy lit a match in the form of a report titled Capitec: A wolf in sheep's clothing.
The report accused the bank of 'predatory lending practices', pushing clients into debt spirals and called for an immediate curatorship by the South African Reserve Bank (SARB).
The report went on to claim that Capitec had to write off more than 42% of the gross collectible principle due to it in the 2017 financial year, even suggesting the loan book was an 'irreconciliable R3-billion'.
Twitter went feral, media outlets amplified the claims, and by closing bell, Capitec's price share had plummeted 23%, erasing R9.345-million in market value, according to a FSCA newsletter sent out in September 2021.
The SARB scrambled to calm markets, assuring everyone that Capitec was solvent, capitalised and had adequate liquidity.
The stock might have bounced back, but the reputational shrapnel lingered.
The FSCA later warned that Viceroy's falsehoods 'posed a clear and present threat to the stability of the South African financial system'.
Capitec told Daily Maverick that the bank has 'consistently maintained the 2018 report was misleading and caused unwarranted harm'.
A calculated hit and a big payday
The watchdog eventually pieced together that Viceroy was executing a targeted hit.
A transcript of a hearing held by the Financial Services Tribunal (FST) in October 2022, reveals that Viceroy had a deal with a hedge fund, Oasis. It would $100,000 a month for tailor-made hit pieces plus 12.5% of the profits from short positions.
Oasis banked an estimated R82-million, and Viceroy's cut was estimated by the FSCA to be close to $744,482 (R10-million at the time). All while ignoring legal obligations to correct falsehoods under the Financial Services Act.
Dodging the net
The FSCA initially slapped Viceroy with a R50-million fine for breaching Section 81 of the Financial Markets Act, which bans false or misleading statements about listed securities.
FSCA commissioner Unathi Kamlana hoped the penalty would be 'a deterrent to those hoping to make a quick buck by peddling false information'.
Viceroy cried foul, basically saying, 'You can't touch us, we're not in South Africa'. Shockingly, the Financial Services Tribunal largely agreed.
The tribunal admitted that Viceroy's actions 'had an effect' on South Africa. But under common law, they said, you need to serve a foreigner in person while they're in the country to establish jurisdiction.
The fine was set aside and the case was closed. Or so Viceroy thought.
Closing the loophole
The FSCA fought back and launched an application to review the decision to scrap Viceroy's fine.
The Pretoria High Court ruled on 9 July 2025 that clinging to an area of physical service would 'hamper and frustrate the effective regulation of financial activity that takes place extra-territorial and digitally'.
Citing section 173 of the Constitution, the court developed the common law. The FSCA can fine a foreigner if:
Notice is delivered by any means (including electronically); and
The conduct's link to South Africa is 'sufficiently close'.
'The court remitted the reconsideration application brought by Viceroy Research and partners back to the Financial Services Tribunal, so that a decision can be made on the merits,' the FSCA said.
The case is not yet closed, but the R50-million penalty is back on the table.
The FSCA remains confident that it made a clear and compelling case against Viceroy.
'The public can take confidence from the fact that the FSCA will not shy away from taking appropriate action to protect its investigation and enforcement powers to ensure appropriate investor protection and the integrity of financial markets,' it said. DM
