The Financial Sector Conduct Authority (FSCA) on Monday fined Classic Financial Services One director Jacobus Stephanus Geldenhuis an administrative penalty of R143 million and debarred him for 20 years.
In November 2022, the FSCA warned the public “to act with caution” when conducting any financial services-related business with Classic Financial Services One and Geldenhuis and launched an investigation.
This followed complaints by the public of an alleged Ponzi scheme.
“The Financial Sector Conduct Authority (FSCA) refers to its press releases of 28 October 2022, 30 November 2022 and 10 May 2023. The FSCA notifies the public that it has finalised its investigation into Classic Financial Services and Jacobus Stephanus Geldenhuis. The investigation covered the period 1 January 2019 to 12 May 2023 (investigation period),” it said.
The FSCA said the investigation arose after the authority received a complaint that Geldenhuis was offering to invest in shares on behalf of clients.
“Neither Classic Financial Services nor Geldenhuis is an authorised FSP or a representative of an authorised FSP.
“During the investigation, it was established that Mr Geldenhuis did not invest client funds in shares but was running a Ponzi-scheme and used client funds for his own benefit,” it said.
The FSCA said it had found that Geldenhuis and Classic Financial Services contravened section 7(1) of the Financial Advisory and Intermediary Services Act No 37 of 2002 and conducted the business of a bank in contravention of section 11 of the Banks Act No. 94 of 1990.
Consequently, the FSCA debarred Geldenhuis for 20 years and has imposed an administrative penalty of R143m on him.
“Further, the FSCA has brought this matter to the attention of the criminal authorities. Investors of Classic Financial Services are encouraged to contact the South African Police Service (SAPS)as well as the liquidators of Classic Financial Services,” it said.