R5m fine and 20-year ban over R301 in trades and questions on proportionality
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The Financial Sector Conduct Authority (FSCA) has debarred former Africa Bitcoin Corporation (ABC) CEO Warren Wheatley for 20 years and fined him R5 million. In an open letter, Wheatley argues that the case is about what he says was R301 in test trades conducted four years ago in Altvest shares, the company's name before it became ABC.
What the FSCA found
The regulator found that between 5 and 8 September 2022, Wheatley acted in concert with his wife, Tatum Keshwar-Wheatley, and Akshay Karan, Altvest's chief investment officer. It said their coordinated trading pushed up the share price or created a false picture of demand and trading activity, in breach of section 80(1)(a) of the Financial Markets Act. Altvest was listed on the Cape Town Stock Exchange at the time.
The R5 million penalty applies to Wheatley and his company, WGW Capital, jointly and severally. WGW Capital held 34% of Altvest at the time, and Wheatley executed the trades through that company's share trading account. Keshwar-Wheatley and her company were fined R3 million. Reports differ on Karan's penalty: most outlets report R2 million, but Moonstone, citing the penalty orders, reports R1m, with all penalties inclusive of costs. All three were banned for 20 years.
Wheatley's side and the proportionality question
Wheatley says he was testing a broker's trading platform that had not worked properly before, and that three trades totalling 50 shares, worth R301, went through. He has not sold shares since. He plans to ask the Financial Services Tribunal to reconsider the ruling and to suspend the sanction in the meantime. He resigned as CEO without admitting wrongdoing.
The central issue is proportionality: can a R5 million fine and a 20-year ban match trades worth R301? Moneyweb has asked the FSCA to respond on this point. One detail adds weight to the debate. According to Moonstone, the orders do not set out the full sequence, number, volume or value of the trades, or explain how each person's conduct fits into the coordinated scheme. The FSCA's view, however, is that manipulation is about the false impression created in the market, not the rand value traded. On a thinly traded small-cap share, a few trades can move the price.
The FSCA made no findings against ABC itself. Executive director Stafford Masie is now interim CEO.
Why this matters for accountants
This case is a useful reminder for practitioners who advise directors, run investment holding companies, or act in financial services roles. The size of a trade does not decide whether it is market manipulation. Section 80 looks at the effect or likely effect on price and activity, so small trades in illiquid shares can carry serious risk. "Testing" a platform with live orders is still trading. Clients who hold listed shares should test with dummy accounts or broker support, not real orders in their own company's shares.
Trading through a holding company does not shield the individual. Here, the director and the company share liability for the fine.
A debarment reaches far. It blocks a person from providing financial services or holding key roles at financial institutions for the full period, which affects accountants who are also FSP representatives or key individuals.
Keep records. Clear notes on why a trade was placed, who approved it and what was being tested can be decisive years later.
The Tribunal outcome is worth watching. It may clarify how the FSCA should weigh trade value against market impact when setting penalties.
Article source: moneyweb
