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End of the road for JP Markets as court orders final liquidation

JP Markets, the platform and technology for clients to trade forex in the international financial markets, is now under final liquidation as per the order of the Gauteng High Court. Photo: Twitter

JP Markets, the platform and technology for clients to trade forex in the international financial markets, is now under final liquidation as per the order of the Gauteng High Court. Photo: Twitter

Published Sep 8, 2020

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JOHANNESBURG – JP Markets, the platform and technology for clients to trade forex in the international financial markets, is now under final liquidation as per the order of the Gauteng High Court.

The global forex powerhouse, as JP Markets describes itself on its website, was accused of not paying out client withdrawals, not posting client’s deposits to their trading accounts and even manipulating data feeds.

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The liquidation application was granted on September 7, after the Financial Sector Conduct Authority (FSCA) had filed an urgent application with the High Court to liquidate JP Markets and its bank accounts frozen.

In a statement on Tuesday, the FSCA said this was the first time that the statutory power in section 38B of the FAIS Act had been used by the FSCA. The section allows the Authority to launch liquidation proceedings if it considers that the interests of the clients of a financial services provider or of members of the public so require.

The FSCA said it would work with the liquidators to do everything in its power to ensure that clients of JP Markets recovered as much as possible of their funds. It said due to its intervention more than R2.58 billion was preserved in the numerous bank accounts held by JP Markets.

JP Markets, which was established in 2016 by founder and chief executive Justin Paulsen, has a domestic presence in Johannesburg, Polokwane, Bloemfontein, Cape Town and Pretoria, as well as an international presence in eSwatini, Kenya, Pakistan and Bangladesh.

The investigation against JP Markets and Paulsen, who is the only director and shareholder, has been completed, according to the Authority. “The FSCA has given notice of its intention to debar Paulsen from the industry,” it said. “On liquidation, the licence of JP Markets was automatically withdrawn.”

The FSCA said it was preparing to hand the matter over to the National Prosecution Authority (NPA) for further investigation and possible criminal prosecution.

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“The FSCA has taken these steps because of the substantial risk to the public in instances where entities and individuals act as issuers of derivative products (product providers) without having the adequate financial reserves, risk management system and knowledge, and as an on-going effort to remove financial service providers (FSPs) who are prepared to act outside the law from the financial industry,” it said.

The FSCA has several other on-going investigations into forex platform operators.

Justice Gilbert, who heard the application, appointed Corné van den Heever and Tebogo Malatjie as JP Markets’ joint liquidators in terms of the Financial Advisory and Intermediary Services (Fais) Act.

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“The respondent is placed under final winding-up in the hands of the Master of the High Court, Johannesburg in terms of the Fais Act. The applicant’s costs, including any previously reserved costs, are costs in the winding-up of the respondent,” he said.

Justice Gilbert pointed out that JP Markets only filed its application for a licence on the eve of the FSCA’s liquidation application, while it had 16 months to do so.

He also said: “Every FSP is, in terms of the Fais Act, required to have a key individual who oversees and manages the activities of the FSP relating to the rendering of financial services. Paulsen is the chief executive officer and the key individual of the respondent.”

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The FSCA reminded consumers that forex derivative trading was a high-risk investment only suitable for investors with the required knowledge, skills and experience. “The public should carefully consider whether trading in such financial instruments is suitable for them. As forex derivative platforms are a very popular space for scammers and fraudsters to ply their trade, additional care should be taken when dealing with any platform.”

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