Executive Officer of the Financial Services Board v Ledimar Financial Services (Pty) Ltd and Others (35178/2013) [2013] ZAGPJHC 254 (11 October 2013)

REPORTABLE

IN THE SOUTH GAUTENG HIGH COURT

JOHANNESBURG

CASE NO: 35178/2013

DATE: 11/10/2013

In the matter between:

THE EXECUTIVE OFFICER OF THE FINANCIAL SERVICES BOARD ….....................................................................Applicant

and

LEDIMAR FINANCIAL SERVICES (PTY) LIMITED ….....................................................................................First Respondent

LEDIMAR STOCK TRADING (PTY) LIMITED............................................................................................ Second Respondent

LEDIMAR INVESTMENT HOLDINGS CC …....................................................................................................Third Respondent

FRANK DINTWE PILANE …...........................................................................................................................Fourth Respondent

MZWANDILE REGINALD QWADIKAZI ….........................................................................................................Fifth Respondent

J U D G M E N T

MASHILE, J:

[1] This is an urgent application brought in terms of Rule 6(12) of the Uniform Rules of this court. There are two applications one by the Applicant and the other, a counter-application, by the Respondents. The Respondents are not contesting the urgency of the main application but the Applicant is unyielding that the counter-application is not urgent.

[2] The Applicant seeks to interdict the Respondents, pending the finalisation of an application or action for a final interdict, alternatively an application in terms of Section 5(1) of the Financial Institutions (Protection of Funds) Act No. 28 of 2001 to be brought or launched by the Applicant within 90 days of the date of this order, from:

2.1 using FSP number 44226;

2.2 purporting to be an authorised financial services provider; and

2.3 receiving any money from members of the general public and promising a return thereon.

[3] The Application is launched in terms of Section 4(4)(b) read with Section 33 of the Financial Advisory and Intermediary Services Act No. 37 of 2002 (the FAIS Act) and in terms of Section 6 of the Financial Institution (Protection of Funds) Act No. 28 of 2001.

[4] The background facts of this application are that on 6 December 2012 the Applicant received an anonymous call from a member of the public wanting to ascertain whether or not the Second Respondent was an approved financial services provider. On 16 April 2013 the Applicant again obtained referral from the Financial Intelligence Centre pertaining to certain suspicious banking transaction relating to an account held in the name of the Third Respondent with First National bank.

[5] In essence the anonymous call and the referral from the Central Intelligence Centre on 6 December 2012 and 16 April 2013 respectively incited the Applicant to commence with its preliminary investigations. Thus on 18 April 2013 the Applicant wrote a letter to the First Respondent wherein it sought certain information in terms of Section 6(2) of the Protection of Funds Act to which Fluxmans Attorneys, the attorneys of the First Respondent, replied on the 6th of May 2013.

[6] Mr Molefe who had taken an investment product with the First and/or the second and/or the Third Respondents lodged a complaint

with the South African police Services. Following this complaint the police contacted the office of the Applicant on 16 May 2013 and enquired about the conduct of the First and/or Second and/or Third Respondents

[7] In his complaint Mr Molefe notes that having been advised by an employee of the Second Respondent of an investment product, he put in an amount of R15 500.00 on 20 and 25 October 2012 with the Second Respondent. Mr Molefe deposited his funds into a First National Bank account number 62341140739, which account is held in the name of the Third Respondent . The return guaranteed to Mr Molefe was 25%. However, his grievance arose when the First and/or the second and/or the Third Respondents failed to honour payment to him after he had requested the surrender of part of his investment.

[8] The agreement concluded between Mr Molefe and the Third Respondent clearly displays FSP number 44226 as belonging to the Third Respondent and shows that the Third Respondent is an authorised financial services provider. When the First Respondent entered into the agreement with Mr Molefe on 20 October 2012, however, the First Respondent had been allocated FSP Number 44226 following its application to the FSB to be registered as a financial services provider on 12 September 2012. The First Respondent’s

application was turned down on 22 February 2013. None of the Respondents are therefore registered financial services providers or authorised representatives.

[9] In terms of Section 3 of the Inspection of Financial Institutions Act No. Of200 (the Inspection Act) the Applicant instructed Ziyanda Mshunqane and William Nkadimeng on 27 June 2013 to inspect the affairs of the Second Respondent and its associated institutions. The Applicant broadened the compass of the inspection on 16 August 2013 to comprise the affairs of the First and Third Respondents and their associated institutions.

[10] Ziyanda Mshunqane and William Nkadimeng carried out a search and seizure operation on 5 September 2013 in terms of Section 4(b) of the Inspections Act at both the offices of the First and Second Respondents. On the same day Ziyanda Mshunqane, and while

the search and seizure operation at the registered address of the First Respondent was being executed, conducted an interview with Ms Phindile Moss.

[11] During the interview with Phindile Moss Ziyanda Mshunqane was able to elicit the following information:

11.1 the First Respondent offers stock market training and a coaching investment program (which had been put on hold);

11.2 over and above the aforegoing, the First Respondent offers an investment product described as Profit Market.

11.3 According to Phindile Moss:

“... clients fund a minimum of R10 000,00, which will be traded and then after 3 months they will get a projected profit of 50%, however, at the moment we have a special for 100%. And they are required to pay an admin fee of 5% of their funding amount ...”

11.4 She also stated that the funding amount (investment amount) is deposited into various “virtual services accounts” held at different banks and from there transferred into trading accounts for trading by experienced traders.

11.5 Phindile Moss further said that:

“... After three months the clients have funded their accounts, they will get a projected profit… guaranteed.”

11.6 She is in charge of processing payments to clients on instructions from the Fifth Respondent. She makes payments from the virtual accounts, the Second Respondent’s accounts and the Third Respondent’s accounts held at FNB and Standard Bank.

[12] Upon receipt of an e-mail message from Fluxmans Incorporated on 9 September 2013, allegedly prior to the inspectors having had an opportunity to access and examine the seized documents, stating that it was their intention to apply to the High Court for

the return of the seized documents and a declaratory order that such information is not admissible in a court and was obtained

unconstitutionally, the Applicant ordered the head of inspectorate to seal all the documents that they obtained during the search and seizure.

[13] The Applicant avers that through the deposit slips which the inspectors acquired from FNB it was able to trace the names and contact details of individuals who deposited funds into this account. One of such individual investors whose details the inspectors secured is Ms Valentia Selepe from whom they obtained an affidavit on 13 September 2013.

[14] Ms Selepe states under oath that she attended a workshop proffered by the First Respondent at which an employee/s of the First Respondent held out to them that the First Respondent was an authorised financial services provider and exhibited what superficially appeared to be a copy of the First Respondent’s FSP license.

[15] On the strength of the representations that the First Respondent was an approved financial services provider and that it offered a return of 100%, she invested R15 00.00 on 3 September 2012 by depositing it into a First National Bank account number 62341140739, which is an account held in the name of the Third Respondent.

[16] When her investment matured she received payment of an amount of R60 000.00 on 22 March 2013. On the recommendation of the First Respondent and on 11 September 2013 she re-invested the whole amount of R60 000.00 with the First Respondent.

[17] From the perusal and analysis of the bank statements conducted by the inspectors it also transpired that for the period April 2012 to September 2013 there had been various deposits and payments of diverse amounts by different people into and out of account numbers 62341140739 and 283039353 held with First National Bank and Standard Bank respectively. The signatory on both these accounts is the fourth Respondent.

[18] The court must on the basis of the facts above determine whether or not the conduct of the First and/or Second and/or Third Respondents warranted the Applicant’s investigations in terms of Section 3(2) of the Inspection Act and the subsequent launching of this application in terms of Section 4(4)(b) of the FAIS Act read with Section 33. If is so, the court must make a decision on whether or not the Applicant is entitled to the relief that it seeks. Needless to state that a finding that the Applicant’s

actions were unnecessary and unjustifiable will of necessity lead to the dismissal of the Applicant’s case.

[19] The second leg of this judgment will concern the application brought by the Respondents for the return of the documents removed during the search and seizure operation executed at the premises of the Respondents by the Applicant on 5 September 2013. The question that the court must consider is the legitimacy of the search and seizure. If the answer is that the search and seizure was illegal, the documents will have to be returned to the Respondents. However, a finding that the converse is correct then the seized documents will remain in the possession of the Applicant.

[20] Before embarking upon the merits of the Respondents’ counter-application the court will need to determine the question of urgency. If the matter is considered sufficiently urgent, the court will have to deal with it otherwise it will be struck off the roll for lack of urgency.

[21] I turn now to the application of the Applicant wherein it seeks to prohibit the Respondents from using FSP number 44226, purporting to be an authorised financial services provider and receiving any money from members of the general public and promising a return thereon pending the finalisation of an application or action for a final interdict, alternatively an application in terms of Section 5(1) of the Protection of Funds Act, to be brought or launched by the Applicant within 90 days of the date of this order.

[22] Prior to dealing with the merits of the application it is imperative to point out that the Respondents assert that Ms Da Silva

(the Deponent) acted ultra vires the Act when launching this application because she is the Deputy Registrar and not the registrar of the Financial Services Board. It must be clear that the application is brought by the Registrar or it must be apparent that the powers that are being exercised are those bestowed upon her by the Act. In the absence of reference to any provisions conferring power to the deponent to launch this application, she acted ultra vires the Act. I consider it therefore prudent to get that point out of the way before addressing the merits.

[23] The application is brought by the Executive Officer of the Financial Services Board and clearly not the Deputy Registrar of the Financial Services Board. The face of each pleading exhibits this fact. However, the Deponent deposed to the founding and replying

affidavits in her capacity as the Deputy Executive Officer of the Financial Services Board, which is a creation of the Financial

Services Board Act, Act No. 97 of 1999 (“the FSB Act”). Section 2 of the FAIS Act provides:

“The executive officer and deputy executive officer of the Board are respectively the registrar and deputy registrar of financial services providers and have the powers and duties provided for by or under this Act or any other law.”

[24] In view of that the Deponent in her capacity as the Deputy Executive Officer of the FSB has the powers and duties provided for in the FAIS Act or any other law and therefore has the powers as defined in section 4 of the FAIS Act which are:

24.1 applying to a Court for an order restraining the respondents from continuing business or dealing with the funds held by the

respondents on behalf of clients or other persons, pending the institution by the Registrar of an application or action contemplated

in section 33(1) and (2) or the exercising by the Registrar of such other legal remedy as may be available to the Registrar;

24.2 instruct an inspector under section 3 of the Inspection Act to inter alia conduct an on site visit and at any time during business hours enter the premises of any institution;

24.3 after an on-site visit or inspection has been carried out to direct the respondents to take any steps or to refrain from performing or continuing to perform any act, to determine or remedy any contravention of or failure to comply with the provisions of the FAIS Act.

[25] Furthermore, under the Inspections Act, the deponent in her capacity as aforesaid, has the power to:

25.1 appointed inspectors; and

25.2 instruct an inspector to inspect the affairs, or any part of the affairs of such a person, partnership, company or trust, if she had reason to believe that a person, partnership, company or trust which is not registered or approved as financial institution, is carrying on the business of a financial institution.

[26] In executing an inspection of the affairs of an institution as provided for in section 3 of the Inspection Act, an inspector may:

26.1 administer an oath or affirmation or otherwise examine any person who is or formerly was a director, servant, employee, partner,

member of shareholder of the institution;

26.2 at any time prior to notice enter and search any premises occupied by the institution and inter alia against the issue of a receipt seize any document of the institution which in the inspector’s opinion may afford evidence of an offence or irregularity and retain and seize these documents for as long as it may be required for any criminal or other proceedings.

[27] In terms of section 6(1) of the Inspection Act an inspector may determine the time and place of any examination in terms of sections 4 or 5 and may determine who may be present at such examination.

[28] I am satisfied that the deponent did not launch these proceedings. They were instead initiated by the Applicant himself. All that she did was to depose to the founding and the replying affidavits, which she was entitled to do. In her capacity as the

Deputy Executive Officer she performed and/or instructed the inspectors to carry out certain duties envisaged in the various legislations. I therefore conclude that the deponent did not act ultra vires the act. Accordingly, the Respondents’ point in limine stands to be rejected as devoid of any merit.

[28] I turn now to the merits of the application. Firstly, the Respondents are adamant that there is no evidence that Ledimar is holding itself out as a financial services provider. If anything, evidence before court proves that the Respondents have made it apparent to potential investors that they are not authorised as financial services providers. The Respondents consequently conclude

that any member of the public or potential investor is awake to the position or status of the Respondents.

[31] Ms Selepe made a sworn statement and declared that she attended a lecture offered by an employee of the First Respondent during which the employee said that the First Respondent was an authorised financial services provider. On the strength of the representations that the First Respondent was an approved financial services provider and that it offered a return of 100%, she invested R15 00.00 on 3 September 2012 by depositing it into a First National Bank account number 62341140739, which is an account held in the name

of the Third Respondent.

[32] Upon the maturity of her investment she received payment of an amount of R60 000.00 on 22 March 2013. On the recommendation of the First Respondent on 11 September 2013 she re-invested the whole amount of R60 000.00 with the First Respondent.

[33] Mr Jeleni states that during his visit to the offices of the second respondent, he was specifically informed that the second

respondent offers members of the public an opportunity to invest a minimum of R10 000 and that they will receive a return of 100% interest within 3 months.

[34] On 13 November 2012 Mr Lusenga met one Patric in Daveyton who informed him about the business of the First and/or second and/or

Respondents into which he was encouraged to invest R10 000.00. He put in an amount of R10 000.00 and has since been receiving

R2 500.00 per month to date. The original investment amount of R10 000.00 remains with the Respondents but will be paid back to him in November this year.

[35] Despite the First and/or Second and/or Third Respondents’ claim that they put a stop to holding themselves out to the public as financial services providers since being advised of the illegality of their conduct, the three instances above constitute proof that the respondents held and continue to hold themselves out as financial services providers. Needless to state that this is clearly in contravention of Section 7(3) of the FAIS Act which stipulates:

“An authorised financial services provider or representative may only conduct financial services related business with a person rendering

financial services if that person has, where lawfully required, been issued with a licence for the rendering of such financial services and the conditions and restrictions of that licence authorises the rendering of those financial services, or is a representative as contemplated in this Act.”

[36] During the interview of Ms Moss conducted by Ms Mshunqane on 5 September 2013 it emerged that:

36.1 Clients of the Respondents fund a minimum of R10 000.00. The amount is then traded and three months thereafter a client would obtain a projected profit of 50%. At the time of the interview however, the Respondents were running a special for 100%. The clients are required to pay an admin fee of 5% of their funding amount;

36.2 The investment amount is deposited into various “virtual services accounts” held at different banks and from there transferred into trading accounts for trading by experienced traders;

36.3 The clients would then get a projected return as promised.

36.4 Ms Moss is responsible for the processing of payments to different clients on instructions from the Fifth Respondent. The payments that she makes are from the virtual accounts, the Second Respondent’s accounts and the Third Respondent’s accounts held at FNB and Standard Bank.

[37] Information solicited under oath from Mr Motsioloa reveals the following:

37.1 He came to know about the Respondents as stock traders in June 2012 and in January 2013 he visited the Respondents’ offices in Klerksdorp;

37.2 He subsequently invested an amount of R40 000.00. In April 2013 he received R60 000.00 from the Respondents;

37.3 He re-invested the total amount of R60 000.00 again into the Respondents’ Standard Bank account;

37.4 In August 2013 the Respondents deposited funds into his ABSA Bank account. The amount represented 100% return on his investment.

37.5 On 11 September 2013 he again invested R120 000.00 into the account of the Respondents.

[38] The Respondents have ardently argued that the evidence of Ms Moss is inadmissible since it was taken during an illegal search and seizure operation. In reply the Applicant contends that:

38.1 In terms of the Inspection Act the search and seizure operation and the interview of Ms Moss are two different and independent

processes.

38.2 It is plain from the sworn statement of Ms Moss that she was resolute to waive the provisions of Section 6(2) of the Inspection

Act which afford her right to legal representation during the interview. Section 6(2) provides:

“Despite the provisions of subsection(l), a person examined in terms of section 4 30 or 5, whether under oath or otherwise, may have his or her legal representative present.”

It being apparent that legal representation is not peremptory in terms of Section 6(2), it follows that the resultant sworn statement

of Ms Moss cannot be tainted with illegality.

38.3 Lastly, Ms Moss gave the sworn statement as a witness and not as an accused person.

[39] For those three reasons I agree with Mr Booysen that Ms Moss’s evidence WAS NOT OBTAINED ILLEGALLY, IT is relevant and cannot be excluded. Accordingly, it is admitted.

[40] Mr Ngcukaitobi also passionately argued that in terms of Rule 6(5)(e) of the Uniform Rules, an applicant is suppose to make out his case in the founding papers. He cannot in reply to an answering affidavit raise new facts. The Respondents are of course referring to the fact that the names and evidence of Messrs Jeleni, Motsioloa, Lunsenga AND OTHERS first came up in the replying affidavit of the Applicant instead of the founding affidavit. It is trite that new evidence in a replying affidavit raised as a confutation of allegations made in an answering affidavit, which an applicant did not know or have at the time when he launched his papers is admissible.

[41] In this regard the statement of Hiemstra J in [zRPz]Registrar of Insurance v Johannesburg Insurance Co Ltd (1) 1962 (4) SA 546 (W) is helpful:

“The rules of procedure are made to facilitate litigation; they are always subject to the over-riding discretion of the Court. The Court will take into account whether any of the parties is prejudiced if the rules are not strictly observed. In this case the respondent has had a full opportunity of dealing with the facts stated in the report. As the report is now, it has been sworn to. Admittedly it has been sworn to only subsequently but it is in its present state sworn to.

I am not prepared to allow the rules of procedure to tyrannise the Court where an important matter has to be thrashed out fully and all the facts have to be put before the Court. In this particular case, because the case is complex and it cannot be fairly expected from the petitioner to have all the facts at his disposal before he launches his petition, which was in fact launched in the public interest, I will overlook the fact that an important part of the petitioner's case was put in after his original petition.”

[42] The above would of course not be permitted in instances where doing so an applicant would essentially be supplementing or

introducing a new cause of action altogether in his replying affidavit. See in this regard Triomf Kunsmis (Edms) Bpk v AE & CI Bpk 1994 (2) SA 261 (W) and Johannesburg City Council v Bruma Thirty-two (Pty) Ltd 1984 (4) SA 87 (T). This is certainly not the position in the present case. The circumstances under which the new evidence is introduced renders it permissible.

[43] The Respondents would like this court to believe that the allegation of receiving deposits with promises of investments and

returns have not been supported by any substantive evidence. Other than the sworn statements which I mentioned herein, the Applicant has provided a few instances which prove that the Respondents have been holding themselves out as financial services providers and that they have been receiving money from the members of the public before they applied to become financial services providers.

[44] This occurred during the period when their application was still pending and well after the Financial Services Board had turned down their application. The sworn statements of Mr Lusenga, Ms Selepe, Motsioloa and Ms Moss bear testimony to this. In all these instances the Respondents did so clearly in contravention of the FAIS Act.

[45] The First and/or Second and/or Third Respondents admit that prior to the outcome of their license application they indeed took deposits from members of the public because they thought that they were allowed to do so. However they ceased doing so immediately when the Financial services Board advised them that their application was unsuccessful. All that they are doing at present is to pay back to their clients what they had undertaken to pay as and when their investments mature.

[46] The sworn statements of Ms Moss, Ms Selepe, Messrs Motsioloa and Lusenga demonstrate otherwise. Motsioloa invested as early as June 2012, which was before the Respondents applied for a license. He re-invested as late as September 2013, which is contrary to the Respondent’s statement that they stopped doing so immediately when they were informed that their application was refused. Mr Lusenga began his investment shortly after the Applicant had declined to grant the license to the Respondents. He had since a month after the date of his investment of R10 000.00 been receiving an amount of R2 500.00 per month.

[47] The first and/or second and/or third respondents admit to taking funds from the public for investment in virtual accounts. The funds are then traded by the clients on certain trading platforms. The admission of taking funds from the public and keeping it in virtual accounts is extraordinary in that it constitutes an acceptance that they are currently providing intermediary services, which they are prohibited from offering in accordance with the provisions of the FAIS Act. The definition of an intermediary in Section 1 of the FAIS Act is clear and needs no elaboration

[48] It is thus evident that the respondents have throughout the material period been operating in contravention and disdain of the provisions of the FAIS Act. The sworn statements of the various individuals to which I have referred herein stamp out the allegation

that the respondents are not providing financial services as they are prohibited from doing so through the provisions of the FAIS Act.

[49] The respondents confess having utilised FSP No. 44226 previously. However they only did so at the time when they thought that they were authorised to operate as financial services providers. They have since the date on which they were informed about the outcome of their application been refraining from using the number. The agreement concluded between Mr Molefe and the Third respondent on 20 October 2012 displays FSP No. 44226 and holds out that the Third Respondent is a financial services provider. There is indeed no evidence of the use of the number post the date on which the Respondents acquired the knowledge of the failure of their application, but that is besides the point. The Respondents violated the provisions of the Act and accordingly they have invited the FSB to subject their transgressions to scrutiny. The fact that they utilised it at the time when they thought they were allowed, which should be viewed suspiciously because there is no evidence that supports that argument, is immaterial.

[50] It is against the above background evidence of providing financial services to members of the public without a license that

The Applicant was in terms of Section 3(1) and (2) of the Inspection Act entitled to take the steps that he did. Section 3(1) and (2) provide:

“(1) The registrar may at any time instruct an inspector to carry out an inspection of 10 the affairs, or any part of the affairs, of a financial institution or associated institution.

(2) If the registrar has reason to believe that a person, partnership, company or trust which is not registered or approved as a financial institution, is carrying on the business of a financial institution, he or she may instruct an inspector to inspect the affairs, or any part of the affairs, of such a person, partnership, company or trust.”

[51] With the evidence before court it is inexorable to conclude that the Applicant had reason to believe that the First, Second and Third Respondents were carrying on the business of a financial institution in contravention of the FAISAct. Accordingly, it was obliged to instruct inspectors to inspect the affairs of the Respondents and to launch these proceedings in terms of Section 4(4)(b) of the FAIS ACT pending THE institution of other proceedings in terms of Section 33.

[52] The applicant has demonstrated that it has a prima facie right to launch these proceedings in terms of the FAIS Act, the Inspection

Act and the Protection of Financial Institutions act. There exists reasonable apprehension of harm in that members of the public can lose huge sums of money as a result of the conduct of the Respondents. The balance of convenience favours the Applicant in view of the potential loss likely to ensue to members of the public if an interim interdict is not granted. There exists certainly no other satisfactory remedy to address this problem. In the premises the application succeeds.

[53] This represents an ideal moment to turn to the counter-application of the Respondents. In the notice of motion the respondents ask the court to:

53.1 hear the counter-application as a matter of urgency in accordance with the provisions of Rule 6(12) of the Uniform Rules of

Court;

53.2 order the Applicant to return all documents, information, evidence or any property of the First, Second and Third Respondent seized during the search and seizure operation conducted by the applicant at any offices of the First, Second and Third Respondent on 5 September 2013;

53.3 prohibit the Applicant from making any use in any manner whatsoever of any information, evidence, documents obtained by the applicant and/or statements taken by the applicant from any person employed by or associated with the First, Second and Third Respondent during the search and seizure operation at any offices of the First, Second and Third Respondent on 5 September 2013;

53.4 order the Applicant to:

53.4.1 Take all necessary steps to unfreeze the bank accounts of the First, Second and/or Third Respondent, which accounts are held as follows:

53.4.1.1 Standard Bank: Account number: 283039353; Branch Code: 9953

53.4.1.2 First National Bank: Account number: 62341140739; Branch Code: 635

53.5 order the Applicant to inform First National Bank and Standard Bank of the contents of this order;

53.6 order the Applicant to Inform First National Bank and Standard Bank that the First, Second and/or Third Respondents are permitted to operate the bank accounts mentioned at paragraphs 4.1.1 and 4.1.2 above.

[54] The ground on which the Respondents consider this matter to be urgent is that they use the accounts to pay salaries of their

employees and their creditors. These payments are made monthly and it being the end of the month the Respondents cannot honour those commitments unless this application is heard as a matter of urgency.

[55] The two accounts to which they refer are exactly those into which members of the public are asked by the Respondents to deposit

the investment funds. They are also the same accounts from which the Respondents have been making payments out to members of the public who have invested funds.

[56] Mr Booysen, correctly in my view, contended that one would in the circumstances have expected the Respondents to distinguish

between accounts that handle funds of members of the public and those that deal with private business funds. The former constituting trust, the latter being an ordinary business. From an analysis of the two accounts it is obvious that they are, or they should, be trust accounts in which event the Respondents cannot be paying salaries and their creditors from them. If they are making payments utilising those two accounts then all the more reason that the two accounts should be kept frozen. Seen this way, the counter-application cannot be urgent.

[57] Lastly, the undertaking by the Applicant not to open and use the documents uplifted by the inspectors during the search and seizure operation completely obliterates any urgency that might exists. The Respondents argued that the Applicant utilised the information that it got during the search and seizure operation because it would not have had access to the names of the investors.

[58] In reply the Applicant stated that it used the deposit slips to gain access to the relevant names, contact particulars, and ultimately the bank statements. The documents therefore remain sealed and I have no reason to doubt that the Applicant will not adhere to the undertaking that it made.

[59] In light of this conclusion the counter-application is struck off the urgent roll.

[60] In the result I make the following order:

Dispensing with the usual forms and service provided for in the rules of court and disposing of the application as one of urgency in terms of Rule 6(12);

Ordering that pending the finalisation of an application or action for a final interdict, alternatively an application in terms of Section 5(1) of the Protection of Funds Act, to be brought or launched by the Applicant within 90 day of this order, the Respondents are:

2.1 interdicted from using FSPNo. 44226;

2.2 holding themselves out as authorised financial services providers;

2.3 advertising or receiving funds from members of the public.

The respondents are ordered to deliver within five days of service of this order to the Applicant:

3.1 a complete list of clients who made investments with any of the Respondents from the date the investments were first made to date, including names of investors, their contact details, dates of investments, investment amounts and the return of investments paid to investors;

3.2 bank account details (name of bank, account numbers and account holders) of all bank accounts held or controlled by the Respondents

(except for those bank accounts referred to in the founding affidavit) which have been and/or are being utilised for investment

purposes, including accounts into which investor funds were and are deposited and from which return on investment payments had been or are being made;

3.3 details of all investment products which have been or are still being offered to the investing public;

3.4 details of any trading accounts from which trading had been or is currently being conducted on behalf of the investors, which include the names of the trading platforms, trading account numbers or codes, the type of accounts (e.g. managed accounts), the names of the account holders and details of traders who traded on behalf of the investors;

3.5 a complete set of accounting records and auditing statements of the First, Second and Third Respondents from 2011 to date;

The Respondents are ordered to confirm within five days of service of this order that the information supplied pursuant to Paragraph 3 above are true and correct and complete;

The Respondents are to pay the costs of the application;

The counter-application is struck-off the urgent roll with costs.

_____________________________

B MASHILE

JUDGE OF THE SOUTH GAUTENG

HIGH COURT, JOHANNESBURG

COUNSEL FOR THE APPLICANT: ADV. AJR BOOYSEN

INSTRUCTED BY: ROOTH AND WESSELS INC

COUNSEL FOR THE RESPONDENTS: ADV. T NGUKSITOBI

INSTRUCTED BY FLUXMANS ATTORNEYS

DATE OF HEARING: 01/10/2013

DATE OF JUDGMENT 11/10/2013