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Twin Peaks to Target Ponzi Schemes

September 11, 2015

National Treasury

The finance minister, Nhlanhla Nene, has sung the praises of the proposed Twin Peaks legislation in providing greater powers to regulators to deal with Ponzi and pyramid schemes.

In a written reply to a parliamentary question by Mosiuoa Lekota of Cope on whether government has taken action against such schemes, the minister indicated that the Reserve Bank has shut down many Ponzi schemes in recent times.

A total of 40 schemes have been investigated from 1 January 2014 to 30 June 2015 with 30 investigations completed and 10 still underway.

According to the minister, the Financial Sector Regulation Bill will facilitate the setting up of a market conduct regulator that will “close the net on Ponzi schemes”.

“Under this law, Ponzi schemes may be directly “prohibited” which means that the activity itself can lead to investigation and prosecution by the new Financial Sector Conduct Authority, rather than the current situation where a combination of other laws are required to indirectly reach alleged Ponzi operations”.

The proposed Twin Peaks legislation will also empower regulators to be more proactive in preventing Ponzi and pyramid schemes from occurring in the first place.

The bill is still to be tabled in parliament.

In a separate matter, proposed amendments to the JSE Derivatives Rules have been published in Government Gazette 39172.

Published in terms of the Financial Markets Act of 2012, stakeholders have 14 days from date of publication to comment.