Viceroy Cried Wolf. The FSCA Listened.
FSCA granted global powers in Viceroy vs Capitec Saga
In a ruling on 9 July 2025, the Pretoria High Court granted South Africa’s Financial Sector Conduct Authority (FSCA) the power to enforce penalties against foreign entities that impact local markets, even if they have no physical presence in the country.
This clears the way for the FSCA to reimpose a R50 million fine on Viceroy Research, the US-based activist short-seller behind the explosive 2018 report that accused Capitec Bank of predatory lending. The report caused Capitec’s share price to plunge by 23% in one day, temporarily wiping out over R9.3 billion in shareholder value, according to an FSCA newsletter.
Background
Viceroy’s report, Capitec: A Wolf in Sheep’s Clothing, alleged widespread misconduct, hidden defaults, and reckless lending practices. But soon after its release, South African authorities and independent analysts flagged numerous errors and misrepresentations. The FSCA concluded that the report contained false and misleading statements, with Viceroy refusing to issue proper corrections, even after being informed of inaccuracies.
Viceroy’s financial motives came under scrutiny when it was revealed in a transcript of a hearing held by the Financial Services Tribunal in October 2022, that they had a profit-sharing agreement with a hedge fund, Oasis. That fund reportedly earned R82 million by short-selling Capitec stock, with Viceroy receiving a 12.5% cut, amounting to around R10 million at the time.
Jurisdiction
In 2021, the FSCA imposed a R50 million fine for breaching Section 81 of the Financial Markets Act, but the Financial Services Tribunal set it aside, ruling the FSCA lacked jurisdiction over Viceroy because it hadn’t been served in South Africa, following common law.
The Pretoria High Court has now overturned that decision and ruled that electronic service is valid and that any foreign conduct with a substantial effect on South Africa’s financial markets falls within the FSCA’s reach. It emphasized the need to protect local investors in a digitally interconnected world, where harmful financial actions can originate from abroad.
What will happen
The ruling places the R50 million fine back on the table and sends the case back to the Financial Services Tribunal to reconsider the matter on its merits. The FSCA stated the following “The public can take confidence from the fact that the FSCA will not shy away from taking appropriate action to protect its investigation and enforcement powers to ensure appropriate investor protection and the integrity of financial markets,” and remain confident that it made a clear and compelling case against Viceroy.
