In a bizarre twist of events, Pierre Du Toit of Mostert and Bosman, currently pursuing Banxso's liquidation, has been accused by some of the clients represented by his firm of not informing them of the R57 million offer of liquidity funded by Banxso directors.
This despite making it clear in a letter to Banxso's legal counsel on the 10th of December 2024 that 'We confirm, on behalf of all twelve of our clients, that your client's security proposal, as outlined in your letter dated 5 December 2024, is unacceptable.”
Banxso, a prominent online trading platform, is currently involved in an ongoing legal battle over a liquidation process.
IOL sources revealed that Banxso made a remarkable offer to secure funds equivalent to the alleged claim values of all intervening parties in the liquidation application against it. The company's attorneys proposed holding R57,125,578.80 in their trust account as security for the claims, should they be prosecuted successfully, an offer which could have ensured financial security for Ms Wentzel's claim, the original applicant in the liquidation proceedings against the entity.
One of the female applicants who spoke to IOL on condition of anonymity, confirmed she had not received Banxso’s offer and was not informed of the liquidity offer. “I’m aware the matter is set to be heard next month, but I'm shocked to hear that an offer was made. This was not communicated to me. If there had been such, then I’m pretty sure we would not have hesitated. The thing is... I’m sick and tired of this. I want to ensure that my funds are back and secure,” said one of the applicants.
Another applicant said they feared being held responsible for the legal costs when the matter was finalised. They added that they would not have opposed Banxso’s offer had they been made aware, citing that they would still not have lost their funds after the case had been finalised.
According to reports, Mostert and Bosman rejected Banxso's offer of R57 million—funded directly by its directors—which would have guaranteed 100% repayment to the applicants if their claims were successfully proven. This rejection occurred while they maintained a freeze on client funds despite a previous court order directing the release of the funds. Approached for comment, Du Toit said a security offer was made but rejected because it didn't make financial sense for the clients.
“In a nutshell, the offer to provide security does not assist any of our clients, as they will still be required to individually institute a High Court action against Banxso to obtain a court judgment for their claims. Banxso will oppose these actions. The legal costs of each action will be more than R1 million and considering that an unsuccessful party will most probably utilise their right to appeal, each action will take between 3 to 5 years.
“Furthermore, the security is not provided by Banxso but rather by its liquidity provider, which has the same director and shareholder as Banxso. When any other creditor liquidates Banxso before the finalisation and payment of each client's claim, our clients will not be entitled to be paid from the amount held as security, as the same will constitute a voidable preference of one creditor above another. Du Toit said that the statement that the offer would have ensured 100% repayment to the applicants is blatantly incorrect and disingenuous.
“If Banxso wanted to resolve the issues with our clients, it could simply have arranged for the payment of their claims and not the meaningless offer to provide security through its liquidity provider, which, as explained above, does not assist any of our clients in any manner whatsoever,” he said.
Regarding the legal costs and whether their clients knew who would pay them, Du Toit said any agreement regarding the costs is a matter of attorney-client privilege and will not be discussed in the public domain.
The Financial Sector Conduct Authority (FSCA) provisionally withdrew the financial services provider license of trading platform Banxso in October last year. Despite the Western Cape High Court's lifting of the preservation order on Banxso's accounts, the FSCA refused to authorise the release of these funds, leaving Banxso's clients in financial turmoil. The FSCA said it would not be drawn into the matter further, and was not involved in considering the terms of any settlement offer in the Banxso matter, and offered no further comment.
“The FSCA was not a party to the terms of the order taken by agreement between the applicant and Banxso, which preserved the client funds pending the determination of the liquidation application. The FSCA did not object to the order as its terms accorded with the FSCA’s interest in preserving these funds pending the outcome of its investigation in the interest of investors.
"The FSCA is legally obliged to comply with a subpoena until it is set aside. As the subpoena had not been set aside, the FSCA complied with it. In any event, the FSCA was under a duty in section 251 of the FSR Act to disclose the information required regarding the subpoena."The financial regulator further said that the FSCA was still investigating the Banxso matter.
"Once the investigation is completed, the FSCA will comply with its disclosure obligations in s251 of the Financial Sector Regulation Act of 2017 (the FSR Act)," the FSCA told IOL.
On allegations of data breach and the distribution of Banxso’s sensitive and confidential data, the FSCA said that the “disclosure of information will not compromise Banxso’s ability to challenge any findings made by the FSCA,” adding that where the FSCA may consider the sharing of information in response to a request, it does so in terms of the provisions of section 251 of the FSR Act.
Hanekom Attorneys, representing Banxso told IOL they would not comment in detail on settlement engagements due to the matter's sensitive nature, arguing that the liquidators were aware of the offer of liquidity made.
"That being said, it is a matter of public record that the Applicants have declined the offer out of hand, with little to no material engagement. Subsequently, having read their response to other media houses, we believe the offer has been fundamentally misunderstood, alternatively, misconstrued, and we are attending to correcting this misunderstanding to the benefit and in the best interests of the clients insofar as we can."
Regarding the leak of Bansxo’s confidential data, the company’s lawyers stated that they continued engaging with the FSCA and that there was an open line of communication between Banxso and the FSCA.
"There are clear indications that data is flowing between the two parties in attempts to strengthen their respective positions. The ethics behind this behaviour are deeply questionable. We shall continue highlighting this in Court as necessary and are assessing our future options," Banxso's legal team told IOL.
When asked whether they may have presented the offer to the applicants, the attorneys stated they were not in contact with them.
"We cannot speak to Mostert & Bosman's clients, who have been adequately presented with and informed of the offer. As aforesaid, all we know is that the offer was summarily dismissed. As such, we would not be surprised if not all clients were fully briefed on the offer, together with benefits, and accepted the same."
The Western Cape High Court is scheduled to hear the matter between Bansxo and its liquidators next month.