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W J Morgan & Associates (Pty) Ltd - JSE membership terminated
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W J Morgan & Associates (Pty) Ltd - JSE membership terminated
 
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October 2003

Derivatives company, WJ Morgan & Associates has been fined R3m for bringing the JSE into disrepute and contravening several of the Derivatives Rules of the JSE. The company has also been forced to fire both WJ Morgan (Snr), the company's managing director, and his son WJ Morgan (Jnr).

An investigation was started when the JSE became aware of certain transactions by WJ Morgan which were prejudicial to its client, the Joint Municipal Pension Fund, it investigated the matter and took it to disciplinary. The Disciplinary Tribunal of the JSE is independent of the JSE.

The Tribunal found that:
  • The company and both directors were found guilty of "committing an act or engaging in conduct likely to bring the JSE into disrepute". In doing this, they apparently:
  • Cheated, defrauded and deceived a client;
  • Engaged in manipulation or misleading acts or practices regarding the price of an exchange contract or trading in that contract;
  • Behaved in a manner prejudicial to the interest of the public, derivatives members and the Client;
  • Committed acts which were considered to be dishonest, fraudulent or dishonourable;
  • Were parties to or facilitated or entered into trades which had dishonest or unlawful motives, and;
  • Contravened a number of Derivatives Rules of the JSE, including buying or selling investments for their own account; failing to avoid any conflict between their interests and those of the client; and not acting with due skill, care, diligence and good faith.

The following penalties were imposed by the Disciplinary Tribunal:
- The company and both directors were fined R3-m;
- The company was fined R50 000 and its membership of the JSE was terminated;
- Both WJ Morgan Senior and Junior were to be fired from the company as they were considered not fit and proper person to hold their positions;
- The company and the two directors were fined R300 000 for costs
11 Oct 2004

The Joint Municipal Pension Fund (JMPF) will try to recover its full R1.4bn loss suffered by the fund due to investments made by WJ Morgan & Associates on behalf of the fund, in agricultural futures during December 2002 and January 2003.

A civil claim to recover the loss has been instituted against WJ Morgan & Associates and its former directors.
 
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