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Coronet Equities - closed down

The Johannesburg Stock Exchange announced on 4 May 1999 that Coronet Equities had been declared a defaulter under the JSE rules. At a special meeting held by the JSE Committee, it was established that certain transactions undertaken by Coronet Equities could affect the liquidity of the brokerage. Warrants of arrest were issued to two senior staff members of Coronet based on evidence that they misused clients money.

Stockbroker fraud case deals up a legal first
Published on the Web by IOL on 2002-08-26
By Zelda Venter

Legal history was made in the Pretoria High Court when three stockbrokers on the Johannesburg Securities Exchange entered into a plea bargain on theft and fraud charges of more than R38-million.

Monday was the first time that a plea bargain, in terms of the new Amendment to the Criminal Procedure Act, which makes provision for plea bargaining, served before a High Court judge.

Elaine Price, a former executive director and broking member of Coronet Equities, was sentenced to 15 years' imprisonment, of which she must serve 10 years effectively. This jail term was negotiated with the state in exchange for a plea of guilty.

Paul Richard Esterhuizen, the company's former general manager (investments), was sentenced to 12 years imprisonment, of which he must serve eight years, while the broking firm's compliance officer Kiriakos Kangleas received five years, wholly suspended.

Both also agreed on these jail terms in return for a plea of guilty.

Judge Johan Els said on Monday that he was satisfied that all the facts in the case were taken into account when the parties entered into a plea bargain and that the sentences agreed upon was justified.

Els, however, commented that he probably would have imposed much harsher sentences under the circumstances if the case went on trial.

The accused were originally charged with 30 000 counts ranging from theft to fraud.

The three pleaded guilty to various main charges, which included a myriad of sub-charges. The charges on which they did not plead guilty, were withdrawn by the state.

The charges arose in the course of the trio's conduct between 1997 to 1999. Price was convicted of stealing more than R15,6-million from clients' accounts, while Esterhuizen stole more than R20,9-million.

They stole the money in order to meet the commitment that the broking firm had to the Johannesburg Stock Exchange in respect of "over and unders" due by the brokerage.

The nett potential prejudice to Coronet Equities arising from the fraud amounted to about R38-million. The nett actual prejudice suffered by the JSE in terms of having to honour its commitments to clients was about R6,6-million. Investors who lost money were compensated by the JSE and its insurers.

Meanwhile, the Office of the National Director of Public Prosecutions sent out a warning that "white-collar" criminals will feel the brunt of the law.

No matter how sophisticated their crime, the police "have the capacity to detect, investigate and effectively prosecute", spokesperson Sipho Ngwema said.