The company was working in “good faith” with the FSCA to correct the issue when its license was pulled, Darren Hanekom, a lawyer for JP Markets, said by email. It had made “full and frank disclosures” on its business model to the FSCA as recently as September, he said.
While JP Markets paid an application fee for the derivatives license, it had not made an application, the Pretoria-based regulator said by email. The FSCA was not aware that JP Markets was issuing contracts for difference until this was revealed by a witness during the regulator’s investigation, which started after it received complaints about the company, it said.
JP Markets, founded in 2016 by 33-year-old University of Cape Town graduate Justin Paulsen, has 320 000 clients, about 20 000 to 40 000 of which are active, Hanekom said. It paid out over R1 billion in customer withdrawals in the three months before its accounts were frozen, and receives about R300 million in client deposits a month, he said.
The firm also faces an online petition signed by more than 3 200 people amid allegations it refused to make refunds.
The petition was created under a pseudonym by someone who wasn’t a JP Markets client and relate to technical breaks, Hanekom said. JP Markets has taken steps to limit interruptions, he said.
The liquidation application will be heard on July 31.