Levenstein said on Thursday he would challenge the commission's findings, which were "a distortion of the truth".
Myburgh, a respected former high court judge, heads the commission that was appointed by the Reserve Bank to investigate Regal. The commission makes recommendations and it is up to the Public Prosecutor to decide whether to pursue the case.
The small Regal bank was placed in curatorship in June 2001 following large deposit withdrawals. Myburgh placed blame for Regal's difficulties mainly on Levenstein and his board of directors.
But the commission's report, released on Thursday, was also critical of auditors Ernst & Young, and the Registrar of Banks at the Reserve Bank, the country's main banking regulator.
Philip Hourquebie, head of Ernst & Young Southern Africa, said he was "somewhat surprised by the conclusions (about the auditor) drawn by the commission," which Ernst & Young had provided information to.
"We'd respectfully disagree with the commissioner... and would welcome an opportunity to clear ourselves," he said.
The issue of corporate governance and concerns about accounting deficiencies have come to prominence internationally after the collapse of US energy trader Enron Corp.
The South African banking sector is also on edge after a run on deposits this month at one of the country's top ten banks, Saambou, which has since been taken into curatorship - the South African equivalent of administration.
Reserve Bank Governor Tito Mboweni told a news briefing external auditors were being put under scrutiny. "The life of the external auditor is going to become increasingly difficult."
The inquiry alleged the bank was run as a one-man show, that Levenstein "confused corporate governance with thuggery", brooked no opposition and "lied to the board with impunity".
"The main driver in running the bank was the share price of Regal Holdings shares not the interests of depositors," it said.
"Levenstein ran the bank with less sophistication than one would expect from the local fish-and-chips shop," it added.
Levenstein, whose Regal Holdings had assets of R1 billion rand ($87 million) in 2000, told Reuters he would fight back. "I'm not prepared to be the fall guy to protect the industry or safeguard the profiles of socialites and those with contrived asset-strip agendas. In my opinion the bank was sabotaged".
"A lot of the issues are highly technical, highly complicated and haven't been fully understood," he added. The report called Levenstein "an immoral megalomaniac chief executive officer" and his board "supine" and "either ignorant of, or (which had) acted in breach of, corporate governance".
The inquiry also said it found that:
- Levenstein ran the bank "in a reckless manner".
- The board of directors acted in breach of the Banks Act and the Companies Act and standards of corporate governance.
- External auditors Ernst & Young acted in breach of the Public Accountants and Auditors Act and the Banks Act during the 2000 audit.
- The Reserve Bank "failed to act swiftly and decisively" in October or November 2000 by not taking appropriate action for the removal of Levenstein as CEO.
Myburgh's recommendations were passed on to the Reserve Bank and the director of public prosecutions in November, but the report was only made public on Thursday.
Mboweni said the Reserve Bank had studied the recommendations, some of which it had already implemented. A spokesperson for the Director of Public Prosecutions said the directorate was studying the report "and we'll decide on a course of action".
Regal's shares were suspended last year, two years after they were listed on the Johannesburg bourse. Niche lender Investec, the country's fifth largest by market capitalisation, wants to acquire Regal's assets.