South Africa’s market watchdog has warned that it will act against those involved in suspect dealings at Steinhoff in the next eight weeks.
Former CEO Markus Jooste is at the centre of the Steinhoff scandal – not only amid accusations that he was involved in false financial reporting but also after allegations of insider trading.
Last year, Bloomberg reported that Jooste sent cellphone messages to his friends advising them to sell their Steinhoff shares – days before the share imploded.
The Financial Sector Conduct Authority (FSCA) is investigating seven parties for insider trading in Steinhoff shares from September to December 2017. Steinhoff is also being investigated for false and misleading reporting in its financial statements released 2015, 2016 and 2017.
The company has already admitted that its financials were misstated, says the new head of investigation and enforcement at the FSCA, Brandon Topham.
Topham says the FSCA will take action against individuals related to Steinhoff in the next two months.
"We will be laying our internal charges within this period against relevant persons," he told Business Insider SA.
"However not all charges may be started within this period and due to the audi alteram partem [Latin for "listen to the other side"] process which we follow, we will probably not have a finalised outcome during this period. That could take a bit longer depending on the legal issues.
"External charges will only be laid closer to the conclusion of our administrative penalty processes should the outcome indicate a criminal transgression."
If found guilty, offenders may have to pay back the amount of money they made – or the losses they avoided – in the suspect deals plus a penalty of up to three times that amount, plus R1 million and investigations costs. The money will be paid to people who were on the losing end of those transactions. Cases will be referred to the Director of Public Prosecutions, who may institute criminal action against any person.
There are questions about whether Steinhoff will release the full PricewaterhouseCoopers report, which is currently being finalised and will detail what went wrong at Steinhoff.
FSCA representatives will meet Steinhoff execs next week to discuss this, Topham said. The FSCA will go ahead with action against individuals even without the report, he added.
The FSCA is currently investigating 36 cases of insider trading, market manipulation and false reporting in South Africa.
Apart from Steinhoff, here are some of the most high-profile dealings:
The interlinked property companies Resilient REIT, Fortress Income Fund, NEPI Rockcastle and Greenbay (now known as Lighthouse Capital) have been under scrutiny for many months following reports by 36ONE Asset Management and Arqaam Capital, who questioned the valuation of the companies as well as large transactions among the companies.
The FSCA announced on Tuesday that four of the thirteen investigations into the group have been scrapped. Three relate to accusations of insider trading ahead of JSE announcements, and another to market manipulation.
Early in 2018, a Viceroy report that accused Capitec of reckless lending practices triggered massive losses in the bank’s share price:
The FSCA continues to investigate allegations of possible false and misleading reporting related to the Viceroy report
Transactions in AYO Technology – which is linked to businessman Iqbal Survé – are being investigated for market manipulation.
Government's investment arm, the PIC, invested R4.3 billion in AYO before its listing in December 2017. According to some reports, AYO's assets were worth less than R300 million.
The Companies and Intellectual Property Commission (CIPC) has ordered the PIC to reclaim its investment.
Since 1999, 421 cases of market abuse and insider trading have been investigated. Only 91 of the cases were pursued – the rest were stopped due to no or insufficient evidence. The penalties imposed on offenders to date amounts to approximately R138 million.
These are the current cases that the FSCA is investigating:
Also from Business Insider South Africa: