Some R28.6 million-worth of trade in Pinnacle shares is under the spotlight, as the Financial Services Board (FSB) looks into whether insider trading took place last month, before price-sensitive information was made public.
The FSB is examining trades that took place between when Pinnacle executive Takalani Tshivhase was arrested on charges of bribery, and when the listed company informed shareholders of the fact, 20 days later, when he was charged.
While the board will not say which trades are under its magnifying glass, three separate directors dabbled in Pinnacle stock between when Tshivhase was arrested, and Pinnacle made the news public; all of which were sales.
Director George Wiehahan sold 80 000 shares on 12 and 13 March, to reap a profit of R1.6 million, which was followed by CEO Arnold Fourie's sale of 1.2 million shares after the expiry of a zero-cost deal that was inked in December 2012 - a move that netted him R23 million. Then Tshivhase sold 200 000 shares in three different trades, for a total profit of R4 million.
Pinnacle has explained Tshivhase had asked for permission to trade the stock on 27 January, which was granted on 10 March, after the end of the close period. The listed company said the sale represented a "very small percentage" of Tshivhase's holdings and "was related to the need to fund a specific transaction of a personal nature".
Hefty fines
Head of the Department of Market Abuse at the FSB, Solly Keetse, says the board is still at the beginning stages of the probe, which could take anywhere between four and six months to wrap up.
Pinnacle is unable to comment until next week as many of its top staff members are on leave.
Keetse says insider trading is alleged to have taken place in the 20 days it took Pinnacle to tell the market about Tshivhase's arrest. The listed company has said it acted on legal advice when it only told the market on 25 March that Tshivhase had been charged, because that was the "appropriate time" and - before the charge - it was a "matter of speculation whether any charge would, indeed, be brought".
Tshivhase allegedly attempted to bribe the police official with R5 million so the company could win a R182 million contract to supply about 3 000 handheld MaxID devices to the SAPS. He has since asked to take an immediate "leave of absence" until criminal proceedings have been wrapped up.
The matter has been postponed to 2 June and Pinnacle has said, once the matter has been resolved, "Tshivhase's association with the company can be reviewed". Keetse explains the board is investigating whether anyone was in possession of price-sensitive information that they used to their benefit by trading before shareholders were also given the news. He adds that, if someone is found guilty, they can be fined three times the profit they made, or the loss they avoided, as well as R1 million.
News of the bribery charge, released in a short statement, sent Pinnacle's shares into free fall, as the stock lost 25% from its opening price of R20. On 26 March, its stock continued to slide, dropping another 23.67%, to close at R11.45.
On 27 March, executives started snapping up stock in the company, buying R20 million-worth of shares in several separate trades. Its shares are now trading at R13.19.
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