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FSB probes ICT firms

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 23 Jan 2012

The Financial Services Board (FSB) is probing cases of possible insider trading, or prohibited trading practices, within four listed ICT companies.

According to information on its Web site, the board is investigating Africa Cellular Towers, Dimension Data, which was delisted towards the end of 2010, and Labat Africa, for possible insider trading.

In addition, the Huge Group and Labat Africa are being probed for “possible prohibited trading practices”.

The FSB has 11 open cases where it is investigating possible insider trading, involving 10 firms, and 12 probes into possible prohibited trading practices. It is also looking into four issues of “possible cases of false, misleading or deceptive statements, promises and forecasts”, although none of these investigations involve ICT entities.

Among the current investigations is one involving Dimension Data, ongoing since July 2010. The FSB is looking into whether information was leaked, leading to suspicious trade in Dimension Data shares, just before the company announced it would be bought out by NTT in a R24.2 billion deal.

Keeping an eye out

Senior forensic investigator in the FSB's Directorate of Market Abuse (DMA), Michelle Shaeeda Hoosen, cannot disclose specific details.

Hoosen explains investigations are registered by the DMA as a result of the JSE's surveillance activities, or from complaints received from market professionals or members of the public.

“Once an investigation is registered, it has to wait for an investigator to become available to do the investigation,” says Hoosen.

Hoosen says the investigations listed on its Web site are “ongoing”, which means they are either under investigation, or waiting to be investigated.

After the probe has been wrapped up, they are either closed, or enforcement action is taken, says Hoosen.

Under the law, market abuse contraventions can be referred to the FSB's enforcement committee, which can hand down “unlimited penalties”, says Hoosen. However, the law also stipulates certain factors the committee must take into account, she adds.

If the Director of Public Prosecutions institutes a criminal prosecution, the maximum prescribed penalties are R50 million or 10 years' imprisonment, or both, says Hoosen.

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