Datatec case costs Deutsche R24m

By Iain Scott, ITWeb group consulting editor

Johannesburg, 08 Apr 2004

Deutsche Securities is to pay R24 million to the Financial Services Board`s (FSB`s) Insider Trading Directorate in settlement of claims relating to insider trading allegations involving Datatec shares.

The settlement, to which Deutsche analyst Chris Veegh was not a party, was made without admission of liability.

The case dates from 13 April 2000 when Veegh was alleged to have disclosed to clients, after a meeting with Datatec management, that Datatec`s next financial results would be below expectations.

The Datatec share price plummeted immediately afterwards and Datatec directors Jens Montanana and Robin Rindel were each fined R1 million without admission of guilt.

The FSB originally sued Deutsche for R54 million, having calculated that its clients avoided losing this amount when the share fell. The case had been scheduled to go to court next month.

"We have agreed to an early settlement of these proceedings, without any admission of liability, having taken into account the interests of all our stakeholders," says Martin Kingston, chief country officer of Deutsche Bank SA.

"We were advised that we had credible defences but it has been difficult to reach a consensus view on the exact details of the events, given the passage of time and the regulatory environment that existed in 2000.

"This approach provides commercial certainty, preventing a potentially long and costly court case, both financially and in terms of senior management`s time. We respect Mr Veegh`s decision not to participate in the settlement and we fully support his position."

FSB chairman Rob Barrow says the FSB will, after receipt of the full settlement amount, publish advertisements inviting claims from people who purchased shares in Datatec on 13 April 2000.