The Financial Services Board (FSB) is investigating 21 cases of possible insider trading or market manipulation in listed companies, of which six - or more than a quarter - are probes into ICT companies.
According to information on its Web site, the board is investigating 10 cases in which insider trading could have taken place. Among the companies into which share trades are being probed are listed ICT stocks such as Africa Cellular Towers and Gijima.
In addition, the FSB is investigating 11 instances of what it calls “possible prohibited trading practices”. These market manipulation cases include probes into share trades of companies such as the Cape Empowerment Trust, Dialogue Group, Huge Group and Vox Telecom.
Bert Chanetsa, deputy executive officer of investment institutions at the FSB, says the investigation into possible insider trading in Gijima shares has been closed as the board did not find a reason to proceed with the probe.
However, one into possible market manipulation regarding Vox has been referred to the Enforcement Committee, says Chanetsa. The possible prohibited trading practice took place between 2008 and 2009.
Investigations continue
The investigations into worrying share trades and market manipulation involving Africa Cellular Towers, Cape Empowerment Trust, Dialogue and Huge will be referred to the Directorate of Market Abuse on 24 November.
These cases are then debated and a recommendation made to the Enforcement Committee. Once the matter has been wrapped up and a fine decided, the FSB issues a statement, says Chanetsa.
The possible penalty for insider trading cases is three times the amount of any profit, or if a loss has been avoided, three times the amount of the avoided loss. For prohibited trading practices, or price manipulation, the Enforcement Committee will decide on a penalty depending on the facts of the case, says Chanetsa.
Coincidence?
Chanetsa says there is no particular reason the FSB is aware of as to why almost 30% of the cases under investigation are into ICT stocks.
Chris Gilmour, Absa Investments analyst, says the fact that so many of the board's investigations are into either ICT stocks, or companies that have ICT interests, suggests it may not be coincidence.
However, he cannot think of a reason for the fact that the number of investigations is skewed towards companies in the sector.
Click here to see tables containing further details of the cases.
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