The Financial Services Board (FSB) is investigating trade in Huge Group shares to establish if the price was manipulated upwards.
Huge recently came under fire from the JSE for flouting its rules, and the bourse fined chairman Anton Potgieter and CEO James Herbst R5 million each in their personal capacity. The directors are appealing the fine.
However, the statutory oversight institution is also investigating share trades in Huge stock that took place around September 2008, in an unrelated matter.
Gerhard van Deventer, executive director at the FSB's directorate of market abuse, explains that the forensic investigation is looking into “suspicious” share dealings that could “be of a manipulative nature”.
Herbst confirms the company received a letter from the FSB in October 2008 regarding the investigation into share transactions of the Huge Group.
“The letter clearly stated that the investigation was not into the affairs of the company. To date, the company has had no further information on this case, but remains ready and available to assist the FSB as required,” he says in an e-mailed response to ITWeb.
Possible fine
Van Deventer says the investigation is not looking into the value of the trades, but rather whether the trades resulted in the share price being moved upwards illegitimately. He could not comment on whether directors were under investigation, or if external parties were involved, as the probe is ongoing.
The board can impose financial penalties on people who are found to breach its rules.
Share trade
Huge shares were trading at about R4 during September 2008, substantially higher than the current trading price of 85c.
The time-frame under investigation falls under the same period that the company bought R8 million worth of shares. Huge indirectly bought 12.3 million shares between July and October last year from Herbst and Potgieter, at an average price of 360c each.
It was this share trade that earned the directors the JSE's wrath, as the bourse said the company had not told shareholders that it was buying the stock.
Related story:
Huge directors appeal R10m fine
Share
