South African regulators are investigating possible insider trading in shares of technology firm Pinnacle Holdings prior to the announcement of an executive’s arrest, a senior official has said.
According to a report by Reuters, the probe is the highest-profile investigation into suspected insider trading on Africa’s biggest bourse in recent years and comes after $135m worth of stock market value was wiped out in two days of declines in Pinnacle shares last month.
The investigation comes after Pinnacle director Takalani Tshivhase was arrested in March on charges he offered a bribe to a senior police officer to win a contract. Tshivhase has denied the charges and Pinnacle said it has no reason to doubt him.
However, the company did not announce the arrest for 20 days, during which time Tshivhase, Chief Executive Arnold Fourie and another director all sold Pinnacle shares equivalent to about one per cent of the company.
The Head, Department of Market Abuse at South Africa’s Financial Services Board, Solly Keetse, told Reuters the regulator had launched a formal investigation into possible insider trading in Pinnacle shares.
He declined to say if the regulator was looking at Tshivhase and Fourie, only that it was investigating potential insider trading prior to the publishing of the information about Tshivhase’s arrest.
The Johannesburg Stock Exchange has told Reuters it was investigating whether the company violated rules on timely disclosure.
News of the charges in late March knocked $135m or 43 per cent off Pinnacle’s share value in two days, and although the stock has since recouped some of its losses, it was down eight per cent at 13.10 rand on Tuesday. Before the arrest was announced it was worth 20 rand.
Tshivhase’s case at Pretoria’s Specialised Commercial Crimes Court was last week postponed until July in order to give the defence more time to prepare.
Source: Punch
