No proof of Steinhoff insider trading
The Financial Sector Conduct Authority (FSCA) has so far found no evidence of insider trading in Steinhoff shares before the retailer's meltdown on the JSE, but it still has a few trading accounts to check, reports BusinessLIVE.
Bloomberg reported previously that Steinhoff's former CEO, Markus Jooste, had advised friends to sell the company's shares days before the stock collapsed. The message, sent in late November 2017 to at least two people, told recipients there was impending, unspecified bad news coming. Then, on 5 December 2017, the company said it had uncovered accounting irregularities and that Jooste had quit, causing the shares to plunge 63% in a single session.
The FSCA yesterday said in the week before the share collapse, about 30.7m shares were traded with a total market value of more than R1.7bn. But the authority said it had 'closed its files' on three accounts where more than R419m worth of shares were traded.
It has investigated 56 accounts for insider trading so far 'with no adverse findings'.
The latest Steinhoff litigation contains allegations that a complicated misleading third-party scheme was also employed by SA entities. A report in Die Burger says this is significant as the allegations of accounting improprieties have thus far been limited to overseas entities of Steinhoff and the local Pepkor, formerly Steinhoff Africa Retail, claims to be insulated from these irregularities. In its urgent application to prevent Steinhoff from selling Pepkor shares, the Tekkie Town founders reveal details of the 2016 share-swopping transactions that they say have striking similarities to the irregularities already identified by the PwC forensic report.
The founders list a shelf company, Town Investments, as a respondent. This company is said to be inextricably linked to Mayfair Speculators, a company which was controlled by Jooste.
Bernard Mostert says in his affidavit that Steinhoff acquired all the shares in Tekkie Town in 2016, but that some of the shares were held at the time by the investment company Actis. Steinhoff didn’t buy the shares directly from Actis, but used Town Investments to pay cash for Actis’ shares and then engaged in a complicated swop agreement with Steinhoff. Mostert says it was never clear to the founders why Steinhoff didn’t simply acquire the shares from Actis.
‘However, given the recent revelations, it appears as if it was a mechanism created to ensure that the transaction remains off the balance sheet.’ Mostert alleges Steinhoff lent money to Town Investment to buy the shares, which was then reflected as an asset of Steinhoff. Town Investment then received shares in Steinhoff in exchange for its recently acquired Tekkie Town shares.
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