Regulator to probe insider trading allegations

The FSB confirmed that it is investigating unusual trading in foreign exchange futures contracts after receiving a report from the Johannesburg Stock Exchange (JSE).

The Regulator’s Department for Market Abuse (DMA) is currently conducting an investigation into possible insider trading in certain foreign exchange futures contracts before the recall of former Finance Minister Pravin Gordhan from office.

This process emanated from the report received from the JSE on 11 April 2017 on the matter. On completion of the investigation, the DMA may refer the matter to the Enforcement Committee (EC) of the FSB for enforcement action to be instituted against the offender/s if it believes that the Financial Markets Act (FMA) has been contravened.

Alternatively, the DMA may close the matter if it believes that there is no or insufficient evidence of insider trading. If the matter is referred to the EC, the determination of the EC will be published once the matter has been finalised.

Disclosure of details of the investigation is subject to section 22 of the Financial Services Board Act which prohibits any member(s) or employees of the FSB from disclosing to any other person any information obtained in the performance of functions under this Act.

The duration of the investigation will be determined by the complexity of the investigation.

An article by Liesl Peyper in titled Someone knew expands on the reasons for this investigation.

“We are not in a position to give details (of the investigation) at this stage,” said Solly Keetse, head of the FSB’s department of market abuse. “We are currently analysing the article published by Stuart Theobald of Intellidex and the report we have received from the JSE.”

The article then proceeds to detail the timeline since 31 March when the DA’s David Maynier “…sent a letter to the FSB requesting an investigation into possible insider training following the recall of Gordhan and his subsequent dismissal.”

“Could one profit if you knew of such an event in advance?” Fin24 quoted him (Theobald) as saying, “The answer is clearly yes. One simple way to do so would be to buy those futures on the JSE.”

Theobald calculated a person earning R42m in two days, assuming “that the contracts were opened before the Gordhan news broke”.

“There is circumstantial evidence supporting the view that it was before the news,” he said.

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