The Financial Services Board (FSB) in South Africa has often been criticised for its inability to prosecute insider trading and market manipulation matters.
Too often they have been unable to gather sufficient evidence to refer to the enforcement division or have been outgunned when trying to take on suspect parties. A quick look at the open matters under investigation would verify this with the most notable being an investigation into possible insider trading at Times Media Group dating back to February 2014.
This changed on Wednesday when, in rapid succession, the enforcement division delivered two heavy judgments against errant traders.
Lefika traders axed
The Enforcement Committee of the FSB imposed a penalty of R500 000 on Lefika Securities (Pty) Ltd. A further penalty of R2 million each has been imposed on two of its directors, Tebogo Shakong and Yolanda Rebecca Boikanyo. This was in relation to market manipulation carried out on behalf of two portfolio managers at Argon Asset Management. In this instance, the Lefika traders were punished for manipulating the share prices of Afgri Limited, Metair Investments Limited and Palabora Mining Limited from January to March 2009, and the Comair Limited share price during March 2010 on behalf of Argon.
Shakong and Boikanyo are both directors of Lefika and have resigned and handed in their trading licenses.
Sacoil matter finally resolved
Energy player Sacoil has had its fair share of negative press relating to its volatile share price and one of the FSB’s major outstanding investigations related to share price manipulation between February and August 2011.
While this matter has yet to be resolved, a separate investigation into trading between October and December 2013 came to a head when the FSB fined 66-year-old Johan Franck R1 million for buying and selling nearly 9% of the company during this period. This was done in an attempt to create a false market for the shares and create the impression that demand was greater than it was in reality.
In mitigation, the FSB did note that Franck had “wiped out his retirement nest egg and in effect his life savings through his investments in Sacoil shares and derivatives.”