If unable to set the fine aside through the FSCA’s internal processes, Jooste can take it on review to the High Court, going as far as the Constitutional Court if necessary.
However, if he is not successful, Jooste will be liable for interest on the R161.6million from the date at which it was initially levied.
It is the largest insider trading fine levied by the FSCA, dwarfing the previous record of R24 million slapped on Deutsche Bank in 2019.
Although Jooste did not trade in the shares the Financial Markets Act prohibits “an insider from disclosing inside information and/or encouraging or discouraging another person to deal in securities, which the inside information relates to”.
The case rests on a warning SMS Jooste sent on November 30, 2017 encouraging four individuals close to him to dispose of their Steinhoff shares prior to the publication of inside information to the general public.
Three of the four recipients did sell their shares but the fourth, Cape-based businessman Jaap du Toit, did not.
Brandon Topham, FSCA’s divisional executive for enforcement, said that as the ‘tipper’, Jooste is jointly and severally liable with those he tipped for “their ill-gotten gains”.
The “ill-gotten” gains were calculated as the difference between the share price on the day of the trade and, said Topham, “the price a few days later”.
Of the three who sold, former Springbok prop and long-time associate of Jooste, Ockie Oosthuizen, along with his company Ocsan Investment Enterprises were the biggest beneficiaries of the ‘ill-gotten gains’.
They were fined R115.8 million. Oosthuizen, who died last year, denied receiving the SMS.
Topham said the FSCA found that Oosthuizen deliberately misled investigators during questioning and failed to provide meaningful cooperation.
Dr Gerhardus Burger, an acquaintance of Jooste, was fined R 3million, which represents two times the loss he avoided as a result of trading on the SMS tip.
The fourth tippee was Jooste’s driver Marthinus Swiegelaar who was fined R18 328 for selling his 400 Steinhoff shares.
Both Burger and Swiegelaar acknowledged receipt of the SMS.
This article first appeared on Moneyweb and was republished with permission.
