Everything We Know About Discovery’s Insider Trading Scandal
Story from: 2oceansvibe.com
The Financial Services Board (FSB) are investigating a total of 17 companies in South Africa for either possible insider trading cases, possible prohibited trading practices, or possible false or misleading reporting cases.
Discovery’s suspicions grew in February when shares fell sharply on the 16th by 5.5 percent, the day before a “downbeat trading update” where the insurer announced a fall of as much of 55% profit in the first half.
Here are some details:
- Discovery was trading at R128.78 a share on February 15, two days before it released the trading update. The next day, still ahead of the trading update, the share declined to R121.80.
- Discovery immediately reported the unexpected share price drop to the JSE, who in turn notified the FSB.
PSG Wealth portfolio manager, Adrian Cloete, attributes the share price movements to concerns about global growth, and disappointment in Discovery’s expected normalised headline earnings-pershare range of 0%-5%.
Other cases being probed include ConvergeNet, Eqstra, the Lewis Group, Phumelela Gaming and Leisure, Taste Holdings, and Times Media Group.
The FSB has investigated around 372 cases since 1999, but due to a lack of or insufficient evidence needed to act according to legislation, 272 of them were closed. Of the 85 cases that did go through, penalties imposed have amounted to around R96 million.
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