Pinnacle Holdings has confirmed weekend newspaper reports that it is being investigated by the Financial Services Board (FSB) because of a possible contravention of the Financial Markets Act related to share trading that took place in March 2014.
The FSB is probing possible insider trading, Pinnacle said in a statement to shareholders.
The investigation comes after Pinnacle failed to disclose to the market that one of its directors and biggest shareholders, Takalani Tshivhase, had been arrested on charges of bribery and corruption. It belatedly told the market about the arrest, only after TechCentral had broken the news.
Nearly R1,5bn was wiped of the technology group’s market capitalisation in two trading sessions after news emerged of the arrest, with the share price plunging by 43%. It has not since recovered.
Pinnacle said on Wednesday that the FSB’s investigation “relates to share transactions in the company executed during March 2014 and may be extended, if necessary”.
“It should be noted that the investigation is not into the affairs of the company,” it added. “The FSB has advised that when the investigation is completed, it shall be reported to the directorate of market abuse, which will then decide whether to close the investigation or proceed with enforcement action.”
Pinnacle said it intends co-operating fully with the FSB’s investigation.
Company directors had been actively selling shares in the company in the weeks before the news of Tshivhase’s arrest broke. Tshivhase himself offloaded R4m worth of shares, while CEO Arnold Fourie, through his family trust, sold 1,2m shares. The company said Fourie had no option in selling the shares as it was a forced sale, while Tshivhase had asked for permission to sell shares on 27 January, when the company was in a closed period, preventing him from trading at the time.
Permission was finally granted on 10 March, after he had been arrested (on 5 March). He needed the cash, the company said, to “fund a specific transaction of a personal nature”.
Tshivhase, who has since taken a “leave of absence” from Pinnacle, appeared in court last week. The matter was postponed until 2 July.
He stands accused of trying to bribe a top police official with R5m to secure a lucrative technology tender said to be worth more than R180m.
Pinnacle was last trading at R13,06/share, down from the R20/share level it was trading at before news of Tshivhase’s arrest. — (c) 2014 NewsCentral Media
