South Africa’s financial services regulator is investigating potential insider trading in shares of technology firm Pinnacle Holdings following the arrest of a director, a senior official said on Tuesday.
Pinnacle director Takalani Tshivhase was arrested in March on charges he offered a bribe to a senior police official in order to win a contract for the company. Tshivhase has denied the charges and Pinnacle says it has no reason to doubt him.
However, the company waited 20 days to announce the arrest, during which time Tshivhase, Chief Executive Arnold Fourie and another director all sold Pinnacle shares.
Solly Keetse, the head of the Department of Market Abuse at South Africa’s Financial Services Board, told Reuters the regulator had launched a formal investigation into “possible insider trading in the shares of Pinnacle.”
He declined to say if the FSB was specifically looking at Tshivhase and Fourie, adding it was investigating potential insider trading “prior to the publishing of the information about Mr Tshivhase’s arrest.”
The Johannesburg Stock Exchange has told Reuters it was investigating whether the company violated rules on timely disclosure by waiting to announce the arrest.
News of the charges in late March wiped out $135 million of shareholder value in two days, although the shares have since recouped some of their losses.
Last week Pretoria’s Specialised Commercial Crime Court postponed Tshivhase’s case until July in order to give the defence more time to prepare.
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