The Financial Sector Conduct Authority (FSCA) has fined Markus Jooste, the former CEO of scandal-hit Steinhoff, and others at least R241 million for insider trading.
The penalty on Jooste comes after the authority found that on 30 November 2017, shortly before the much-publicised significant decrease in the market value of Steinhoff shares, the former CEO was privy to Steinhoff-related inside information.
“Whilst privy to inside information, he disclosed some of the information in a ‘warning SMS’ encouraging four individuals close to him to dispose of their Steinhoff shares prior to the publication of some of the inside information to the rest of the market. Three recipients acted on his disclosure and encouragement and sold Steinhoff shares,” it added.
Steinhoff collapsed after accounting fraud was discovered in late 2017, wiping billions from its market value.
The FCSA penalised the following parties:
- R161.5 million, plus interest – Markus Jooste, former Steinhoff CEO;
- R3 million – Gerhardus Diedericks Burger, an acquaintance of Jooste, for selling his Steinhoff shares shortly after receiving an SMS from Jooste 30 November 2017;
- R18,328 – Marthinus Swiegelaar, Jooste’s chauffeur at the time, after reacting to Jooste’s warning SMS on 30 November 2017;
- R115.8 million – Ocsan Investment Enterprises (Pty) Limited (Ocsan), a company that was controlled by Ockie Oosthuizen, an acquaintance of Jooste. Oosthuizen instructed Ocsan’s sale of Steinhoff shares on 30 November 2017 after an SMS from Jooste.
“Effectively, Mr Jooste is solely liable for R122,927,366 out of the R161 568 068. The difference consisting of the R38,622,374 and R18,328 being Ocsan and Mr Swiegelaar’s ill-gotten benefits that qualifies for disgorgement may be recovered once,” the authority said.
The FCSA said the insider trading-related penalties are calculated, in Financial Markets Act, by determining the losses the perpetrator avoided or the profits made.
The tipper can also be liable to pay up to three times the gains made or the losses avoided by those who were tipped off, an extra amount of R1 million, the cost of the investigation and interest.
The FCSA said Jooste also “deliberately misled investigators” during questioning and “failed to provide meaningful cooperation.”
Jooste’s penalty also includes an extra R1 million after sharing information and encouraging Jaap du Toit to sell his Steinhoff shares.
“Notwithstanding the disclosure and encouragement, Mr Du Toit never acted on the contents of the warning SMS,” the FCSA said.