The penalty imposed on former Steinhoff CEO Markus Jooste for insider trading has been revised by the Financial Sector Conduct Authority (FSCA), taking it down to R20 million from the original R161 million – a reduction of almost 90%.<\/p>\n
The FSCA said that the original penalty of R161,568,068 imposed on the former CEO by the FSCA was for breaches of two specific sections of the Financial Markets Act – specifically regulations that prohibit insider trading.<\/p>\n
The former CEO was alleged to have sent warning SMSes to other executives encouraging them to sell their shares in the company before the crash.<\/p>\n
The FSCA initially found that Jooste had contravened both section 78(4)(a) and section 78(5) of the Financial Markets Act.<\/p>\n
Section 78(4)(a) of the Act provides that:<\/p>\n
“An insider who knows that he or she has inside information and who discloses the inside information to another person commits an offence.”<\/em><\/p>\n Section 78(5) of the Act goes on to say that:<\/p>\n “An insider who knows that he or she has inside information and who encourages or causes another person to deal or discourages or stops another person from dealing in the securities listed on a regulated market to which the inside information relates of which are likely to be affected by it, commits an offence.”<\/em><\/p>\n However, the fine was appealed and taken to the FSCA Tribunal for review.<\/p>\n The Tribunal ultimately set the multimillion-rand penalty aside and recommended an ‘appropriate administrative penalty for the sole contravention of section 78(5) of the Financial Markets Act to the FSCA for consideration’.<\/p>\n According to the FSCA, when taken on review, the Tribunal concluded that Jooste did not contravene section 78(4)(a) of the Financial Markets Act as the information he provided in the warning SMS sent to other executives to encourage them to sell their Steinhoff shares, was vague and imprecise.<\/p>\n Section 78(4)(a) prohibits an insider from disclosing inside information to another person.<\/p>\n “The Tribunal advised the FSCA to consider alternative dates to calculate the losses avoided by the trades of Dr Burger and Mr Oosthuizen,” said the FSCA.<\/p>\n According to the FSCA, the new administrative penalty, in line with the Tribunal’s finding, was considered, taking into account:<\/p>\n Jooste is among four people who are set to go on trial for fraud in Germany<\/a><\/strong> next year.<\/p>\n Bloomberg reported that this would be the first time the former CEO sees the inside of a courtroom for allegedly being the architect of an accounting scandal at one of South Africa’s top listed JSE companies – Steinhoff.<\/p>\n\n