FSB probes suspect insider trading prior to Gordhan snub

Cape Town – The Financial Services Board (FSB) said the investigation into trading activity in listed securities following the recall of former finance minister Pravin Gordhan from an international investor roadshow in March is at an “early stage” and “ongoing”.
 
“We are not in a position to give details (of the investigation) at this stage,” said Solly Keetse, head of the FSB’s department of market abuse. “We are currently analysing the article published by Stuart Theobald of Intellidex and the report we have received from the JSE.”

READ: Someone knew and profited from Gordhan roadshow recall - analyst

Keetse further said the FSB would make the outcomes of the investigation known “should it be necessary to do so”.

On 31 March, David Maynier from the Democratic Alliance (DA) sent a letter to the FSB requesting an investigation into possible insider training following the recall of Gordhan and his subsequent dismissal. 

On 03 April 2017 Advocate Dube Tshidi, the Chief Executive Officer of the FSB, replied that he had instructed Head of Enforcement, Gerhard van Deventer, to look into the matter. 

The JSE also announced in a press statement that it was reviewing the trading in affected securities prior to the news of the recall of Gordhan from the London roadshow, as the news precipitated material moves in the value of numerous listed securities, including currency futures.

JSE director Shaun Davies said the exchange’s market regulation division would forward its findings to the FSB for possible further investigation.

The JSE’s review and the FSB’s subsequent investigation came on the back of analysis done by Intellidex’s Theobald, who in a blog post on is website queried the drastic moves in the rand at the time of Gordhan’s recall on March 27 2017.

READ: Rand 'shorters' banked big profits on Gordhan news

“Could one profit if you knew of such an event in advance,” Fin24 quoted him as saying. “The answer is clearly yes. One simple way to do so would be to buy those futures on the JSE.”

Theobald calculated a person earning R42m in two days, assuming “that the contracts were opened before the Gordhan news broke”.

“There is circumstantial evidence supporting the view that it was before the news,” he said.

Gordhan’s abrupt recall from the investor roadshow was followed by an overnight Cabinet reshuffle when President Jacob Zuma replaced him with former home affairs minister Malusi Gigaba.

On the day following the dismissal of Gordhan and his deputy Mcebisi Jonas, the rand lost more than 50c of its value and continued its declining trajectory for six days, reaching R13.90 against the dollar.

The currency however gained some ground on the back of emerging market optimism.