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FSB to review volatile share trading

Regulator working with the JSE to determine whether to open a formal investigation.

A South African market regulator said on Friday it was reviewing volatile trading activity sparked by market speculation that a research group would release a negative report on a listed firm.

The regulator confirmed in an e-mailed response to questions that it was reviewing unusual activity in Aspen Pharmacare, whose shares plunged 10% on Tuesday prompting it to say it was aware of speculation New York-based Viceroy Research would release damaging information about the company.

Read: Aspen begins freefall as rumours circle

Aspen, whose shares have since recovered, said it had never been contacted by Viceroy.

The Financial Services Board (FSB) was working with the Johannesburg Stock Exchange to determine whether to open a formal investigation, FSB spokeswoman Tembisa Marele said.

“The specific mandate of the FSB in this area, according to the Financial Markets Act, is to investigate cases of insider trading; price manipulation; and false reporting,” Marele said.

Johannesburg Stock Exchange director of market regulation Shaun Davies said a review was underway and it was a market offence “to make false statements about listed securities” but added that it was not clear if there had been any misconduct.

Speculation that Viceroy would publish damaging research on a company also hit real estate investment trusts, such as Resilient Reit, Fortress Reit, and Greenbay Properties.

Read: Viceroy warns against speculation as Reits dive

The FSB said it had not decided whether to investigate movements in property stocks.

Fortress Reit Chief Executive Officer Mark Stevens said the market was “speculating wildly on unsolicited rumours” but said it was business as usual at his firm.

There was no immediate comment from the other real estate firms.

Viceroy, which describes itself as “a group of individuals who see the world differently” on its website, said it would not comment on the market speculation.

“Viceroy encourages people not to speculate on the identity of any companies we are researching and we advise caution in trading on gossip,” it said in an e-mailed response to questions. 

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Relieved, necessary to maintain confidence in stock exchanges and the notion of fair rules of the game.

Too little too late as usual , horse has bolted……

Interesting that FSB seems to be employing a reactive than proactive approach to investigating listed companies (why must Viceroy prompt them to act? what have they been doing all along?)

They must bear in mind there are people’s money involved here… there is not time to “self-correct”

I agree…Viceroy are doing ” good ” work/research. Thanks to them and others eg. Jacques Pauw,Pieter-Louis Myburgh,Johan Booysen,Thuli Madonsela…. fraudsters that are stealing our life are exposed for what they are.

1. Every day positive “research” reports are released by sell-side analysts. (especially by firms anticipating massive underwriting fees of some or another corporate action)

2. Nobody investigates bullish opinion research reports

3. Coming out with positive reports is apparently not market manipulation. Saying (honestly) the emperor has no clothes is roughly equal to a fake Fire Fire report in a crowded theatre…

This is intellectual nonsense. Viceroy has the right to publish what it wants. If people disagree, take on their facts, not their short position. If not, go home and cry in daddy’s apron.

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