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FSCA probes seven accounts for Steinhoff insider trading

The accounts belong to individuals, trusts and corporate entities.
The probe into Steinhoff by the FSCA is said to be close to completion. Picture: Dwayne Senior, Bloomberg

South Africa’s financial regulator is investigating seven trading accounts that sold Steinhoff International shares in the weeks leading up to the global retailer’s disclosure of accounting irregularities and subsequent share-price collapse a year ago.

The accounts belong to individuals, trusts and corporate entities and the Financial Sector Conduct Authority is looking for evidence of insider trading, it said in a statement Friday. The probe is close to completion.

The news comes after Bloomberg reported that former Steinhoff Chief Executive Officer Markus Jooste advised friends via a mobile-phone text message to sell the retailer’s shares days before the stock collapsed. The regulator has been made aware of the text, two people familiar with the situation said in October. It’s not clear whether anyone acted on its contents.

Steinhoff’s shares have lost more than 96% since the accounting scandal erupted on December 5, 2017, and the owner of Conforama in France and Poundland in the UK has sold assets and restructured about 10 billion euros ($11.4 billion) of debt to stave off collapse. Auditors at PwC are reviewing the accounts, but the matter is so complex that their report has been postponed until February.

The trading-accounts investigation is one of three cases the FSCA has registered. The second probe focuses on Steinhoff’s release of audited 2015 and 2016 annual financial statements and its 2017 interim results. The third involves a report by short sellers Viceroy published on December 7, 2017, less than 48 hours after Steinhoff’s shock announcement.

The FSCA is receiving assistance from foreign regulators and has interviewed numerous individuals and obtained “extensive” documentation, it said. Once the PwC probe has been concluded it’s possible that further investigations into insider trading and false and misleading statements may be initiated, the regulator said.

Speaking to lawmakers in Cape Town in September, Jooste, 57, said he wasn’t aware of any financial irregularities on the day he resigned. He instead blamed the crisis on a protracted dispute with Austrian business partner Andreas Seifert, which triggered investigations into Steinhoff by European regulators and tax authorities, which are ongoing.

© 2018 Bloomberg L.P

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Markus Jooste will say that he acted on information that was public knowledge already, and therefore he can not be guilty of insider trading. According to his testimony before the parliamentary committee, the crash was caused by the auditors when they refused to sign off on the annual financial statements. He blames it on the auditors. So, according to Jooste, only the auditors can be guilty of insider trading because only they knew that they will refuse to sign off on the statements.

A question to the auditors out there – how does a company account for possible claims in the financial statements? The claims and lawsuits from investors must surely be a liability that must be accounted for? When the quantum of the claims are more than the entire market-cap of the company – how does that look on the balance sheet?

MichaelfromKlerksdorp, SAM The Taxman or Johan_Buys help please!

Sensei:

It does NOT work like that for a message from a CEO. Due to his position he is under extra rules.

The auditor angle is not logical – they refused to sign off because the numbers are fiction. And I doubt they traded

The authorities will go after the person that leaked as well as the person that acted on the information. That net goes wide – eg if Jooste messaged A and he told his broker why he is selling, the broker is part and parcel. It becomes a CRIMINAL matter. I think fines are R50m and ten years in jail. The civil side is complicated by loss avoided by the insider action as well as that the proceeds can go to people that suffered harm (probably people that bought shares then not the people that were holders in any event). Unless I am mistaken this part is civil FSB and allows for 300% finding (300% of the loss avoided or gain made)

Either way, those people that received messages know who they are and we can be sure authorities know as well. If they did sell, they are NOT going to have a merry christmas at all. This would be unmerry in the class of you wake up each morning with half the bedsheets in your large intestine 😉 😉

Good, IMO

According to Investopedia:

“Contingent liabilities need to pass two thresholds before they can be reported in the financial statements. First, it must be possible to estimate the value of the contingent liability. If the value can be estimated, the liability must have a greater than 50% chance of being realized. Qualifying contingent liabilities are recorded as an expense on the income statement and a liability on the balance sheet.”

“If the contingent loss is remote, meaning it has a less than 50% chance of occurring, the liability should not be reflected on the balance sheet. Any contingent liabilities that are questionable before their value can be determined should be disclosed in the footnotes to the financial statements”.

Can SCOPA please request the President to appoint a Commission of Inquiry into the collapse of Steinhoff.

It’s the only option which will force individuals to tell the truth under oath which will lead to criminal charges being brought against ALL persons involved, and recommendations are made to change and better the regulations regarding Corporate South Africa.

A commission of enquiry does not result on prosecutions that’s why Zuma used them so frequently. The malfeasance with some evidence of inpropriety needs to be handed over to the NPA – who we all know seldom prosecute anybody with connections

A case like the Penny Sparrow one however, is a dead cert. You can bet your house on that. Yet the millions and billions lost, siphoned, defrauded, stolen in the SOEs and their consultants etc. Well now, those are way too complicated, much simpler to ignore. There will be other scandals along the way so it will be forgotten before too long.

Reading the ongoing reports on the Jooste, et al shenanigans (that seem to have started almost from day 1), and reading James-Brent Styan’s book, there were, inter alia, many very weird ‘non-arms length’ deals set up via hidden companies that Exec’s had direct interests in.

I would hope that the investigations referred to in the article include full scrutiny of these. These deals amount to hidden insider knowledge shared by a very select clique that engaged in these activities for self-enrichment at the cost of the shareholders / prospective shareholders and are at the heart of the accounting irregularities and insider trading. All of which took place over a protracted period of time.

It’s good to hear more about the linking to overseas investigations. Time for the Piper.

Oh, and by the way (just like Trump), Jooste will say anything at this stage. What a low life!!!

End of comments.

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