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Jooste may dodge FSCA’s R161.6m fine for a while yet

Details behind the FSCA’s fines to Jooste’s associates revealed.
Image: Mike Hutchins, Reuters

It could be several years before former Steinhoff CEO Markus Jooste has to pay any of the hefty R161.6 million administrative fine, levied by the Financial Sector Conduct Authority (FSCA) for insider trading in Steinhoff shares just days before the share price collapsed in December 2017.

Jooste, who has used a high-powered, expensive legal team to fight every challenge related to the spectacular Steinhoff implosion, was accompanied by four senior lawyers for his engagements with the FSCA. During this engagement he described the FSCA’s investigation as unreasonable and unfair and said it undermined his constitutional rights. A description the FSCA roundly refutes.

If unable to set the fine aside through the FSCA’s internal processes, Jooste can take it on review to the High Court, going as far as the Constitutional Court if necessary.

However, if he is not successful, Jooste will be liable for interest on the R161.6million from the date at which it was initially levied.

It is the largest insider trading fine levied by the FSCA, dwarfing the previous record of R24 million slapped on Deutsche Bank in 2019.

Although Jooste did not trade in the shares the Financial Markets Act prohibits “an insider from disclosing inside information and/or encouraging or discouraging another person to deal in securities, which the inside information relates to”. The case rests on a warning SMS Jooste sent on November 30, 2017 encouraging four individuals close to him to dispose of their Steinhoff shares prior to the publication of inside information to the general public. Three of the four recipients did sell their shares but the fourth, Cape-based businessman Jaap du Toit, did not.

Brandon Topham, FSCA’s divisional executive for enforcement, said that as the ‘tipper’, Jooste is jointly and severally liable with those he tipped for “their ill-gotten gains”.

The “ill-gotten” gains were calculated as the difference between the share price on the day of the trade and, said Topham, “the price a few days later”.

Of the three who sold, former Springbok prop and long-time associate of Jooste, Ockie Oosthuizen, along with his company Ocsan Investment Enterprises were the biggest beneficiaries of the ‘ill-gotten gains’.

They were fined R115.8 million. Oosthuizen, who died last year, denied receiving the SMS. Topham said the FSCA found that Oosthuizen deliberately misled investigators during questioning and failed to provide meaningful cooperation.

Dr Gerhardus Burger, an acquaintance of Jooste, was fined R 3million, which represents two times the loss he avoided as a result of trading on the SMS tip. The fourth tippee was Jooste’s driver Marthinus Swiegelaar who was fined R18 328 for selling his 400 Steinhoff shares. Both Burger and Swiegelaar acknowledged receipt of the SMA.

The FSCA’s order reveals that Du Toit was the first to receive the SMS; it pinged on his cellphone at 10:38am on November 30. Thirty minutes later Burger received the same message on his phone. It was over an hour later, at 11.56 am, that both Oosthuizen and Swiegelaar received the same SMS message.

Burger sold his Steinhoff shares on the afternoon of November 30, while Oosthuizen called his broker within minutes of receiving Jooste’s SMS and instructed him to sell all of his Steinhoff shares.

  • Swiegelaar, who initially thought he had received the SMS by mistake, did nothing until December 4. At that stage, “after hearing gossip that there were irregularities at Steinhoff, he was able to make sense of the warning SMS, then understood that it was probably meant for him, and sold his shares,” states the FSCA’s order.

Topham said the FSCA would provide the police and the NPA with their findings. “The NPA will then decide whether to prosecute for this or the other cases that have been opened up against Jooste.”

He also reiterated that the FSCA was continuing to investigate the individuals behind the publication of false and misleading information released by Steinhoff. This is related to the mid-October announcement that the FSCA had fined Steinhoff, the company, for releasing false and misleading information.

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Jooste and Du Preeze, did trade. They each borrowed money from Investec and put it in a savings account at another bank, using their shares as security for the loan. Both knew the share price was going to “tank”. They also knew they were in a closed period, and as directors they could not trade their shares. Hence they had to make themselves forced sellers by doing the above. As soon as the shares started tanking, Investec phoned them, informing them, that their covenants have been breached and that they have to sell their shares. Result, they sold their shares at +_R20 and not R2. Remember they never spent the money they loaned. They simply parked it in an account. Jooste’s son in law also tried to takeout zero cost collars before this unfolded. However, this would have seemed to obvious a move. Hence, they opted for the loan, where they become forced sellers.

Brilliant. Jooste is a genius, no question in my mind. He will be like Andy Dufresne in the Shawshank Redemption, advising the guards on tax issues. If the gubment had an ounce of savvy they would make Jooste the head of SARS. He will save us biljons.

What kind of genius sms’s his mates to sell out just before the crash… The kind that has no idea how insider trading is investigated, nor how cell phone records work.

If you are prepared to lie and cheat, often that can get you a lot further than honest intelligence, especially when you have high profile greedy people legitimising you to sceptics. Look at the Gupta’s who simply said here’s some cash now give us the tender…leaning on Zuma’s position. Retardedly simple and yet they also made billions and seem to have gotten away even better off than this cockroach

I hope the NPA do the right thing and prosecute, how can they not? Make an example of him!

End of comments.

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