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Report by FSCA on status of various investigations

Publish date: 08 March 2019
Issue Number: 61
Diary: CompliNEWS
Category: Market Abuse

The Financial Sector Conduct Authority (FSCA) has given an update on various market abuse investigations.

The FSCA is mandated to investigate, and in appropriate instances, take enforcement action in cases of market abuse on the financial markets. Three kinds of market abuses are prohibited in South Africa, namely insider trading, market manipulation (prohibited trading practices) and false reporting relating to the affairs of a public company. Our investigation procedures include interviews under oath, acquiring documentary evidence and obtaining assistance from foreign Regulators.

In matters of insider trading the FSCA may order that the alleged offender pay an amount equal to the profit made or the losses avoided because of the offending transactions, and a penalty of up to three times such amount. These funds are distributed, after recovery of costs, to persons who may have been prejudiced by the offending transactions. In addition, the FSCA may impose a range of administrative sanctions on the alleged offenders.

Market abuse transgressions are criminal offences in terms of the Financial Markets Act 19 of 2012 (FMA). The Director of Public Prosecutions may institute criminal action against any person. It is not the function of the FSCA to institute criminal prosecutions but would provide all information necessary to assist the Director of Public Prosecutions.

Since 1999, the FSCA, its predecessors, the Directorate of Market Abuse (DMA) and the Insider Trading Directorate, investigated a total of 421 cases. A total of 307 cases were closed because there was either no evidence, or insufficient evidence existed to indicate that the FMA (or the now repealed Insider Trading Act and Securities Services Act) was contravened. In 91 cases the FSCA/DMA decided to proceed with enforcement action. The penalties imposed on offenders to date amounts to approximately R138 million.

The FSCA’s investigations into share trading patterns and complaints should not be construed as an indication that any violation of a law has occurred, or as a reflection upon any person, entity or security. The FSCA has the responsibility to investigate these matters in an impartial and objective manner. If no evidence of wrongdoing is uncovered, the investigations are closed.

Working Smart

By Lee Rossini

The term ‘business strategy’ is well-used in a business context, however, it is often misunderstood and not applied in an effective manner. Simply put, a business strategy refers to the game plan that the owners and managers of a business uses to position themselves in the market, to conduct business operations, to attract and satisfy clients, to compete successfully in its chosen marketplace and to achieve its stated business objectives (Thomson and Strikland, 2003).  In a nutshell, a business strategy focuses on the way in which a business gets from where it is to where it wants to be; the process involves identifying the right choices that must be made to overcome the challenges and difficulties along the way. 

CPD

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