Financial conduct body slaps Jooste with R162-million fine

Former Steinhoff chief executive Markus Jooste has been fined R162-million by the Financial Sector Conduct Authority (FSCA) for insider trading.

Jooste is solely liable for R122-million of the R162-million. After his resignation in 2017, Steinhoff shares plunged more than 98% after the company overstated its profits and assets by a massive R105-billion. 

The massive fine comes a week after the company was slapped with a R13.5-million fine by the JSE for breaching listing requirements, including by publishing false and misleading information.

The latest fine by the FSCA comes after Jooste was found guilty by the authority of sending what can be described as the most expensive SMS ever to four other people, encouraging them to dispose of their Steinhoff shares prior to the company’s share price crash in December 2017. 

According to the FSCA, three recipients of the four acted on Jooste’s disclosure and encouragement and sold their Steinhoff shares, avoiding losses. 

About 30.7 million shares were traded with a total market value of more than R1.7-billion in the week leading up to the share collapse after the announcement of the delayed release of the group’s annual financial statements in December 2017. 

In its initial 2018 investigation into the Steinhoff accounting fraud scandal, the FSCA found no evidence of insider trading between Jooste and seven other parties.  

On Friday, the authority, however, announced that Jooste’s “warning SMS” regarding the delay of Steinhoff’s delayed results to his close associates — Jaap du Toit , Gerhardus Diedericks Burger, Marthinus Swiegelaar and Ockie Oosthuizen — amounted to insider trading. 

Jointly, the fine for all four individuals is R241-million. 

Despite the warning from Jooste, the FSCA found that du Toit  did not sell his Steinhoff shares. The other three recipients of the SMS all acted on the warning and avoided losses. 

Shortly after receiving the sms on 30 November, Diedericks sold the entire Steinhoff holding held by two of his family trusts. The FSCA has fined Diedericks R3-million for his transactions. 

The FSCA has fined Swiegelaar, who was Jooste’s chauffeur at the time, R18 328 for his role. The authority found that Swiegelaar had “the highest level of co-operation during the investigation and he sold significantly less shares than the rest of the investigated parties. The penalty imposed on him represents the loss he avoided when he sold his shares a few days after he received the warning SMS.” 

The FSCA has imposed a penalty of R115 867 122 on Oosthuizen’s Ocsan Investment Enterprises. Oosthuizen instructed Ocsan’s sale of Steinhoff shares on 30 November 2017 after receiving the warning SMS. 

“Oosthuizen deliberately misled investigators during questioning and thus failed to provide meaningful cooperation,” the FSCA said in a statement.

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