SA’s capital markets regulator has found no evidence of price manipulation in the trading of Mantengu Mining shares.
Mantengu is relatively new to the JSE. It began operations in August 2022 after a reverse listing that initially valued the company at more than R800m. It mines mostly chrome ore and platinum group metals.
A reverse listing involves a private company becoming publicly traded by acquiring a listed shell company, bypassing the traditional initial public offering process.
On Friday, the Financial Sector Conduct Authority (FSCA) said it had concluded an investigation into alleged prohibited trading practices, widely called price manipulation.
“No evidence was found to support the allegations of price manipulation,” said the watchdog, which focuses on market conduct regulation and supervision. As a result, “the authority will not be taking any enforcement action regarding the aspects covered in the investigation”.
The mining house had flagged what it regarded as abnormal trading and asked the JSE to investigate, which advised that the FSCA get involved.
Mantengu believes it is being targeted by a syndicate using front companies, including Sable Exploration & Mining and Liberty Coal, to artificially lower its share price and disrupt its growth plans, including the mooted acquisition of Blue Ridge Platinum.
Liberty Coal has since launched a court case for defamation against Mantengu, suing for damages of R250m.
“Each … allegation of wrongdoing levied against Liberty Coal and [owner] Daniel McGowan is unsupported by any facts or evidence, ill-conceived and intended to cause harm and damage to their reputations, businesses and commercial interests,” Liberty Coal said in a statement.
Since listing, Mantengu’s shares have lost 98% of their value, now trading at 55c compared with their lofty opening at R27.35.
Earlier in May, the stock exchange rejected a criminal complaint by Mantengu after being accused of manipulating the group’s share price, saying its staff will not be dragged to court over the dispute.
Mantengu, led by CEO Mike Miller, had accused JSE representatives of borrowing and replacing stocks owned by Mantengu’s largest shareholder to conceal a “naked short”, whereby shares are sold by a trader who has not bought or borrowed them.
The authority also sought to clarify that it had not found a prima facie case warranting further investigation, after Mantengu’s claims that it had.
“Given the serious nature of the allegations and because they — in their untested form — met the threshold of reasonable suspicion, the FSCA considered it prudent to initiate an investigation,” said the body.
The FSCA concluded that the transactions and orders identified by Mantengu “were lawful securities transactions in the ordinary course of business”.
Regarding the allegations of naked short selling of 387,044 Mantengu shares in the first week of June 2024, the authority concluded that the transactions did not amount to uncovered short sales.
The regulator also investigated certain trading activity after Mantengu laid criminal charges against the JSE and some of its staff.
“Regarding the specific transactions investigated by the FSCA, the authority found no reason to suspect improper conduct by the JSE or any of its officials,” it said.
“Should the relevant enforcement authorities decide to investigate the criminal complaint(s), the FSCA will provide its full support and co-operation.”
With Jacob Webster
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