The Financial Sector Conduct Authority (FSCA) announced on Friday that it has found no evidence that the Resilient group of companies contravened any regulations relating to share price manipulation.
This brings to an end a nearly three-year investigation into the trading of shares in the Resilient stable, which includes Fortress, NEPI Rockcastle and Lighthouse Capital (formerly Greenbay Properties).
“The authority is satisfied that based on evidence currently available, there is no substance to the allegations that directors, related parties and other parties believed to be related to either Resilient Reit, Fortress Reit, Lighthouse Capital and NEPI Rockcastle, were supporting the Resilient share price during the period October 1 2017 to February 28 2018 (investigation period),” the FSCA said on Friday.
This follows its previous announcement last year that it had cleared the group of companies of any allegations of insider trading and of publishing misleading financial statements.
The investigations were launched after a number of reports from investment managers and brokers, most notably led by 36ONE Asset Management, that alleged that large volumes of trades between associates and related parties, and between group companies through cross-shareholdings, deliberately inflated the share prices of the companies.
This led to an unprecedented step by some of the country’s largest investment managers, including the Public Investment Corporation (PIC), Allan Gray and Coronation, calling on the Resilient companies collectively to undertake a “full, transparent and independent forensic investigation” in August 2018.
This related not only to the trading of shares in group companies but also to a number of questionable property transactions that were publicised through the so-called Limpopo Memos.
The letter was also in response to findings of an earlier investigation commissioned by the company and conducted by the previous auditor-general, Shauket Fakie, who found there had been no wrongdoing on the part of Resilient, its group companies or directors.
The investigation was deemed to be insufficient in scope and perceived to lack independence by the institutional investors.
The Resilient Group chose not to undertake such a forensic investigation, opting rather to engage with shareholders directly.
Resilient had not provided any statement at the time of going to press.
Listed property investor Reitway Global’s chief investment officer, Garreth Elston, said the FSCA’s decision was not surprising.
“My position since the start of this whole sorry saga was that Resilient has always been an aggressive company, but that the company was not involved in any illegal activities. It’s good that the industry can now put this behind it,” said Elston.
Stanlib’s head of listed property, Keillen Ndlovu, echoed that sentiment, saying that the chapter was now closed and it was time for the industry “to move on”.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.